Tokenization Offers ‘Enhanced Liquidity,’ but Faces Major Hurdles, BofA Says

Tokenization represents the next evolutionary step in financial asset management, offering distinct advantages over traditional structures, according to a Bank of America report. The process converts ownership of real-world assets—from stocks and bonds to real estate and art—into digital tokens on a blockchain.

This model builds on the legacy of mutual funds, separately managed accounts, and ETFs, potentially revolutionizing investor access. Key benefits include enhanced liquidity through 24/7 trading, fractional ownership lowering investment barriers, and transparent blockchain-recorded transactions.

However, the technology faces significant adoption challenges. While tokenization could streamline settlements and reduce intermediary fees, regulatory uncertainty and infrastructure gaps remain obstacles. Wall Street's cautious embrace contrasts with the crypto sector's bullish outlook on asset tokenization.