Changpeng Zhao: The main risk of tokenization is liquidity fragmentation
Binance founder Changpeng Zhao (CZ) has once again drawn attention to the rapidly growing market for tokenized real-world assets (RWA), highlighting a key issue that could slow the development of the entire industry. In his view, issuing digital assets simultaneously on multiple blockchains poses a serious threat — liquidity fragmentation, which ultimately reduces market efficiency.
Tokenization as a magnet for capital
Amid the sector's upswing, when the value of tokenized real-world assets reached $38.4 billion, Zhao is actively promoting the idea of using tokenization as a tool to attract investment. He emphasizes that this is one of the best ways for countries to increase foreign direct investment (FDI) inflows by selling tokenized shares to a global audience. Zhao is already advising the authorities of Pakistan and Kyrgyzstan on digital asset regulation, and in June he made similar proposals to the governments of these countries.
The market, meanwhile, is showing impressive momentum. Over the past 30 days, the value of tokenized assets has grown by 2.16%, and the number of holders has increased by 79.74%, reaching 2.379 million. At the same time, the total value of listed assets has declined by 4.66% to $342.63 billion, indicating a redistribution of capital within the ecosystem.
The fragmentation problem
Despite supporting tokenization on any blockchain, Zhao warns of the risks associated with issuing assets across multiple networks at once. This issue has already drawn the attention of the largest players in financial infrastructure. Clearstream, DTCC, and Euroclear, together with Boston Consulting Group, dedicated an entire report to this problem, noting that fragmentation "locks" assets in separate pools and increases operational costs.
Zhao himself sees the solution in high interchangeability between different issuers. "Fragmentation can be partially solved if there is high interchangeability between different issuers, and this is important," he wrote, expressing confidence that over time market participants will learn to interact better with each other.
Interestingly, Zhao is not alone in his optimism. Robinhood CEO Vlad Tenev this week called tokenization the best way to modernize the U.S. financial system.
My analysis: Liquidity fragmentation is a systemic challenge that could become the "Achilles' heel" of tokenization. Without standardization and interoperability, we risk ending up with a fragmented market where liquidity is scattered across many isolated ecosystems. However, as the history of cryptocurrencies shows, the market knows how to self-organize, and initiatives to create unified standards could become a catalyst for the next wave of growth.