July 22, 2026. Franklin Templeton's Chetan Karkhanis, who leads digital asset partnerships across Asia-Pacific, sat down with Bitcoin.com News to explain why tokenized real-world assets keep missing their breakout moment despite years of institutional buildup.
The firm manages $1.78 trillion in assets as of May 31, 2026, and is actively building blockchain-based investment products. That makes Karkhanis's candor about the sector's limits worth noting.
His first target was standards. Tokenized funds, securities, and cash instruments have cleared the proof-of-concept stage, but they now run across incompatible Layer 1 blockchains, different interoperability protocols, and a patchwork of permissioned and permissionless networks. "From a technology standpoint, the biggest challenge is probably ubiquity of standards with the product set," he said.
Assets and payments frequently live on separate networks. Settlement can happen via stablecoins, tokenized bank deposits, or CBDCs, each governed by its own ruleset. "Even simple tokenized cash products lack common rails of convergence," Karkhanis added.
The Bank for International Settlements has already mapped out what a fix could look like: interoperable networks linking tokenized assets with central bank reserves and commercial bank money, cutting reconciliation time and enabling programmable settlement. Without shared infrastructure, those gains stay locked inside individual platforms.
Technology, though, may not be the hardest wall to break through. Cross-border regulatory inconsistency determines where a product can be sold, who is allowed to hold it, and how custody gets treated in each jurisdiction. Karkhanis was direct: "The larger challenges are likely regulatory clarity across borders and really awareness, adoption and education, which could lead to greater adoption of tokenized RWA if done right."
IOSCO flagged the same cluster of problems in its November 2025 tokenization report, listing regulatory treatment, interoperability, settlement arrangements, and operational dependencies as barriers that haven't shifted much despite rising issuance volumes.
Distribution is the third friction point. Traditional asset managers hold existing investor relationships and proven sales channels. Digital-native platforms could theoretically pull in new capital and new participants, but they haven't yet matched the reach of legacy networks.
Karkhanis argues that raw issuance numbers are the wrong scorecard. Investor participation rates, secondary market liquidity, and actual portfolio allocation tell a cleaner story about whether tokenized assets are working in practice or just existing on paper.
This article is for informational purposes only and does not constitute financial or investment advice.
