Tokenization Has Moved From Experiment to Production: Pharos CSO

Wall Street used to look at tokenization as a science experiment. Now, it's officially the next big thing.

Maybe it should have been obvious when crypto skeptic and JPMorgan CEO Jamie Dimon made his own pivot last year. But now, crypto startups bringing stocks, bonds, and real estate onchain are some of the hottest.

For the most part, institutional finance kept its distance, wary of regulatory uncertainty, security risks, and an industry still dominated by speculation. Suddenly, according to Pharos Network Chief Strategy Officer David Dai, that era is over.

"Institutional adoption is not only happening, but it's happening fast," Dai tells Coinage in a new interview. "Most importantly, they see the path to scale."

Names that once dismissed crypto outright — including major financial institutions like Morgan Stanley — are now actively exploring tokenized assets, stablecoins, and blockchain-based financial infrastructure. Fidelity, BlackRock, Franklin Templeton, and others have already launched tokenized products or crypto-related offerings, while new legislation around stablecoins and market structure is beginning to give institutions the regulatory confidence they had long demanded.

For Dai, whose background spans Morgan Stanley, structured finance, and traditional investment banking, the move from traditional finance into crypto was less a leap than a natural evolution.

“As soon as people see the potential of utilizing, for example, blockchain or utilizing digital assets, utilizing the compliance suites onchain, there's really no turning back,” Dai said. “Because you see the efficiency, you see the improvement in the security. You see there's a composability that's basically introduced a lot of possibilities.”

Pharos, a new EVM-compatible Layer-1 blockchain focused specifically on financial applications, is positioning itself around that institutional transition. Rather than trying to compete as a general-purpose chain, the project is hyper-focused on real-world assets, onchain vaults, and tokenized capital markets.

But Dai argues the real challenge for the next generation of tokenization projects is no longer simply bringing assets onchain. It’s building infrastructure sophisticated enough for institutions to trust.

For years, crypto’s growth was fueled largely by highly incentivized DeFi ecosystems offering aggressive yields. But many of those systems, Dai argues, were never truly built for institutional-scale capital. That becomes particularly dangerous, he warned, when leverage and layered DeFi structures amplify risks across interconnected protocols.

“If the underlying assets go south where something happened to maybe some credit events happen, the potential loss will be amplified and pass through the entire value chain,” Dai said. Instead, Pharos is attempting to build around what Dai views as institutional priorities: risk management, lower-cost capital, and sustainable liquidity.

“We don't really have to have super high-yielding assets,” he said. “What we really need is a safe asset and moderate yielding assets.”

That shift also reflects a broader transition now happening across crypto markets, where the industry’s next wave of growth increasingly appears tied not to retail speculation, but to traditional financial capital finally entering the space. And according to Dai, regulatory clarity may become the unlock that accelerates everything.

For years, many traditional financial firms remained hesitant to fully commit to digital assets due to legal uncertainty in the United States. Even as stablecoins and tokenized treasuries gained traction globally, large pools of institutional capital largely stayed on the sidelines.

“There is just not enough clarity for them to [go] all in,” Dai said. But that could now be changing as the CLARITY Act moves closer to becoming law after passing the Senate Banking Committee by a vote of 15-9 last week.

“Once that is passed, it will give them confidence and ... be able to [invest in] digital assets,” he said.

Dai believes crypto still represents less than 1% of the global financial system today. But if tokenization infrastructure, stablecoin regulation, and institutional adoption continue accelerating, he believes that percentage could rise dramatically over the next several years.

Coinage is a community-owned DAO letting our NFT holders become actual co-owners in one of the fastest-growing Web3 media outlets. Mint an NFT and become a member today to open a path to patronage dividends, or stake with us to support our project.