Tokens Face Credibility Crisis Amid Structural Flaws and Governance Gaps

The token, once the beating heart of crypto innovation, is currently facing a deep crisis of credibility. Many in the crypto community argue that tokens have failed to deliver sustained value, with most token prices lagging far behind Bitcoin’s meteoric rise. According to Daniel Taylor, head of policy at Zumo, the issue stems from structural misalignments in how tokens are issued, structured, and governed [1].

The failure of tokens is rooted in three key problems. First, token allocation has increasingly favored private investors and project teams, leaving retail investors with a small fraction of early-stage assets. Second, investors often treat utility and governance tokens as passive investment vehicles, failing to engage with the protocols they govern—such as staking or liquidity provision—which are typically where value is created. Third, token markets remain largely disconnected from traditional asset classes, lacking legal frameworks that allow tokenized equities, bonds, or real-world assets (RWAs) to be traded with the same legitimacy as their non-tokenized counterparts [1].

Despite this, there is growing optimism about the future of tokenization. Regulatory efforts, particularly under the EU’s Markets in Crypto-Assets (MiCA) framework, are providing a clear legal structure for token offerings. This has already led to a resurgence of public fundraising models that emphasize transparency and accessibility, reminiscent of the early days of initial coin offerings (ICOs) [1]. In the UK, a similar regulatory approach is emerging, emphasizing that whether a token is classified as a utility or a security, the same standards of disclosure and investor protection apply. This regulatory clarity is forcing better token design, ensuring that tokens are built with real value for holders in mind [1].

Perhaps the most promising development lies in tokenized real-world assets (RWAs). Unlike crypto-native tokens, RWAs represent legally secured and verified assets such as real estate, commodities, or traditional financial instruments. The expansion of this sector hinges not on technology, but on legal and governmental support. As major firms like BlackRock begin to tokenize real-world assets and governments integrate tokenization into financial infrastructure, the scope of token-based investment is expected to broaden significantly [1].

The convergence of these trends—regulated token fundraising, improved token design, and the emergence of RWAs—points to a future where tokenization is deeply embedded in capital markets. Retail investors, once sidelined, may soon gain direct access to a diversified range of tokenized assets. While the road ahead requires purging inefficiencies and rethinking tokenomics, the token is far from dead. It is, instead, undergoing a necessary reinvention [1].

Source:

[1] title: The token is dead, long live the token

(url: https://cointelegraph.com/news/token-is-dead-long-live-token?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound)