4 Tenets of Tokenization | Barath Jawahar | ETHMumbai 2026

Hey everyone. Okay. Uh so yeah my talk is on tenets of tokenization. Uh my name is Barat. I just want to get a sense of uh how much you know usage there there is in the crowd for crypto today or or here who all have used u stable coins in in their in in their in their life.

Okay, great. Uh, who all have uh used uh tokenized other sort of real world assets like equities or real estate or something like that. Okay, so that's like pretty decent. To be honest, I expected less cuz I've rarely touched it like once or twice in in practice. Uh it's mostly stable coins.

Um so before I sort of get into uh the tokenization aspect I just want to talk a bit about BitGo um and where it sort of started from. Uh so not sure if it's completely legible here but you can see uh just a list of all the hacks and attacks that have happened in crypto over the last um you know 15 years. Uh hopefully people here weren't really affected by it but I would say that this is still the number one uh you know downside of crypto uh as compared to real world assets today because it's so easy to lose crypto and you can see that over the years this hasn't really sort of decreased or at least the graph doesn't seem to show it but at the same time crypto's value has increased quite a bit and uh usage also has increased over the last 15 years. So maybe it's not sort of super reflective in this graph, but uh since the value has increased, I do think that you know theft and and crypto hacks have decreased in comparison to it. But this was the problem that sort of BitGo set out to solve back in 2013.

Uh so those of you who are not familiar with sort of the product itself largely it starts as a multi-IG wallet which is um you know there's no single point of failure uh in a multi-IG wallet in which the crees are created in different areas and the transaction signing also is not concentrated in one place and that adds a layer of security uh to the product and that's the base with which BitGo kind of started. But on top of that, we've built a lot of layers uh you know and services uh to to provide uh folks that use BitGo. So at the bottom is what I talked about self-custody wallets. So pretty proud to say that BitGo has you know multi-ig wallets, MPC wallets, hot wallets, cold wallets, self custody, qualified custody and different sort of mismatches of these things that you can think of. So for example, you can have you know a cold self-custody wallet uh which is MPC very possible uh or you can do different mismatches of these combinations to set up the different types of wallets that you want.

Uh on top of that there is a layer of qualified custody. uh the qualified custody aspect plays a pretty key role largely because uh it's you know uh tries to cut away from the the bankruptcy protection that you don't usually have in most other cases. So in previous cases of hacks such as sort of the FTX hack in which uh when FTX went bankrupt you know users actually lost money but in the event that bit goes bankrupt uh you know user deposits are unaffected largely because of qualified custody uh regulation. Um yeah so on top of that uh we also have a layer uh which you know you can trade lend borrow um stake and do collateral management using the qualified custody so that you don't really have to take your assets out and on top of that we do have our team here who have led different parts of the stack so we have satu who's leading stablecoin as a service and we also have siraji in the crowd here doing uh token management uh so we do have different services on top of the prime layer as well. Uh so largely this talk is around stable coins and and tokenization.

So over the last couple of years we've created a product in which other companies can launch stable coins in different markets and based on that here are some sort of predictions on what we think that the the tokenization market will uh will go to. Um oops yeah so uh just a bit about me uh I'm largely involved with Ethereum wallets and multi-seg wallets since 2016 and uh you know we do have a large office in Bangalore as well. So uh the first prediction that I I would like to make is firstly like real world assets are set to grow uh over a 100 times in the next 5 years. Uh this actually might seem like a pretty big number, but if you compare it to the total market of real world assets, uh we are right now less than 0.01% of the total market.

So growing 100x is actually not really that big a deal. Uh and as you can see like the total market cap of these things right now is close to 25 billion. And this is of course like not counting stable coins, not counting stable coins as a real world asset, everything else. So uh you can see that US treasury debt is a huge part of it. We have a lot of companies looking into this today.

Uh we have Onondo, Circle, Black Rockck, some of the big US majors looking into tokenizing treasury. Uh then we have commodities uh largely led by gold. So we have tokenized gold and the two biggest products that we have today I think are from Paxos and Tether. Both have uh gold representations on chain. Uh then finally we have the you know much smaller ones are equity markets though equity market globally is is pretty huge.

Uh the equity tokenized market is again very very small you know probably like onetenth of one bip of the total market. Uh and in even within the equity market we have public equities and private equities. So before uh yeah why do you know do I think that it's going to go 100x largely it depends on sort of some of the use cases that we can find with tokenization of such assets. Um one of them is uh you know I I won't go through all of these but in general like you know accessibility is a huge deal. So right now you know equity markets are uh tied to a particular geography.

They're only tied to a certain number of investors and they only trade in a few locations. This is both bad for suppliers and the traders on the supply side. So people who actually issuing equities want you know their stock price to be high but right now with such a fragmented market this is not the case. Additionally from the people who want to buy equities uh you don't really have an easy way to do so. So accessibility is is a huge bottleneck.

uh even with private equities this is you know set to you know be more accessible with tokenization. Uh there are other aspects of tokenization that really help as well. Uh I would say like 24/7 uh trading is something that we're used to in crypto which doesn't exist in equities today. Uh this is both a possibility with tokenization though it kind of comes with a lot of caveats as well. One of the things that you know or the big challenges that we have with tokenizing of equities is that you know just if events happen on the weekends that cause huge price fluctuations that is just very hard to handle when you have two different markets.

uh it was it's going to be a huge deal for market makers but at the same time it's also going to be a huge deal in in the way that you know markets move over the weekends and how it affects uh you know the Monday price of of that particular stock. Uh other actions are also quite complicated in the current equity market in particular stock splits and dividend payouts. There's huge confusion around how exactly to implement this in a tokenized format. Uh because currently the way that it works, it's kind of like trading stops. These stock splits and dividend payouts happen and then it kind of resumes.

This sort of stop and start model in which we have particular permissioned players uh acting in order to execute these things are probably not what we want in a tokenized model. uh there are other challenges as well uh such as voting and governance which are closely tied to privacy but I'll just quickly talk about privacy in uh in a later slide. Um yeah so uh I also want to quickly touch upon sort of the life cycle of any sort of tokenized real world asset but in particular let's just talk about equities just for you know lack of confusion. uh starting off with origination and then structuring. Today we see there are two main ways that you know equities are being structured.

One is direct issuance onchain and this is pretty rare. Right now it's being done by securitize for a few companies. I think Galaxy was a recent one uh and even bitgo has the possibility of issuing directly on chain in the future. But again there's very like three or four companies purely in crypto that are doing this. The more common method of actually launching a you know tokenized security is through an SPV model.

So what really happens there is that there's a company that you know buys tokens uh in the public markets and then what the tokenized equity really is is not a direct access to those companies but to the SPV in the middle. So many of the voting rights as well as even price might be slightly different in this sort of you know step market flow of equities. But these two models exist today and it looks like as if the sort of the SPV model is something that is probably going to gain more traction at least in the near term but direct issuance could be something that takes a much longer time. Um the third is distribution. So one of the main reasons that equity and sort of real world assets don't see that much distribution today is largely due to permissions.

Uh in the stable coin world there's really no permissions in order to transfer assets in a secondary market. But in real world assets there is you know restrictions placed on these permissions. There are some assets that trade today which don't have permissions uh especially in US treasury bills but largely equity markets do need permissions and this is still a very tricky aspect to solve in order to reach mass adoption. Uh finally um sorry going back uh yeah servicing I talked about this in terms of uh dividend payout and stock splits and so on and redemption and burning is also a key factor especially if certain geographies can actually you know actually do the redemption as opposed to other geographies that can't. Um yeah uh so point number two uh we'll just quickly talk about stable coins as well.

uh largely today stable coins are used as crypto settlement rails for crypto trading and um I think over the next at least 5 to you know 10 years we'll see a lot more use cases globally come up for stable coins and I think the tech has always been there it's just that regulation is sort of catching up to this uh some of the other use cases that we'll most likely see is that you know stable coins are going to be used to settle you know other kinds of trade uh uh there's going to be remittance and and payroll operations as well as uh a hedge against inflation in certain countries. Uh but all this is again very hellbent on on the privacy bottleneck which we probably need to solve from a technology side. Uh so anybody has used this? All right, great. Actually I'm I'm quite curious to know everybody's opinion on this.

I still don't understand sort of how this is different from UPI for the most part at least from the use of it. I do understand from a technical standpoint it's slightly different in the back end but when I when I tried to use it I couldn't really find any difference. So, I'm not really sure where this is headed, but uh you know, currently in the stable coin market, even with permissionless stable coins that exist today in in euros and other currencies, the USD dominates easily more than 99.9%. So, even if we did launch an INR stable coin, I which is permissionless, which is hard to do, uh I do think that we will struggle uh when we did launch.

Okay. Lastly, I want to talk about some of the regulation that's come up in the US uh around stable coins. And I think that this is uh sort of a precursor to what might come up with real world assets in the future. Uh first is the Genius Act which has already been enacted. Largely touches on you know certain participants can actually issue stable coins with holding very liquid assets in the back end.

In particular, this just means cash and treasury bills. Additionally, uh you have to report uh you know audits every every week actually even though it's mentioned as every month here. Uh but then on top of that uh a large kind of fight that's happening right now is reward payout in terms of stable coins. In some cases, rewards are already being paid out today, especially at Coinbase and I think there are a few other ono stable coins that get rewards. But according to the Genius Act, that is actually uh not allowed.

Uh I do think that future acts will make it so that reward payout for stable coins is going to become a thing uh at least within the next few years. Uh the next one is the Clarity Act uh which I think that is still stalled uh largely. It classifies uh assets as being cryptocurrencies or commodities and it also you know kind of provides a path where one can move from one to the other. The main difference is that the CFTC is much easier to work with than the SEC and so everybody is trying to you know move away from being classified as a crypto and more as a commodity. Okay.

Uh yeah. So a third prediction that I want to sort of call out is uh you know onchain privacy uh will become more mainstream in the you know current market today. There are four main ways that onchain privacy is being enforced. Uh I won't really get too deep into each of these mechanisms but uh you know privacy pools led by tornado cache rather infamous uh is is a huge deal. Uh the second one is trusted execution environments which I think Vitalik briefly mentioned in his chat today.

Then we have ZK roll-ups which kind of I would say combine a bit of the tech and privacy pools with rollup technology to have both private and public state and they achieve privacy in a different mechanism. And then finally, fully homorphic encryption tries to achieve privacy on public chains like Ethereum and Solana so that you don't have to go on to another chain in order to achieve privacy. Okay, last one and the last point that I want to mention is sort of the convergence of ICO and IPO mechanics. So over the last I would say like you know 10 years the ICO you know way of raising money has been much much more lucrative than than IPO mechanisms largely because like you can basically raise a large amount of funds with very little revenue in the ICO model. I don't think that you know it both of these will converge in the way that the equity tokens and the tokens operate.

uh but at the same time the mechanics of the auction are pretty much the same today as we see in IPOs. So largely you have a certain amount of tokens that are held by employees. Second there is uh you know certain amount of qualified investors who try who can get in early in order to bid uh for that particular token. they set a particular you know limit price as well as their budget in which they want their tokens filled. Uh this largely removes other problems that we had previously in terms of lastm minute bids or um you know someone frontr running your auction.

Uh these mechanisms kind of basically solve many of those problems that we saw in earlier ICOs. And finally, you do get a final price for the end retail, which will then also make a direct market in many DeFi apps. So, I would argue that the ICO mechanism for actually, you know, launching uh uh an asset is in fact like probably superior to the IPO mechanism that we see today. Um and uh yeah, that's my presentation. Um thanks everyone.

Uh, I'm not sure if anybody had any questions or thoughts. If not, I can hand it over to the next one. Oh, yeah.

Hello. Okay. So, you told that our WAS will heavily real uh rely on the S SPVS.

Yeah. Uh and I think bid go has their opensource something related to the wallets and all but u are they looking like to develop something for the SPVS as well? Um

not yet. Um, I mean, I think that it's still a pretty nent market and we do have the ability to launch stable coins in with the BitGo SDK, but not really tokenized real world assets uh through SPV. Uh, we don't have that mechanism right now in many of the BitGo products, but it's something that we're definitely looking into. We do have some announcements on this front

but it's not been announced yet.

Yeah, exactly. Right.

Hi. Uh my question is not regarding VidGo or anything personal. I just wanted to get your thoughts on uh see if I'm coming from a traditional market. My uh main concern is about uh when you talk about tokenization, how do you see the secondary market which is a big problem statement. Then the the second part of the problem is fear uh this thing and suppose if I put the tokenization what you talked about the equity market imagine a 2008 like a scenario uh what happened in a week's time would happen in seconds you'll have depleted and there's no responsibility so how do you address because when you talk about um compliance regulatory practices and see if you have a T1 T2 T3 kind of delays in payment that basically is what it's ensuring is that it's ensuring compliance multiple levels and it can block and you can stop that flow.

So as somebody who is working in that ecosystem, how do you visualize this? What would you be? Because see it's very easy to say there's a I'm at 0001% of that this thing. But if I have not come to that 100 100x or something there is a reason why we have not done it right. What's your thought process?

I'm not challenging. I'm asking how do you perceive it?

Yeah. Yeah. Um sorry I will answer. What was your first question again?

Secondary market

uh secondary markets. Okay. Okay. Got it. Got it.

Yeah. Yeah. I mean I 100% agree like the reason that it hasn't reached 100x already and it's not even at a small scale as stable coins is because of all these challenges and restrictions that are there in the market. uh the secondary market for equities. I think that largely like there are only a few use cases that people you know really want in the in the secondary market.

One of them is access to private equity. Uh so this is sort of I think there is some demand for this but even that it's only for a few very famous companies. So for example, I think OpenAI and SpaceX were two companies that had private equity token launches in Europe, I think a few months ago, and that was reasonably successful with Robin Hood. Uh so that's one use case. Uh the second use case is like secondary market trading onchain as opposed to offchain.

Uh right now it doesn't feel like there's that much difference. So if you did have access to centralized exchanges in order to trade equity, you'd probably just get better execution and better prices there as opposed to decentralized markets. Uh the large one is really about getting you know global access to equity. I think that that comes down to permissioning. Um since regulators and sort of people who are launching equities really need to know who are the holders of those equities, we probably need to have a standardized mechanism of permissioning uh globally that needs uh you know approval so that you know this market can become something that everybody can agree to

journey. I have no doubts but when you Yeah.

Agree.

Yeah. Yeah.

Yeah. There's no success story. That's true.

I think largely Yeah. like these two problems like just a global permissioning system in which people know how they can do this in the blockchain is is definitely one of those things and second it's probably only going to be useful for a few number of assets even within the real world asset like I don't think real estate is actually going to be the one that really moves the needle here again it's going to be probably some amount of equities but also very specific ones uh which are rather famous and people want to buy in different parts of the globe. I think there's nothing.

Oh, I'm so sorry. Um, that's about it. I'm sorry. We can go on and on about this but these are my thoughts.

Yeah. Yeah. For sure. Uh okay. So, so I also want to address your second question which is sort of the uh the challenge with regards to you know a large scale movements which I did think you know mentioned was a problem with real world assets with large scale movements especially on the weekends or downtimes and how do you kind of match two different markets uh one which is stuck without moving and one which is stuck and it's completely moving.

Yeah, this is a huge challenge especially for market makers. I don't really think it's too much of an issue with you know for people trading like retail trading but you know market makers have to hedge their bets and in the event that they're hedging their bets and something huge happens in sort of off times this is a huge problem. uh largely I think that this will be solved by sort of how it's been solved I would say in terms of real-time betting there will be like times in which you cannot trade and it'll be locked even on chain it just has to be the case uh so previously if you look at like kind of betting on real world events basically it used to be something you know it wasn't real time where there was an event at time X and you could lead you know bet up to time X - 5 and then during the event again you cannot bet but over time we've come up with systems at least in betting in which during the event as well you can bet and those things move at a much slower pace and there are huge restriction placed on when you can place those bets. So similarly, I do think that even in a freely traded 24/7 market such as tokenized equity, there will be large restrictions placed in order to help market makers manage both centralized uh exchanges and uh DeFi trading. Okay.

Uh thanks for the questions folks. Uh and yeah, catch me uh outside the talk if you want chat. Thanks. Hey, baby.