Tokenization solves real problems but institutions aren’t ready, says 21Shares co-founder

Tokenization addresses genuine inefficiencies in payment systems and asset movement, but the broader financial infrastructure remains unprepared for institutional-scale adoption, according to Ophelia Snyder, co-founder of 21Shares, a digital asset investment firm.

The infrastructure gap

Speaking with CoinDesk, Snyder argued that while blockchain companies have largely resolved transaction throughput issues, they have not met the broader operational requirements of financial institutions. The core challenge, she explained, is not technological capability but rather the readiness of existing systems to integrate with blockchain-based workflows.

Many financial firms rely on third-party software providers whose platforms were not designed to handle blockchain transactions. These legacy systems create friction when attempting to incorporate tokenized assets into standard operations such as settlement, custody, and reporting.

Risk management in a 24/7 market

Tokenized assets trade around the clock, unlike traditional markets that operate during set hours. Snyder noted that this 24-hour trading cycle would require financial institutions to fundamentally rethink their risk management frameworks. Current models are built around defined trading windows and settlement periods, not continuous markets.

This operational shift is not trivial. Firms would need to adjust everything from collateral management to intraday liquidity monitoring, changes that cannot happen overnight.

Scale remains the critical test

Snyder pointed out that while tokenization projects can function effectively on a limited scale, they may struggle to handle the volume of U.S. capital markets, where $1 billion is considered a trivial sum. She anticipates that the industry’s biggest challenges will surface as institutions move beyond pilot programs and into full-scale business operations.

These concerns echo broader industry discussions. Major banks and asset managers have experimented with tokenization for years, but widespread adoption remains elusive. The gap between proof-of-concept and production-level deployment continues to be the defining hurdle.

Conclusion

Snyder’s assessment highlights a critical inflection point for the tokenization sector. The technology has matured enough to demonstrate real-world utility, but the surrounding infrastructure — from software providers to risk management protocols — has not kept pace. Until these operational gaps are addressed, institutional adoption will likely remain incremental rather than transformative.

FAQs

Q1: What is tokenization in finance?
Tokenization is the process of representing real-world assets, such as stocks, bonds, or real estate, as digital tokens on a blockchain. This can improve efficiency in trading, settlement, and asset movement.

Q2: Why are institutions not ready for tokenization?
According to Ophelia Snyder, many financial institutions rely on legacy software and risk management systems that are not designed for blockchain-based transactions or 24/7 trading, creating operational friction at scale.

Q3: What are the main challenges for tokenization adoption?
The key challenges include integrating with existing third-party software providers, adapting risk management frameworks for continuous trading, and proving that tokenization can handle the massive transaction volumes of major capital markets like the U.S.