Franklin Templeton executive Chetan Karkhanis, who leads digital asset partnerships in Asia-Pacific, identified fragmented blockchain standards, regulatory inconsistency, and distribution gaps as the primary barriers preventing tokenized assets from achieving scale. Franklin Templeton reported assets under management of $1.78 trillion as of May 31, 2026, and is among major asset managers developing blockchain-based investment products. Despite technical readiness, tokenized funds, securities, and cash instruments remain limited by differences among Layer 1 blockchains, interoperability systems, and permissioned versus permissionless networks.
Fragmented Blockchain Standards Limit Tokenized Asset Scale
Karkhanis described the technical challenge in an exclusive interview: "From a technology standpoint, the biggest challenge is probably ubiquity of standards with the product set." Assets and payments often operate across separate networks, while settlement may involve stablecoins, tokenized bank deposits, or central bank digital currencies governed by different systems. "Even simple tokenized cash products lack common rails of convergence," Karkhanis noted.
The Bank for International Settlements outlined how interoperable networks connecting tokenized assets with central bank reserves and commercial bank money could reduce reconciliation, support simultaneous settlement, and enable programmable transactions. Without common infrastructure, those benefits may remain confined to individual platforms.
Regulatory Gaps and Distribution Constraints Restrict Adoption
Inconsistent cross-border rules determine where products may be sold, who can own them, and how custody and settlement are treated. Karkhanis stated: "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."
The November 2025 tokenization report from the International Organization of Securities Commissions identified regulatory treatment, interoperability, settlement arrangements, and operational dependencies as persistent barriers. Established banks, brokerages, advisers, and fund platforms already provide custody, reporting, and access to retail and institutional capital. "Traditional distribution platforms are not all there yet. Some are experimenting and launching POCs but not at scale commercial deployments," the Franklin Templeton executive remarked. "The technology exists, but liquidity in tokenized RWA and issuance is minuscule compared to traditional assets."
Traditional and Digital Distribution Channels Could Coexist
Karkhanis said: "I believe there will be a diversity of offerings -- both incumbents and DeFi next gen players will have an opportunity to participate." Incumbents retain most investor relationships and assets, while decentralized finance platforms could attract newer generations of investors and their asset flows.
Familiar products, including tokenized stocks, bonds, and exchange-traded funds, may offer the clearest route to broader distribution because investors already understand their risks and returns. Franklin Templeton's Onchain U.S. Government Money Fund combines a regulated, U.S.-registered money market fund with blockchain-based record-keeping and administration.
Portfolio Use and Investor Participation Will Define Success
Karkhanis stated: "The main role asset managers like us can play at the current juncture is education and awareness building, and product appeal." Mainstream investors will continue to evaluate returns, risks, costs, liquidity, and suitability rather than the technology recording ownership.
Looking five years ahead, the executive expects blockchain infrastructure to fade into the background, with investors benefiting from tokenized products without needing to understand the underlying technology. He framed success in practical terms: "Simplifying that experience and making it seamless will ensure greater adoption and success will really be measured by the level of asset growth and investor adoption."
FAQ
What did Franklin Templeton executive identify as the main barriers to tokenized asset adoption?
Chetan Karkhanis identified fragmented blockchain standards, regulatory inconsistency across borders, and distribution gaps as the primary barriers preventing tokenized assets from achieving scale.
How does Franklin Templeton measure success for tokenized products?
Karkhanis stated that success will be measured by the level of asset growth and investor adoption, rather than by the underlying blockchain technology.
What role do traditional distribution platforms currently play in tokenized asset deployment?
Traditional distribution platforms are experimenting and launching proofs of concept but not at scale commercial deployments, according to Karkhanis.
