Securitize COO Michael Sonnenshein recently stirred the crypto community at Paris Blockchain Week by downplaying the potential of tokenized real estate. His remarks, dismissing property as unsuitable for the digital ledger, have fueled debate among blockchain enthusiasts and real estate innovators alike. Critics argue that Sonnenshein’s stance overlooks the tectonic shifts tokenization could bring to the world’s largest asset class.
A Paradigm Shift in Property Investment
Real estate, projected to balloon to $654.39 trillion in value this year, stands at the precipice of a digital transformation. This is no minor tweak—tokenization promises to overhaul entrenched systems. The traditional labyrinth of paperwork, fees, and lengthy settlements can be dramatically streamlined with blockchain’s smart contracts. “These aren’t just small inconveniences,” notes Darren Carvalho, Co-Founder and Co-CEO of MetaWealth, “they’re systemic inefficiencies that tokenization can eradicate.”
Smart contracts, with their ability to automate compliance and secure transactions, could be the silver bullet for the real estate sector’s woes. By reducing fraud and expediting processes, tokenization isn’t merely a marginal improvement—it’s a potential game-changer.
Beyond Liquidity: Democratizing Access
Sonnenshein’s focus on liquidity misses the mark, critics say. The real allure of tokenized real estate lies not in liquidity per se, but in accessibility. Historically, institutional-grade real estate investments have been the playground of the affluent. Minimum investment thresholds, accredited investor requirements, and prolonged capital lockups have kept a significant chunk of the population—teachers, nurses, middle-class families—out of the game.
Enter tokenization. By fractionalizing ownership, it allows investors to dip their toes into the real estate waters with as little as $100. They can receive income distributions and even trade their stakes on emerging secondary markets. As Carvalho puts it, “The demand for democratized access is colossal, even if liquidity takes time to catch up.”
Regulatory Hurdles and Technological Translation
Sonnenshein also points to tokenization’s alleged difficulty in translating real-world ownership into digital assets. Yet, blockchain’s prowess in enabling fractional property investment contradicts this view. Tokenization can divide a $50 million project into 500,000 tokens, each offering a slice of rental income and appreciation. This doesn’t just lower entry barriers; it revolutionizes wealth building through real estate—offering transparency and control not seen in traditional REITs. For instance, the world’s largest $3B RWA tokenization deal involving MultiBank, MAG, and Mavryk highlights the growing scale and feasibility of such initiatives.
However, the real challenge lies in outdated regulatory frameworks and business models resistant to change. The UAE’s recent $1 billion real estate tokenization initiative underscores a growing recognition of blockchain’s potential, even as some continue to gloss over its transformative power.
Building the Future: Institutional Momentum
Beyond the skepticism, the infrastructure for tokenized real-world assets is quietly gaining traction. BlackRock’s tokenized money market fund, BUIDL, nearing $3 billion, is a testament to the burgeoning interest. Major players like UBS Asset Management, Hamilton Lane, and Franklin Templeton have also embraced tokenization, signaling a seismic shift in traditional finance’s perception. This momentum is further evidenced by Tether’s strategic move to finalize buying a 70% stake in Adecoagro, securing its tokenization ambition.
Each new entrant to the tokenized sphere creates a cascading network effect, enhancing connectivity and liquidity. While critics harp on current limitations, the focus should be on the burgeoning ecosystem. Secondary markets are evolving, regulatory clarity is improving, and these developments are laying the groundwork for widespread adoption—faster than skeptics might anticipate.
The Road Ahead: A New Era of Wealth Creation
For too long, institutional investors have had a monopoly on the most lucrative real estate opportunities, leaving retail investors with high-fee options and limited choices. Tokenization disrupts this status quo, enabling anyone to craft a diversified property portfolio spanning commercial, residential, and industrial assets globally.
While some industry leaders remain fixated on liquidity as the ultimate metric, they risk missing the forest for the trees. The real breakthrough is in democratizing access to real estate—a sector that has historically minted more millionaires than any other asset class.
The ultimate goal of real estate tokenization is to make institutional-grade property investments available to everyone. Despite skepticism, the adoption of tokenized real estate and other real-world assets is poised to continue its upward trajectory, reshaping the investment landscape in ways that could soon seem inevitable.
Source
This article is based on: Crypto leaders are wrong about tokenized property
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
