xStocks, the tokenized equities product by Backed Finance, has surpassed $2 billion in total trading volume across centralized (CEX) and decentralized exchanges (DEX), with over $100 million in on-chain DEX volume. This milestone reflects growing adoption, with Tesla’s TSLAx leading as the first token to exceed 10,000 holders. Assets under management (AUM) for xStocks are reported at approximately $43.3 million.
Tokenization breaks down high-value assets like equities, real estate, and private credit into smaller, tradable units, democratizing access for retail and institutional investors. For instance, xStocks’ TSLAx token exceeding 10,000 holders shows how tokenization lowers barriers to entry, enabling fractional ownership of assets previously reserved for high-net-worth individuals.
This increased liquidity could transform illiquid markets, such as private equity and real estate, by enabling 24/7 trading and reducing settlement times from days to seconds, as seen with Victory Park Capital’s $1.7B tokenized private credit on zkSync.
Blockchain-based tokenization streamlines processes by automating transactions via smart contracts, reducing intermediaries and operational costs. The World Economic Forum notes that tokenization could save $15-20 billion annually in global infrastructure costs by minimizing settlement risks and manual processes.
Register for Tekedia Mini-MBA edition 19 (Feb 9 – May 2, 2026): big discounts for early bird.
Tekedia AI in Business Masterclass opens registrations.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register for Tekedia AI Lab: From Technical Design to Deployment (next edition begins Jan 24 2026).
Tokenized assets are increasingly integrated with decentralized finance (DeFi) ecosystems, creating new economic opportunities like yield-generating tokens and programmable liquidity hubs. This composability allows tokenized assets to interact seamlessly with DeFi protocols, enhancing capital efficiency.
The rise of AI-driven smart contracts in 2025 will further optimize tokenization by detecting vulnerabilities, automating compliance, and enabling AI-guided portfolio management, reducing human intervention in trading. The tokenized real-world asset (RWA) market is projected to grow significantly, with estimates ranging from $2 trillion by 2030 (McKinsey) to $30.1 trillion by 2034 (Standard Chartered).
xStocks’ milestone aligns with this trend, as its $43.3 million AUM reflects growing institutional and retail interest. Major players like BlackRock, Franklin Templeton, and JPMorgan are driving adoption, with tokenized treasuries reaching $6.9 billion and private credit surpassing $12 billion by March 2025. This institutional backing validates tokenization’s scalability and credibility.
However, regulatory uncertainty remains a hurdle, with 49% of institutional investors citing it as a primary obstacle. The “paradox of programmability” also introduces risks, such as automated transactions amplifying herding behavior or programmed bank runs, necessitating tailored regulatory frameworks.
Tokenization could reshape global capital markets by increasing fungibility across asset classes, simplifying cross-asset allocation, and correlating private and public markets. This shift may lead to more integrated, nimble global asset allocation with reduced friction. However, it introduces systemic risks, such as amplified volatility from programmable tokens and challenges.
Drivers of Tokenized Assets in 2025
Major financial institutions like BlackRock, Citibank, and HSBC are moving from proofs-of-concept to production-scale tokenization. For example, Citibank’s collaboration with Ava Labs to tokenize private equity funds and Slovenia’s $32.5 million digital bond issuance in 2024 signal a shift toward mainstream adoption.
Innovations like Layer-2 scaling (e.g., Optimistic Rollups, ZK-Rollups) and cross-chain interoperability reduce transaction costs and enhance scalability, making tokenized assets more viable for high-volume trading like xStocks. Zero-knowledge proofs (ZKPs) and AI-enhanced smart contracts improve privacy and automation, addressing concerns about secure, large-scale transactions.
High-net-worth and institutional investors plan to allocate 7-9% of portfolios to tokenized assets by 2027, driven by benefits like increased liquidity, lower costs, and transparency. Tokenized treasuries and private credit, as seen with xStocks, are particularly attractive in a high-interest-rate environment.
Retail investors are drawn to fractional ownership opportunities, such as tokenized real estate or commodities, enabling diversification with minimal capital (e.g., $100 for a fraction of a $2,000 gold ounce). Supportive policies, such as the U.S. Executive Order on Digital Financial Technology and relaxed SEC rules for crypto custody, are catalyzing tokenization growth.
Singapore’s Project Guardian and the EU’s DLT Pilot Regime further encourage innovation through regulatory sandboxes. Beyond equities like xStocks, tokenization is expanding into real estate, commodities, private credit, and even novel areas like tokenized time and expertise. For instance, energy firms are tokenizing renewable energy credits, and professionals are exploring tokenized skills for fundraising.
While offering significant benefits like liquidity, efficiency, and accessibility, tokenization also poses challenges, including regulatory hurdles and systemic risks from programmability. As the market is projected to grow exponentially, businesses and investors must navigate these dynamics to capitalize on tokenization’s role in reshaping global finance.