BitGo: Asset Servicing Is the Real Barrier to Scaling Tokenized Securities

For tokenized securities, the issue of custody—holding the tokens themselves—has largely been resolved. However, the true barrier to large-scale institutional adoption lies in everything attached to those tokens: the rights they represent, the associated obligations, and the service mechanisms that must remain intact whenever an asset changes hands. This perspective was shared with Investing.com this week by a senior executive at BitGo.

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Eugene Hahr, Vice President of Product at the digital asset custody firm BitGo, noted that as platforms like the London Stock Exchange push forward with the tokenization of equities—and as U.S. regulators gradually open the door to on-chain trading—the institutional focus has shifted from mere asset storage to asset servicing.

“The question of how to hold a token has long been solved,” Hahr said. “What hasn’t been uniformly addressed is everything that comes with the token: what rights it represents, who is obligated to uphold those rights, and whether those rights remain functional when the asset is transferred.”

He pointed specifically to an order issued by the U.S. Securities and Exchange Commission (SEC) on September 17. According to Hahr, this order provides a conditional, time-limited exemption from exchange registration for certain on-chain trading venues—provided that the tokens carry the same rights as the underlying shares and do not involve synthetic exposure.

The real challenge, he explained, lies in ensuring that dividends or proxy voting rights reach the wallet holder, that on-chain holdings can be reconciled daily against the underlying assets, and that it is clear whose balance sheet the assets would fall onto should a financial intermediary encounter difficulties.

Regarding the competitive landscape between the U.K. and the U.S., Hahr observed that the two regions are taking fundamentally different approaches. The U.K. is starting from the infrastructure layer, utilizing a “Digital Securities Sandbox”—overseen by the Bank of England and the Financial Conduct Authority—to test the issuance, trading, settlement, and servicing of these assets. The U.S., by contrast, is “approaching from the trading side,” while leaving post-trade processes to operate within existing, traditional frameworks. “I wouldn’t say one side is further ahead,” he said. “Both will ultimately face the same set of questions: what is used for settlement in overnight transactions, and how reliable is the protection of one’s interest in the asset should a default occur?”

Hahr noted that most current initiatives in stock tokenization remain at the “wrapping” stage—where a token represents a claim on a stock, while the underlying stock itself continues to be issued, traded, and settled through traditional channels. In contrast, the tokenization of money market funds, government bonds, and private credit has already reached the stage of practical application.

Regarding the trends among BitGo’s clients, Hahr remarked that the nature of these conversations has “become more pragmatic.”

“Banks and asset managers are exploring how to unify the custody of crypto assets, stablecoins, and tokenized securities, rather than building separate operational models for each asset class,” he said.

“They are also raising more granular requirements concerning where assets are held, who has the authority to transfer them, what compliance controls apply, and how settlement is executed. Institutions are interested in tokenization, but they want it to integrate seamlessly into their existing frameworks for risk, compliance, and operations.”