Changpeng Zhao warns: the main risk of asset tokenization is liquidity fragmentation
Binance founder Changpeng Zhao (CZ) has once again taken center stage in the discussion about the future of digital finance. Against the backdrop of the rapid growth of the tokenized real-world assets (RWA) market, which has gained 2.16% over the past 30 days and reached $38.4 billion, CZ has highlighted a key issue that could slow down the development of the entire sector.
In my analysis, this statement is particularly timely: the number of holders of tokenized assets has surged by 79.74% (to 2.379 million), indicating explosive interest from retail investors. However, it is precisely in this growth that the danger Zhao speaks of lies.
Tokenization as a tool for states
Zhao views tokenization as a powerful mechanism for attracting capital for countries. He emphasizes that issuing tokenized shares opens access to global investments and promotes the growth of foreign direct investment (FDI). Moreover, CZ is already advising the authorities of Pakistan and Kyrgyzstan on digital asset regulation, promoting this idea at the state level.
"Tokenization is one of the best ways for countries to raise money or increase FDI," he stated, wondering which country or company would refuse the opportunity to sell its shares around the world.
Liquidity fragmentation: a hidden threat
Despite the optimism, Zhao warns of a systemic risk: issuing assets on multiple blockchains at once leads to the fragmentation of liquidity. This issue has already attracted the attention of the largest players in financial infrastructure—Clearstream, DTCC, and Euroclear, together with Boston Consulting Group, have dedicated a separate report to it.
Fragmentation "locks" assets in isolated pools, increasing operational costs and reducing trading efficiency. However, Zhao is confident that the market will find a solution: "Fragmentation can be partially solved if there is high interchangeability between different issuers, and this is important."
Notably, Robinhood CEO Vlad Tenev also spoke out in support of tokenization this week, calling it the optimal way to modernize the US financial system.
My conclusion: Zhao's position reflects the maturity of the market—we are moving from euphoria to an awareness of infrastructural challenges. Liquidity fragmentation will become the main test for the industry in 2024, and those projects that offer solutions for cross-network interoperability will gain a competitive advantage. In the long term, victory will go to those who can unite, not divide.