By Alexey Tartyshev
Head of Tokenization and Product Structuring, ATME
In this short article, I will look ahead and offer a vision of how private equity markets might evolve with the help of tokenization. To illustrate how tokenization could reach its full potential, let’s draw a parallel from another industry by examining how the grain market in the United States evolved in the 19th century.
The Old Market Reality
Imagine you’re a baker in need of grain. A few times each year, on designated market days, you travel to a nearby town. There, you find farmers who have arrived in horse-drawn carts, each carrying a modest supply of grain. You inspect the grain directly—running it through your hands, examining its color and texture—and then negotiate face-to-face with the farmer. Reputation and trust were crucial, because these transactions relied heavily on firsthand knowledge.
A Technological Breakthrough
Over time, however, one significant technological breakthrough reshaped the market: the railway. Tracks stretched across the countryside, enabling steam locomotives to connect once-remote farms with grain markets. Instead of arriving in small sacks, grain began pouring in by the wagonload, surpassing anything horse-drawn carts could carry. The marketplace, once defined by personal relationships and familiar faces, became a hub for buyers and sellers from various regions.
The Implications
As the railways reshaped the grain trade, the rules of the marketplace changed. Buyers who once relied on personal relationships to assess quality now found themselves navigating an entirely new reality. Grain arrived in overwhelming quantities from distant farms, often from suppliers they had never met. Checking the grain quality in a wagon was not feasible technically and one wagon could have a mix of grain from various farms.
A Market Transformed
Faced with these challenges, the Chicago market devised a groundbreaking solution: standardization. To address the issue of quality uncertainty, a system of grain quality grades was introduced. Large storage elevators were designated for each grade, ensuring that every deposit met a predefined standard. Sellers would bring their grain to the appropriate elevator, where market-appointed inspectors—working for a commission—would assess its quality and certify it accordingly.
This innovation revolutionized the trade. Buyers no longer needed to be experts in grain or personally inspect every purchase. Trust, which had once depended on face-to-face relationships, was now established through uniform standards and third-party verification.
The Explosion of Growth
With this newfound confidence, the market passed its physical limitations. Buyers could place orders remotely via telegraph, purchasing grain from thousands of miles away without ever seeing it. The identity of the seller became irrelevant—what mattered now was the certified grade and the market’s guarantee of quality.
The impact was profound. The grain trade, once constrained by geography and personal trust, expanded at an unprecedented pace. Standardization created transparency, enabling even those without deep industry knowledge to participate. What had once been a localized exchange between farmers and bakers evolved into one of the largest commodity markets.
With trust secured, financial innovation followed, boosting the implementation of future contracts and derivatives allowing traders to hedge risks and speculate on future prices, pushing the market into a new phase of maturity. As liquidity surged, the sector attracted increased investment, fuelling further advancements in agriculture, transportation, and storage infrastructure.
What had begun as a simple marketplace bound by face-to-face relationships had now transformed into a sophisticated, globalized system—one where technology, regulation, and financial instruments worked in tandem to drive progress.
How does this relate to RWA tokenization?
The tokenization ecosystem of today feels a lot like those early grain markets: non-standardized and fragmented.
- Regulatory inconsistency: Regulations of tokens representing real-world assets (RWAs) vary across jurisdictions—some are at an advanced stage, others remain in a legal grey zone, and many have yet to establish any framework. Just as in the early grain markets, the rules of the game are non-standardized or non-existent.
- Lack of market integration: Digital asset exchanges trading RWA tokens are rare and operate independently, with little connectivity between them. Similarly, a variety of private blockchains exist in isolation, lacking integration with one another or with public blockchains.
- Diverse underlying assets: Just as different farmers produced different types of grain, the assets represented by tokens vary widely in terms of asset class, risk profile, and return characteristics.
- Investor knowledge gap: Much like early grain traders who required specialized expertise, today’s RWA token investors are primarily tokenization enthusiasts with deep knowledge of the space. Meanwhile, the majority of investors struggle to differentiate between RWA tokens, utility tokens, and cryptocurrencies.
These gaps highlight the need for a system where token standards are globally unified, underlying asset types are categorized into risk buckets, regulations are harmonized across borders, and exchanges operate seamlessly together.
This may seem like a mere infrastructure upgrade, but—just as railways transformed the grain market—the tokenization of real-world assets has the potential to redefine the way financial systems operate.
With such a system in place, investors could trade tokens globally, selecting the best assets for their portfolios without being hindered by regulatory or legal complexities. By establishing standardization, RWA tokens could serve as the foundation for financial instruments such as futures, derivatives, and beyond.
A preview of what’s possible if tokenization is commoditizedAssume a scenario where you hold Bitcoin but need fiat to invest in a private equity deal in another jurisdiction. You don’t want to sell your Bitcoin. Instead, you could use Bitcoin as collateral through a regulated and trusted digital asset exchange to secure a fiat loan instantly allowing you to invest in an RWA token backed by a private equity fund.
This could happen seamlessly because you would only need to complete KYC verification once and onboard to the digital assets exchange just once. From there, you could select investment products that have already undergone due diligence and received approvals from reputable regulators.
Now, picture being able to do this with as little as $1,000, without needing a multimillion-dollar check or incurring the legal costs of reviewing a Limited Partnership Agreement prepared by the fund.
Imagine having instant access to tokens representing alternative investments, categorized into standardized risk buckets, which could be traded freely in a relatively liquid secondary market.
And all of this would be managed by immutable, blockchain-based smart contracts, which automate key processes—verifying your collateral’s value, ensuring asset ownership, and distributing returns directly to your wallet.
The entire process would unfold within a user-friendly digital interface, offering an experience as seamless as making mobile banking transactions.
Ultimately, having real-world assets represented as tokens, moving along the same rails as fiat and cryptocurrencies, could revolutionize the financial system as we know it today—driving standardization, broadening market participation, enhancing liquidity, and eliminating inefficiencies in capital flow.
This may sound like a distant future. But it’s not. In my estimation, it is merely one strategic planning cycle—3 to 5 years—away from becoming reality in jurisdictions with advanced regulatory frameworks. Singapore, Luxembourg, and Bahrain are prime examples of markets where these types of transactions could soon take off.