The key to scaling real-world assets

Tokenized real-world assets — from government bonds, equity, private credit, debt, to real estate or commodities — have surged in recent years. The market for on-chain real-world assets has swelled to over $24 billion (up 380% in three years), and some forecasts project it could reach trillions within the next decade. Yet despite this momentum, a critical question looms: Will tokenized finance truly scale?

The missing ingredient isn’t just better blockchain tech. It’s the adoption of shared compliance standards that can earn institutional trust and foster sustainable growth.

Fragmentation erodes trust and limits growth

Today’s real-world asset landscape is a patchwork of proprietary platforms and token formats. Many early tokenization projects built isolated compliance mechanisms, leading to fragmentation: systems that don’t interoperate, inconsistent controls, and duplicated efforts. This fractured approach undermines trust and limits scalability.

Financial institutions are hesitant to fully commit when every project follows a different rulebook. Regulatory uncertainty combined with fragmented token standards remains a major hurdle to mainstream adoption. Without a common framework, the real-world asset market risks stalling below its multi-trillion potential.

Developers must often reinvent the wheel, rewriting compliance logic and integrating bespoke legal requirements for each project. Institutions struggle to align on-chain assets with off-chain regulations when every token behaves differently. These inefficiencies increase operational cost, reduce flexibility, and ultimately erode confidence.

To unlock the next phase of growth, the industry needs a unified approach: a baseline of compliance that every real-world asset token can follow, regardless of issuer, platform, jurisdiction, or asset class.

Why shared compliance standards build trust

Standardization is a proven catalyst for trust in financial markets. Just as accounting rules or messaging protocols like SWIFT give institutions a predictable operating framework, a shared compliance standard for tokenized assets ensures safeguards are consistently in place.

A universal real-world asset standard serves as a signal of quality: a token has basic investor protections and controls by design. This consistency builds institutional confidence and, by extension, fuels market growth.

With a common standard, participants can transact with confidence. Conversely, if each issuer uses a bespoke system, a single failure or compliance lapse can cast doubt on the entire sector. Shared standards also demonstrate an industry-wide commitment to responsible innovation, which encourages regulatory alignment.

Modular frameworks reduce risk and cost

Encouragingly, the industry is converging around pragmatic solutions like ERC-7943, a newly proposed Ethereum (ETH) standard (also known as the Universal real-world asset interface). It’s designed to be a minimal, modular, and interoperable compliance layer for tokenized assets.

Instead of prescribing how to implement compliance, ERC-7943 defines what must be possible: freezing assets, enforcing legal transfers, and restricting activity to verified users. This allows any token (fungible or non-fungible, on any EVM-compatible chain) to implement the interface and meet a consistent compliance baseline.

By introducing a shared interface, ERC-7943 directly addresses fragmentation. Core functions become standardized and reusable. Developers no longer need to rebuild compliance logic from scratch. A DEX or lending protocol can support all ERC-7943 tokens with one integration, rather than custom adapters for each asset. Users can also move assets across platforms without breaking compatibility.

Interoperability boosts liquidity, too. A shared standard makes real-world asset tokens composable across the ecosystem, from the Ethereum mainnet to L2s and other chains. Investors can hold a tokenized bond on one platform and use it as collateral on another, confident that compliance checks (like KYC/AML or freeze status) apply uniformly. This enables unified markets instead of fragmented liquidity pools.

Bridging traditional finance and blockchain innovation

A robust compliance standard is more than a technical upgrade; it’s a bridge between TradFi and DeFi. Institutions operate under strict regulatory requirements. To bring real-world assets on-chain, tokens must respect those guardrails.

ERC-7943 was built with institutional alignment in mind. It supports identity checks, asset freezing, and enforcement transfers, tools essential for legal compliance and governance. Blockchain assets can thus mirror traditional securities’ controls while benefiting from speed, transparency, and programmability.

Standards also serve as a common language. They allow banks and smart contracts to interact seamlessly. As one industry consortium put it, the future of tokenization depends on “an interoperable and trusted framework, crucial for ensuring institutional trust, transparency, and long-term scalability.”

Crucially, a neutral standard fosters cross-border and cross-chain cohesion. Just as internet protocols allowed information to flow globally, an open token standard enables value to move across jurisdictions. Local rules can be implemented as modular policies within the same shared framework.

Without this, regions risk siloed liquidity and compliance arbitrage. A universal interface can harmonize with diverse regulations under a single umbrella. The vision is a scalable tokenized ecosystem where, for example, a bond issued in Europe can seamlessly integrate with a lending protocol in Asia.

Momentum toward an open standard future

The push for standards is no longer theoretical. A coalition of over ten global web3 and fintech firms, including leaders in digital securities, infrastructure, and cybersecurity, has rallied behind ERC-7943. The standard is under community review with input from technical and legal experts, and early versions have been tested in pilot deployments.

If widely adopted, ERC-7943 could become the default compliance layer for tokenized real-world assets. History shows that once a standard hits critical mass, like TCP/IP or ERC-20, innovation accelerates around it. Instead of building in silos, we get an open ecosystem of tokens, services, and markets speaking the same language.

Developers can focus on new features, not rebuilding the basics. Compliance teams can focus on using built-in controls rather than questioning their presence.

Collaboration and standards will determine scale

Tokenized finance is not just a tech challenge; it’s a coordination challenge. Institutions, developers, and regulators who align on common standards will shape this market’s future.

We’re at a turning point. ERC-7943 and similar frameworks offer a chance to bridge TradFi and DeFi with programmable, interoperable compliance. If ignored, fragmentation may widen. If embraced, we unlock composability, liquidity, and trust on a global scale.

Ultimately, tokenized finance will scale only as far as its standards allow. With ERC-7943, we have a foundation to build on.