Tokenization Projects Die Without Buyers, Brickken CEO Says

Regulatory permission has never been what held tokenization back, Brickken Chief Executive Edwin Mata on Friday said, pointing to Europe’s pilot regime where only three firms have been authorized since 2023.

Key Takeaways

Three institutions hold DLT Pilot Regime authorizations and only two are operating, with limited activity
ESMA has proposed making the regime permanent and more flexible after acknowledging weak early uptake
Mata said projects fail because nobody establishes who will buy the asset, not because the technology falls short
He expects most of the 273 registered US transfer agents to buy blockchain capability rather than build it

The SEC proposed rules in September that would let a blockchain serve as the official record of who owns a security. Europe granted comparable permission three years ago.

Three Firms In Three Years

CSD Prague, 21X and 360X are the only institutions authorized under the EU pilot regime. Two of them are live, with thin volumes.

ESMA has since recommended changes to thresholds and eligible assets to make the framework worth using, and reports 10 applications now in the pipeline.

“Europe is a very useful reminder that regulatory permission does not create a market by itself,” Mata told fathom.news in an interview.

The binding constraint was coordination, he said. An issuer can tokenize an asset and still lack investors, distributors, custodians, cash rails and secondary liquidity.

Also Read: Open Weights See Unexpected Rise to 50% Tokens, 13% Spend

The Buyer Problem

Mata, whose firm works with clients in 30 countries, was blunter about why individual projects collapse.

Teams focus on how to tokenize an asset and neglect who will buy it, he said. Legal structures hold up and the software works, but no distribution plan exists.

“Technology cannot manufacture demand that was never there,” Mata said.

Asked whether the honest answer is often that no buyer existed, he said it absolutely is, and that recognizing it early is healthier for the industry.

A Market Forms Underneath

The SEC proposal carries a cost Mata did not dispute. Proposed Rule 17ad-31 would require transfer agents to form a reasonable basis before processing unregistered transactions, turning recordkeeping into judgement. That is not automatically cheaper than paper, he said.

Most of the 273 registered US transfer agents will buy the capability rather than build it, Mata said, because operating reliably at scale matters more than owning the technology. Brickken sells into that market.