Solution 1: Clarify the Definition of Tokenized Assets
Much of the legal uncertainty surrounding tokenization stems from the lack of clear, consistent definitions. Without a unified classification system for digital financial instruments, developers, financial institutions, and regulators are forced to interpret 21st-century products using 20th-century laws. This legal ambiguity leads institutions to adopt a conservative approach in product design, avoid risk in legal positioning, and face inconsistent treatment across entities.
The introduction of the 2025 GENIUS Act has advanced this field, with the bill now passed by the Senate, providing a legal framework for fiat-backed stablecoins. The bill explicitly states that well-structured stablecoins are not securities, significantly boosting confidence among issuers and users. Other asset classes, such as tokenized treasuries, funds, and real-world assets, also require equally clear definitions.
New drafts will spur the next major market-structure bill, promising more comprehensive coverage of this issue. These proposals do not advocate for forcibly categorizing tokenized products as "securities" or "commodities" but instead classify them based on the functional structure and risk profile of the digital assets. Clarifying the definition of tokenized assets will establish a stronger legal foundation for the industry, enabling regulators to implement more consistent oversight.
Solution 2: Establish Interoperability Policy Standards
Currently, U.S. regulations do not explain how obligations such as custody, trading restrictions, or investor protection apply to cross-chain or cross-platform use cases. This creates friction for institutional operations, necessitating clear regulatory guidance to enable seamless cross-network functionality. Many institutions confine assets to closed environments where legal liabilities are easier to manage.
The GENIUS Act has taken a significant step forward by directing regulators to set interoperability standards for payment stablecoins. However, these standards remain incomplete. Corresponding standards are still needed for other tokenized assets like treasuries, funds, and real-world assets.
Policymakers can bridge this gap by creating regulatory frameworks that allow compliance obligations and assets to transfer synchronously across systems. This includes unified policy-making, joint guidance for institutions, or well-structured pilot programs that let businesses explore interoperability use cases within clear regulatory boundaries.
With clear interoperability standards, businesses can confidently develop real-world use cases, ensuring tokenized assets can transfer across systems not just technologically but also legally.
Solution 3: Lay the Foundation for Mainstream Adoption of Tokenized Assets
To bring more mainstream users into the world of tokenized assets, clearer rules are needed on how these products can be offered to the public safely and compliantly. While public interest in tokenized assets is growing, many institutions remain constrained by regulatory frameworks that were not designed with tokenized finance in mind.
Policymakers now have the opportunity to lower these barriers by introducing new frameworks that allow greater retail participation without compromising trust or oversight. Measures include refining licensing pathways for tokenized product platforms, clarifying eligible asset classes, and establishing uniform standards for risk disclosure, custody, and investor protection.
These changes will boost issuer confidence in offering tokenized assets to the public while helping consumers better understand these products. Combining public education, transparency, and responsible distribution mechanisms will ensure tokenization benefits not just institutions but everyday users.
Conclusion
Tokenization is a once-in-a-generation opportunity to modernize financial markets. The technology is ready, and institutional demand is real. What’s urgently needed now is a regulatory environment that actively fosters market growth and development.
The U.S. doesn’t need to build a system from scratch but must advance three key areas: clearly delineating regulatory responsibilities, legally defining digital assets, and creating viable market pathways for tokenized products. The GENIUS Act, upcoming market-structure bills, and the Tokenization Report Act point in the right direction—now it’s time to act.
With the right legal framework, the U.S. can establish a trusted, secure, and scalable tokenized asset market, leading the global evolution of tokenized assets.
