According to CoinDesk, in the world of crypto, digital assets, and the dream of decentralization, the middleman remains a significant figure. Despite the emphasis on peer-to-peer networks and unmediated transactions, intermediaries continue to play a crucial role. They either extract rent for their services or maintain order in the chaotic landscape. Whenever there is a hiccup, a wallet vulnerability, or a glitch in a smart contract, someone must step in to update and secure the system.

As markets mature, the hope is that the role of intermediaries becomes less overpowering. Bitcoin and Ethereum, the titans of decentralization, have vast networks with developers who troubleshoot problems out of duty or altruism. While scale may soften the blow of centralization, intermediaries never truly vanish; they merely transform. As we venture into the tokenization of real-world assets, the concept of intermediaries takes on new dimensions, especially in regulation. Sandbox regimes are emerging across various jurisdictions, making it clear that Central Securities Depositories (CSDs) will persist and may become more central than ever. International CSDs are poised to take on an even more crucial role.

Some dismiss these tokenization efforts as mere theater, arguing that these tokens are not natively minted on a blockchain but are representations of assets still residing with intermediaries. Non-native tokenization hinders the full potential of the technology, limiting its ability to unlock a streamlined, decentralized future. However, these efforts offer a starting point that allows industry players to engage with Distributed Ledger Technology (DLT) while keeping one foot in the world they know. Regulators are comfortable with the redundancy of a CSD’s internal ledger, which must be reconciled against a blockchain that is theoretically immutable and automatic by design.

Efficiency is not always the endgame; stability and familiarity are. Complaints may fall on deaf ears, and the challenge for industry participants is to show how tokenization, even within this framework of intermediaries, offers a path forward. Behemoth asset managers are forging this path, grappling with the limitations of blockchain technology: limited scale, lack of interoperability, and a glaring absence of privacy. Despite these obstacles, tokenization is managing to realize its potential, providing tangible operational efficiencies in the real world. It may not be about erasing the middleman but reshaping their role, refining the interplay between old-world institutions and new-world technology until native tokenization finds its rightful place. In the meantime, blockchain-based financial market infrastructure is already a reality, though never entirely trustless. And that is a reality you can take to the bank.