BitGo: Asset Servicing, Not Custody, Is Key Hurdle for Tokenized Securities

The crucial barrier to moving tokenized securities at an institutional scale is not the custody of the digital tokens themselves, but rather the complex asset servicing required for the rights and obligations attached to them, a BitGo executive said this week.

Eugene Hahr, vice president of product at the digital asset custody firm, told Investing.com that while holding the token is a “solved problem,” the industry is now grappling with the more intricate details of onchain asset management.

The Servicing Challenge

According to Hahr, the focus for institutional readiness has shifted from secure storage to the operational mechanics of the assets. The key unresolved issues involve ensuring the underlying claims and rights survive when a tokenized asset changes hands.

He highlighted several critical questions that need uniform solutions:

• Can a dividend or proxy vote reliably reach the end wallet holder?
• Can an onchain position be reconciled against the underlying asset on a daily basis?
• In the event of an intermediary's failure, whose balance sheet does the asset reside on?

“What is not uniformly solved is everything attached to the token: what claim it represents, who is obligated on that claim, and whether the claim keeps working when the asset moves,” Hahr explained.

Ad

A Tale of Two Approaches

Hahr noted that regulators in the U.S. and U.K. are approaching tokenization from different directions. The U.K. began with infrastructure through its Digital Securities Sandbox, a program supervised by the Bank of England and Financial Conduct Authority to test issuance, trading, and settlement.

In contrast, Hahr said the U.S. “has come at it from the trading end,” citing a recent U.S. Securities and Exchange Commission order that grants a conditional exemption for onchain venues, while leaving post-trade functions on existing rails. “I would not call either one ahead,” he said, noting both jurisdictions ultimately face the same questions about settlement and failure resolution.

Institutional Outlook

Conversations with BitGo's institutional clients “have become much more practical,” Hahr stated. Banks and asset managers are seeking to custody various digital assets—including cryptocurrencies, stablecoins, and tokenized securities—without creating separate operating models for each.

Hahr observed that these institutions are asking detailed questions about compliance controls, transfer rights, and settlement processes, aiming to fit tokenization within their existing risk and operational standards. He added that while many tokenized equities are currently just “wrappers” on conventionally settled shares, assets like tokenized money market funds, treasuries, and private credit are already in production.