In a recent conversation with The Block, Tom Jessop, the president of Fidelity Digital Assets, contended that the push to tokenize a range of assets may have its limits.
Specifically, he said he's not sure if public securities and other assets that trade on exchanges would benefit from tokenization due to the fact that such markets have sufficient liquidity.
Eventually, clients will likely seek to own public securities and tokenized assets within the same portfolio, according to Jessop. However, he said it's unlikely that those public securities will be placed on chain since the current market infrastructure is so well-developed.
"I think that where you see the application of the technologies is illiquid assets, which are increasingly becoming a larger percentage of the overall pie of financial assets that folks invest in," he said.
However, other tokenization use case present opportunities. A number of banks are looking to bring private instruments to market in the form of tokens, according to Jessop, and private real estate remains an area where tokenization can provide more liquidity.
"It's a trickle that hasn't yet become a wave, but it's something we're watching carefully," he said.