70% of Tokenized Assets Fall Short on Transparency, Report Finds | Markets Outlook

Chronicle’s report found that 70% of roughly 20 tokenized assets examined fell short of expected transparency standards. Those assets represent about $12.2 billion to $12.3 billion, making the shortfall significant not only for individual products but also for the markets and applications that may rely on them. Kate Irwin reported the findings, while Nicholas Kunkel emphasized that issuing a token is only the first step: investors and applications also need reliable information about what the token represents.

Kunkel said tokenized assets require verified data on their underlying holdings, composition and value, along with details specific to the asset, such as dividends, stock splits and governance actions. That distinguishes them from crypto-native assets such as Bitcoin and Ethereum, whose value and operation do not depend on the same kind of information about off-chain holdings and corporate actions. Without clear data about a token’s backing and relevant events, users and systems may struggle to assess what they own or how the asset is changing.

The report assesses transparency across five pillars: independence, granularity, frequency, verifiability and on-chain availability. Kunkel said the necessary infrastructure should make metadata accessible and verifiable so applications can integrate tokenized assets and manage risk. The goal is not to require an asset to be reissued whenever its data needs improve; instead, verification and accessible information should support the existing token and the systems using it.

That information is also important for decentralized finance risk management. Kunkel said protocols need verified tokenized-asset data to integrate assets and respond to market changes in real time. One respondent described limited data infrastructure as a constraint on DeFi growth: when protocols cannot adequately evaluate assets, they keep exposure caps low. The respondent framed better risk data as a solvable scalability problem, suggesting that stronger information systems could allow protocols to support more activity without abandoning risk controls.

Another respondent argued that tokenization’s utility comes from integrating assets on-chain, enabling uses such as mobility, lending, yield and borrowing. Without that integration, the respondent said, tokenization is “meaningless.” The respondent pointed to BlackRock, BNY Mellon and Galaxy as organizations that understand the value of this approach, and argued that regulation should treat assets consistently whether or not they are represented in crypto form. The respondent also acknowledged that regulatory scope still needs to expand.

Kunkel said tokenized assets are growing by multiples annually and described tailwinds coming from multiple directions. He said tokenization could rebuild the financial system by putting all assets on-chain, but the report’s findings highlight a condition for that vision: issuance alone does not ensure transparency or practical usability. One respondent said tokenized funds should provide transparency comparable to traditional funds’ audits and public reporting, while potentially allowing second-by-second visibility into backing. That would be more frequent than the monthly, quarterly or annual audit cadence the respondent described for traditional finance.