Prometheum's Kaplan: Secondary Markets, Not Regulation, Hinder Tokenized Asset Adoption

Prometheum founder and co-CEO Aaron Kaplan has challenged the prevailing notion that regulatory uncertainty is the primary obstacle to the broader adoption of tokenized real-world assets (RWAs). Instead, he argues that the lack of dedicated secondary markets for buying and selling tokenized securities is the real bottleneck.

Kaplan's perspective was highlighted in an interview where he referenced Cathie Wood, CEO of ARK Invest, who recently mentioned that regulatory ambiguity is hindering her company's efforts to tokenize its funds. Kaplan, however, contends that the US Securities and Exchange Commission’s (SEC) existing frameworks, such as the special purpose broker-dealer framework and Alternative Trading System (ATS) licensing, already provide a regulated pathway for issuing blockchain-native funds.

According to Kaplan, the true challenge lies in the limited market infrastructure for delivering tokenized securities trading to a broad investor base. He noted that while the value of tokenized RWAs has grown significantly, there is still no fully public secondary market where institutional and retail investors can buy, sell, and trade these assets as they do with traditional securities.

Kaplan identified two general approaches for building out these platforms. The first involves using decentralized finance (DeFi) frameworks, similar to the initiatives by Ondo Finance, Ethena Labs, and Securitize. The second approach is integrating tokenization protocols into existing brokerage platforms that operate under SEC-registered entities.

Kaplan believes that legacy crypto and fintech platforms, already accustomed to facilitating cryptocurrency trading, will seek to broaden their offerings to include tokenized securities. However, he also noted that many traditional brokerage firms, which do not operate digitally, will not cede market share without a fight. These firms are already investing in their own tokenization initiatives or partnering with fintech and crypto firms to remain competitive.

Prometheum, as a digital asset trading and custody firm, is attempting to bridge the infrastructure gap by building a full-service digital asset securities marketplace. The company claims that securities traded on Prometheum offer reduced fees, faster settlement times, and increased efficiency.

Kaplan emphasized that traditional investors are increasingly demanding “digital native” versions of assets they are familiar with, accessible through a single ecosystem. This demand is particularly evident in the real estate sector, where luxury and commercial properties are being tokenized, and secondary markets are being established to enable the trading of tokenized shares.

The potential of tokenization has been recognized by various industry experts. A report by Boston Consulting Group (BCG) highlighted tokenization as a “game-changing blockchain use case in financial services” due to its scalability and near-instant transactions. According to BCG managing director and senior partner Sean Park, tokenization could boost investors’ annual returns by roughly $100 billion while increasing the revenue streams of financial institutions.

The World Economic Forum has also flagged the potential of tokenization, noting that roughly 10% of the global securities market is eligible for use as collateral. Tokenization, which improves collateral mobility and capital efficiency, could unlock this untapped capital and optimize intraday liquidity, allowing funds to be accessed and moved within the same trading day to meet payment and settlement obligations.