Wall Street’s tokenization boom has a liquidity problem: Axis CEO

Real-world assets (RWA) crossed $32 billion in market value for the first time on Tuesday, as Wall Street’s love affair with tokenization continues to accelerate.

JPMorgan was the latest to double down on its interest through a filing with the Securities and Exchange Commission for a new tokenized money-market fund for stablecoin issuers on Ethereum.

Not everyone is impressed by the big names and numbers.

"[Most] of the projects out there, and even the traditional finance players coming into crypto, they're only looking at the issuance layer," Chris Kim, founder and CEO of liquidity provider Axis, told Cointelegraph. "Nobody is actually focusing on the liquidity side of things."

Issuing a tokenized asset and being able to trade it are two very different things, Kim argued. The industry's obsession with market cap figures doesn’t measure how much of $32 billion can actually change hands.

Onchain RWA assets market value grew by about $10 billion in 2026 so far. Source: rwa.xyz

Putting assets onchain is the easy part

Tokenized finance is expected to continue growing. McKinsey & Company projects the tokenized market cap could reach $2 trillion by 2030. Standard Chartered sees $30.1 trillion by 2034.

But Kim claimed that the industry is obsessed with the wrong metrics, as the race to issue is outpacing the ability to trade these assets.

"The tradability around it is going to be an important factor to determine the value of these tokenisation markets going forward. But right now, there isn't that much trading happening around tokenized RWAs," he said.

The headline figure doesn’t tell the story of how unevenly liquidity is distributed across asset classes. Tokenized Treasuries, which account for roughly half of the RWA market, benefit from the underlying liquidity of US government debt, as rwa.xyz data shows.

But for other categories, Chainalysis reported that the tokenized assets market cap is drawn from a platform — rwa.xyz — that tracks highly illiquid assets like real estate alongside liquid ones.

“Because these illiquid assets lack continuous secondary market trading, their exact present market value is inherently difficult to measure, meaning certain aggregate valuations should be treated as best-available estimates,” Chainalysis wrote in its April report. 

Chainalysis tracked $40.5 billion in tokenized gold trading volume and found that for most of its history, it had almost no correlation to traditional gold markets, frequently decoupling entirely. It is only since mid-2025 that the two markets have begun moving in tandem.

Tokenized gold is beginning to track physical gold prices more closely, but the two markets have not yet fully converged. Source: Chainalysis

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In other words, even for one of the most mature tokenized asset classes, onchain trading has only recently started to behave like the real thing.

Fragmentation is taxing the RWA economy

For RWA assets in today’s Web3 economy, the same asset is issued across multiple blockchains.

"The fragmentation is accelerating," Kim said. "We are seeing the same asset being issued on multiple blockchains in 30 different formats, and they can't interact with each other."

Kim has a stake in the narrative. Axis, his arbitrage yield platform, is built on capturing price discrepancies across fragmented markets.

When tokenized assets are spread across blockchains without seamless interoperability, pricing diverges and capital efficiency takes the hit. Issuers can face duplicated legal work and siloed liquidity pools, while investors must navigate different custody models and risk profiles.

The cost of this fragmentation is already measurable, according to a report by RWA.io. Moving capital between networks compounds the problem by costing investors between 2% to 5% per transaction in fees and slippage.

The same tokenized fixed-income asset trades at different prices across blockchains. Source: RWA.io

RWA.io estimated these inefficiencies drain between $600 million and $1.3 billion from the market every year. If the fragmentation persists as the market scales, those annual losses could reach $75 billion by 2030.

The technology to fix this exists, but the infrastructure connecting it all is the missing piece of the puzzle, according to RWA.io. Onchain operational failures drove a 143% increase in financial losses in the first half of 2025 compared to all of 2024.

The long road to a functioning RWA market

Kim is not bearish on tokenisation and views it as an inevitable destination for global capital markets. But inevitable does not mean imminent.

"I view tokenisation as a default standard in the far future," he said. "But until we get there, we are still going to have a differentiation between TradFi liquidity profiles and on chain liquidity profiles."

JPMorgan and BlackRock are racing to put assets on chains. But until the liquidity infrastructure catches up, the market cap figure doesn’t fully measure a functioning market.

"We are just maybe in the early innings," Kim said. "Until more sophisticated liquidity providers are able to synchronise TradFi and onchain tokenised markets, then I think we can only call it a successful alternative to TradFi."

The IMF has also flagged a longer term concern in a January 2025 note on tokenization and financial market inefficiencies. It warned that while tokenization could reduce some trading costs, it may amplify shocks if institutions become more interconnected and hold lower liquidity buffers as a result. 

In other words, the race to put assets on blockchains may be creating new systemic risks even as the old infrastructure problems remain unsolved.

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