Opinion: Darren Carvalho, co-founder of Metawealth
During Paris Blockchain Week, Chief Operating Officer Michelson Nenshain created the headline by denying real estate as the best asset class for tokenization. This is not the first time that Crypto leaders have underestimated the benefits of real estate on-chain, and it is probably not the last time. While I respect Sonnenshein’s contribution to digital assets adoption, his assessment misses the fundamental point of potential transformation in real estate tokenization.
According to Statista, real estate represents the world’s largest asset class and is projected to reach $654.39 trillion this year. When industry leaders argue that this large market is not suitable for tokenization, they overlook today’s transformative infrastructure and core value propositions expanding far beyond liquidity, changing access to asset classes.
Replace traditional foundations
Sonnenshein claims that traditional assets already have a “good system.” He implies that tokenization offers at best a slight improvement, but this rating overlooks the fundamental inefficiency of today’s real estate market that tokenization deals with.
The current real estate transaction process includes several weeks of paperwork. There are several purchase fees within the UK that allow you to easily add 10% to your total invoice. The settlement period can be extended to several months, and complexity increases exponentially for cross-border transactions.
These are not minor flaws. They are systematic obstacles that tokenization technology is uniquely positioned to resolve. For example, it employs the ability to automate compliance, allowing verification and payment distribution while reducing fraud through immutable recordkeeping.
Redefine demand beyond liquidity
When Sonnenshein says, “Onchain Economy demands more liquid assets,” he misunderstands what everyday investors really demand. For 99% of people who are excluded from facility-grade real estate investments, the main task is not liquidity like Bitcoin. It is meaningful access to asset classes that have built more wealth than any other wealth over the past century.
Traditional real estate investment instruments require a large amount of minimum investment, accredited investor status, and a multi-year capital lock-up period. These barriers effectively rule out teachers, nurses and middle-class families from participating in key real estate properties that have historically provided consistent returns to investors.
Recently: Dubai Land Division launches real estate tokenization project
Tokenization fundamentally changes this equation. Splitting ownership through tokenization allowed investors to participate for just $100, receive a proportional income distribution, and ultimately trade positions in the specialized secondary market. Even if secondary market liquidity initially lags behind the secondary market, the demand for this democratized access is enormous.
Translation issues? There is not at all
Sonnenshein also suggests that tokenization does not “translate well” to represent property ownership. This valuation overlooks the innovative ability of blockchains to enable fractional investments in real estate, previously only accessible to institutional investors.
Tokenization technology excels precisely at creating transparent and secure fractional investment opportunities with minimal overhead. The $50 million housing development project can each be divided into 500,000 tokens, each with an equal share of rental income and potential valuations. This dramatically reduces barriers to entry while maintaining the core benefits of real estate as an asset class.
This division fundamentally changes the way people build wealth through real estate. Previously, REITs provided the only realistic path to diverse real estate exposures. Tokenization allows investors to build personalized portfolios across multiple property types. All of this is managed through all digital wallets.
What doesn’t “translate well” is not technology. An outdated regulatory framework and incumbent business models resist this necessary evolution. The UAE government is aware of this reality and is supported by recent initiatives to tokenize $1 billion in real estate assets.
Build the infrastructure for tomorrow
Conservative attitudes on RWA growth forecasting have missed on ongoing accelerated infrastructure development. BlackRock’s tokenized money market fund Buidl is quickly approaching $3 billion in assets, indicating a significant institutional desire for tokenized investment vehicles. This is not an isolated case.
UBS Asset Management, Hamilton Lane, Franklin Templeton and others have launched tokenized investment vehicles, showing a fundamental shift in how traditional finance sees tokenized technology.
What critics consistently underestimate is the network effects of financial infrastructure. Participants from each institution do not only add linearly to the ecosystem. Increases connectivity and liquidity pool exponentially. We witness an early stage in the self-reinforcement cycle in which each new participant reduces friction in subsequent participants.
The story should not focus on current limitations. Instead, there should be a spotlight on what is being built. With real-world assets optimized secondary markets emerging, regulatory clarity is increasing in major jurisdictions, each development strengthens the foundation of mass adoption at a pace that could surprise today’s skeptics.
Creating democratized wealth
Institutional investors have enjoyed privileged access to the most profitable real estate investments for decades, while retail investors have been limited to residential property or luxury REITs. Tokenization breaks this paradigm by allowing multiple regions to build a diverse real estate portfolio that spans commercial, residential and industrial assets.
When Crypto leaders reject real estate tokenization based solely on liquidity metrics, they apply the wrong metrics. The potential for change is to democratize access to asset classes that have produced more billionaires than any other investment vehicle in history.
The end of real estate tokenization makes institutional-grade real estate investment accessible to anyone. The adoption of tokenized real estate and other real-world assets continues to grow despite skepticism from executives who missed the forest because of trees.
Opinion: Darren Carvalho, co-founder of Metawealth.
This article is for general informational purposes and is not intended to be considered legal or investment advice, and should not be done. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or express Cointregraph’s views and opinions.
