Michael Burry's Reversal: Why a Former Crypto Skeptic Is Eyeing Tokenization

Michael Burry, once a vocal Bitcoin skeptic comparing cryptocurrency to the infamous tulip mania bubble, has quietly signaled a significant shift in his thinking. His recent sharing of a tokenization article on X marks a notable departure from his previous public criticism. The piece itself frames tokenization as a burgeoning multibillion-dollar force in finance, arguing it could transform how assets move globally. This pivot sparks debate about whether the technology has finally matured beyond the speculative excesses Burry once condemned.

The core of Burry's renewed interest appears to lie in tokenized stablecoins and their potential role. He acknowledges their function as tools to potentially strengthen the U.S. dollar's global standing. Proponents, including Burry now, argue tokenized dollars enable real-time asset transfers with unprecedented speed and efficiency, building on interoperability advances. This perspective contrasts sharply with his earlier crypto skepticism, suggesting he sees distinct utility in asset tokenization separate from cryptocurrencies like Bitcoin.

Burry's reconsideration gains weight alongside institutional endorsements. BlackRock CEO Larry Fink has explicitly compared tokenization's potential to the internet's early stages, signaling broad market acceptance. Fink's backing underscores a growing view that tokenization represents a foundational shift in financial infrastructure, not just another speculative asset class. This convergence of shifting views from prominent figures creates a powerful narrative about the technology's maturation and potential strategic value for investors.

However, Burry's pivot alone doesn't erase underlying frictions. The technology still faces regulatory uncertainty, especially concerning stablecoin issuance and cross-border transfers. Its long-term impact versus traditional finance remains debated, and widespread adoption hinges on overcoming scalability and interoperability hurdles. While Burry and Fink point to the upside, these practical challenges mean tokenization's ultimate role in strengthening the dollar or revolutionizing markets depends on navigating complex technical and regulatory landscapes.

Tokenization's Accelerating Traction

The tokenization market is moving from niche experiments toward broader commercial viability. Global revenue hit $3.32 billion in 2024 and is forecast to expand at an 18.3% compound annual growth rate through 2032 according to Fortune Business Insights. This momentum is amplified by Deloitte's even more ambitious real estate projections, forecasting the tokenized segment growing from under $0.3 trillion in 2024 to a staggering $4 trillion by 2035-a 27% compound annual growth rate. These figures signal a profound shift beyond speculative digital assets into tangible economic activity.

Fractional ownership is a core driver fueling this expansion. It unlocks liquidity for traditionally illiquid assets like real estate and private funds. Deloitte specifically highlights targeted penetration rates, anticipating tokenized private funds will reach 8.5% of the market by 2035, while securitizations are projected to hit 0.55%. This structured penetration reflects increasing institutional confidence and the potential for standardized models.

However, the path isn't without obstacles. Regulatory clarity remains a significant hurdle. Deloitte flags uncertainty around default resolution mechanisms and legal frameworks governing tokenized assets as major challenges. Technical integration complexities also persist, as noted by Fortune Business Insights, hindering seamless adoption across diverse blockchain protocols and existing financial systems. Early adopters, including firms like Kin Capital and Redwood Trust, are actively testing solutions for compliance automation and liquidity, but widespread market adoption hinges on overcoming these friction points. The growth potential is immense, yet its realization depends significantly on resolving these foundational regulatory and interoperability issues.

Risk & Guardrails to Adoption

Building on the early momentum of tokenization, significant risks and regulatory gaps must be addressed for widespread adoption. FSB reports highlight key vulnerabilities, including liquidity mismatches (when assets cannot be sold quickly to meet investor demands), leverage amplification through composability, asset quality uncertainties, and interconnectedness with traditional financial systems. According to the Financial Stability Board, operational fragilities, such as smart contract flaws, and opaque project structures further complicate oversight. The Bank for International Settlements also notes these elements could threaten financial stability if tokenization scales rapidly or becomes overly complex, though current adoption levels are too low to pose material systemic risks.

McKinsey identifies transitional challenges, notably the need for infrastructure modernization and regulatory alignment across jurisdictions. According to McKinsey, tokenized assets are evolving from pilots to large-scale use, but hurdles like interoperability issues and 'cold start' problems-where initial adoption struggles to gain traction-remain significant. Regulatory uncertainty and coordination gaps among stakeholders also slow progress, despite blockchain's promise for operational efficiency.

Adoption is scaling up, with tokenized assets projected to reach a market capitalization of $2 trillion by 2030. However, this growth is tempered by persistent risks and the urgency for robust safeguards. Emerging measures include enhanced monitoring frameworks, clearer regulations, and cross-border coordination efforts urged by FSB. While high-profile successes could accelerate momentum, regulatory hurdles and operational vulnerabilities continue to pose risks, requiring careful management to prevent amplification of systemic threats as adoption accelerates.

Catalysts & Valuation Implications

McKinsey projects the tokenized asset market could reach a $2 trillion market cap by 2030, excluding cryptocurrencies, driven by adoption in bonds, mutual funds, and loans. This growth hinges on near-term catalysts like the Financial Stability Board and Bank for International Settlements' 2025 regulatory guidance, which aims to clarify cross-border frameworks and reduce fragmentation. Early large-scale adoption also relies on institutional partnerships testing liquidity models, such as Kin Capital and Redwood Trust exploring compliance automation and fractional ownership structures for private funds and securitized loans. However, the market faces significant friction: regulatory uncertainty remains a major hurdle across all regions, and achieving interoperability between diverse blockchain protocols is still unresolved.

North America currently dominates the tokenization landscape with 36.45% market share, reflecting its lead in infrastructure and institutional adoption. This early advantage may translate into valuation premiums for regionally dominant players, though the asset class remains in its "cold start" phase. Deloitte's real estate tokenization forecast shows even more explosive growth, projecting a rise from under $0.3 trillion in 2024 to $4 trillion by 2035 (27% CAGR), highlighting strong penetration targets for private funds (8.5% by 2035) and securitizations. Yet, both segments grapple with execution risks: legal ambiguities around asset control and default resolution could delay scalability, while SMEs-despite faster projected growth-face cost and integration barriers.

If regulatory clarity emerges, tokenization's efficiency gains (e.g., reduced settlement times, automated compliance) could unlock significant upside. But widespread adoption requires overcoming technical and coordination challenges. The $2 trillion 2030 target is ambitious; its realization depends on resolving interoperability issues and scaling liquidity solutions tested by early adopters. Without accelerated progress on these fronts, momentum could stall despite favorable growth projections.