Tokenization is becoming an important part of how financial markets evolve. By representing real-world assets as tokens on public blockchains, institutions can create more efficient, transparent, and accessible systems for transferring value.

Across the United States, financial firms, infrastructure providers, and policymakers are exploring how tokenized assets could fit into the broader market structure. The technical foundation is already being used to support stablecoins, tokenized Treasuries, funds, and other instruments. The next step is ensuring the regulatory environment is equipped to support this transition.

This post identifies three core regulatory challenges facing tokenization in the U.S. and outlines practical steps policymakers can take to address them.

Three Core Blockers Holding Back U.S. Tokenization

Challenge #1: How Are Tokenized Assets Classified?  

One of the most persistent sources of regulatory uncertainty in tokenization is the lack of consistent legal classification.

U.S. law does not yet offer a consistent taxonomy for digital assets. As a result, these assets are frequently subject to case-by-case interpretation. A fiat-backed stablecoin, for example, could be considered a payment instrument, a stored-value product, a security, a fund, or a bank deposit depending on how it is structured and who is reviewing it. Many issuers have chosen to avoid paying interest or implementing yield features precisely to avoid securities classification.

Tokenized Treasury products face similar challenges. While U.S. Treasuries themselves are exempt from SEC registration, packaging them into a pooled tokenized product could trigger the Investment Company Act. In other cases, the presence of yield or fractionalization could lead regulators to treat the token as a security in its own right.

This lack of definitional clarity forces companies to rely on legal opinions and conservative product design choices to avoid regulatory risk. It also undermines the ability of policymakers to craft targeted rules, since the foundational question of classification remains unsettled. Until U.S. regulators agree on consistent categories for tokenized assets, and define them in law, the market will continue to operate within a gray zone.

Challenge #2: What Standards Guide Interoperability?

Tokenization is built on the idea that digital assets can move across systems—between chains, platforms, and financial institutions—with the same ease and reliability as data on the internet. Technically, that vision is already being realized. Cross-chain interoperability protocols like Chainlink CCIP make it possible to transfer tokenized assets across different blockchains and systems.

While the infrastructure is advancing, the policy foundation requires more development. There is no clear regulatory framework in the U.S. that explains how compliance obligations apply when a tokenized asset moves across systems. Questions around custody, transfer restrictions, investor protections, and compliance responsibilities are often unresolved once an asset leaves its original environment.

For example, when a tokenized fund is transferred from one chain to another, it is not always clear whether the receiving environment must meet the same licensing or custodial standards. Institutions may hesitate to interact with assets across chains if they cannot verify how regulatory responsibilities carry over. This uncertainty reduces confidence, fragments liquidity, and limits the broader functionality of tokenized markets.

Challenge #3: What Is Preventing Broader Consumer Access?  

Tokenization is often described as a way to broaden participation in financial markets by lowering access barriers and embedding trust into financial products. Yet today, most U.S. consumers have limited access to tokenized assets through the platforms they already use.

One major reason is that regulated tokenized products are often restricted to private offerings or gated to accredited investors. Complex and fragmented licensing requirements, such as state-by-state money transmitter rules, broker-dealer registration, or the need for specialized trust charters, make it difficult for most consumer-facing platforms to launch and scale tokenized products.

This creates a two-tier system. Institutional investors and high-net-worth individuals are gaining early access to tokenized markets, while retail users are left on the sidelines. Without clear regulatory pathways for broad consumer distribution, many platforms focus only on permissioned or offshore use cases. 

There is also a gap in public understanding. Many consumers do not know what tokenized assets are, how they differ from traditional products, or how features like proof of reserves, automated compliance, or 24/7 liquidity can benefit them. Without clear regulatory pathways and accessible examples in the market, broader familiarity and trust have been slower to develop.

How U.S. Policy Can Clear the Path for Tokenization

Solution 1: Define what tokenized assets are and what they are not

Much of the legal uncertainty around tokenization comes down to the absence of clear, consistent definitions. Without a shared taxonomy for digital financial instruments, developers, institutions, and regulators are left interpreting how 20th-century laws apply to 21st-century products. This ambiguity leads to cautious product design, risk-averse legal positioning, and inconsistent treatment across agencies.

Headway is being made in this area with the GENIUS Act of 2025, now moving through the Senate, which proposes a statutory framework for fiat-backed stablecoins. It explicitly states that properly structured stablecoins are not securities, helping issuers and users operate with more confidence. Similar definitional clarity is needed across other categories, including tokenized Treasuries, funds, and real-world assets.

Emerging drafts of the next major market structure bill are expected to take a more comprehensive approach. Rather than forcing tokenized products into categories like “security” or “commodity,” these proposals aim to define digital assets based on their function, structure, and risk profile. Clear definitions for tokenized assets would give the entire industry a firmer legal foundation to build on and allow regulators to apply rules more consistently.

Solution 2: Develop Interoperability Policy Standards

Today, U.S. regulation does not explain how obligations like custody, transfer restrictions, or investor protections carry over in a cross-chain or cross-platform context. This creates friction for institutions that need certainty before they can operate across networks. Many choose to keep assets siloed within closed environments where legal responsibilities are easier to manage.

The GENIUS Act takes an important step by directing regulators to establish interoperability standards for payment stablecoins. But these standards are limited in scope. Additional guidance is needed for other tokenized assets, including Treasuries, funds, and real-world assets.

Policymakers can close this gap by developing regulatory frameworks that recognize how compliance obligations travel with assets across systems. This could involve coordinated rulemaking, joint agency guidance, or structured pilot programs that allow firms to test interoperable use cases under clear supervisory expectations.

A clear set of interoperability standards would allow firms to build for real-world use cases with confidence, ensuring that tokenized assets are not only technically portable but legally usable across the systems where they are needed most.

Solution 3: Create the Conditions for Widespread Consumer Access

Expanding consumer access to tokenized assets will require clearer rules for how these products can be offered to the public in a safe and compliant way. While interest is growing, many providers remain limited by regulatory structures that were not built with tokenized finance in mind.

Policymakers have an opportunity to reduce these barriers by developing frameworks that support broader retail participation without compromising trust or oversight. This could include refining licensing pathways for platforms that offer tokenized products, clarifying which types of assets are appropriate for general use, and establishing consistent standards for disclosures, custody, and investor protection.

These changes would give providers greater confidence to offer tokenized assets to the public and would help consumers better understand the products available to them. Education, transparency, and responsible distribution all play a role in ensuring that tokenization can serve everyday users, not just institutions.

Conclusion

Tokenization offers a once-in-a-generation opportunity to modernize financial markets. The technology is already in place. The demand from institutions is real. What’s missing is a regulatory environment that makes it possible to build and scale with confidence.

Rather than reinventing the system, the U.S. can move forward by doing three things well: assigning clear regulatory responsibility, defining digital assets with legal precision, and creating a workable path for tokenized products to reach the market. Legislative proposals like the GENIUS Act, updated market structure bills, and the Tokenization Report Act point in the right direction. Now it’s a matter of execution.

With the right legal framework, the U.S. can lead globally in building trusted, secure, and scalable markets for tokenized assets.