Institutional Tokenization: From Mere “Storage” to the “Asset Service” Challenge
In the world of digital assets, token custody is largely a solved problem. However, the real obstacle to transferring tokenized securities on an institutional scale lies in the entire associated ecosystem: the rights, obligations, and services that must remain in place and effective when the asset changes hands.
This was confirmed by Eugene Harr, Vice President of Product at the digital asset custody company BitGo, who noted that institutional readiness has officially moved from the stage of “pure storage” to that of “comprehensive asset service.” This coincides with major steps taken by the London Stock Exchange towards tokenized shares and the opening of trading on blockchain networks by US regulators.
🔑 The Core of the Problem: What Lies Behind the Token
Harr explained that holding the token itself is not the biggest challenge. Rather, what remains unresolved is:
The nature of the claim that the token represents.
The entity responsible for that claim.
The extent to which the claim remains active and enforced when the asset is transferred between wallets.
He referred to the decision issued by the U.S. Securities and Exchange Commission (SEC) on September 17, 2024, which granted certain blockchain-based platforms a conditional and limited-time exemption from exchange registration requirements, provided that the token carries the same rights as the underlying stock, while excluding artificial exposure.
⚙️ Daily Operational Challenges
Har pointed out that the real and challenging aspect of the work lies in complex operational questions, such as:
Can dividends or voting authorization be delivered directly to the digital wallet holder?
Can the position on the blockchain be matched with the underlying asset on a daily basis?
On which balance sheet does the asset actually fall if the financial intermediary fails?
🌍 The Transatlantic Race: America vs. the UK
Regarding the difference between the American and European approaches, Harr explained that the two sides started from two completely opposite points:
The UK: Started with the infrastructure through a "digital securities sandbox," testing issuance, trading, settlement, and servicing under the supervision of the Bank of England and the Financial Conduct Authority.
The US: Started directly with the trading side, leaving the post-trade sector to rely on existing traditional systems.
He commented, "I wouldn't say either is ahead of the other; they both ultimately arrive at the same question: What is settled overnight, and how robust is that claim when something goes wrong?"
He also pointed out that most equity activity today is still a "tokenized wrapper" representing a claim to a share issued and traded through traditional methods, while tokenized money market funds, government bonds, and private credit have gone further and reached the stage of actual production.
💼 Institutional and BitGo Customer Perspective
In practical terms, Har noted that discussions with banks and asset managers have become "much more pragmatic," adding:
"Institutions are looking at how to hold crypto assets, stablecoins, and tokenized securities without having to build a different operating model for each."
Today, institutions are asking specific questions about asset holdings, transfer rights, applicable compliance controls, and settlement mechanisms. The institutional sector is very interested in tokenization, provided it fully aligns with the risk, compliance, and operational standards of traditional markets.