During Paris Blockchain Week, Securitize Chief Operating Officer Michael Sonnenshein made headlines by dismissing real estate

During Paris Blockchain Week, Securitize Chief Operating Officer Michael Sonnenshein made headlines by dismissing real estate

During Paris Blockchain Week, Securitize Chief Operating Officer Michael Sonnenshein's claim that real estate is a sub-optimal asset class for tokenization drew criticism from Darren Carvalho, Co-Founder and Co-CEO of MetaWealth. Sonnenschein's assessment fails to consider the fundamental problems that tokenization solves and the vast potential it holds for democratizing wealth creation.

While Sonnenschein's contributions to digital asset adoption are valuable, his analysis misses the mark. Real estate is the world's largest asset class, set to reach $654.39 trillion in 2024 according to Statista. To claim it's unsuitable for tokenization ignores today's rapidly advancing infrastructure and the core value proposition that goes beyond liquidity.

Sonnenschein asserts that "good systems" already exist for traditional assets, an observation that misses the point. He seems to imply that tokenization offers incremental improvements at best, an assessment that disregards the deep-seated inefficiencies in today's real estate market.

Each transaction typically involves weeks of paperwork, a minimum of 10% in purchasing fees in the UK, settlement periods spanning months and complexity multiplying exponentially for cross-border transactions. These aren't minor flaws; they're systemic failures that tokenization technology is uniquely positioned to solve.

Consider smart contracts' ability to automate compliance, enabling immediate verification and payment distribution while reducing fraud through immutable record-keeping. This isn't science fiction; it's the core functionality of the blockchain.

Sonnenschein's statement that "the onchain economy is demanding more liquid assets" also misinterprets what everyday investors are demanding. For the 99% excluded from institutional-grade real estate investments, the primary task isn't Bitcoin-like liquidity; it's meaningful access to an asset class that has built more wealth than any other over the past century.

Traditional real estate investment vehicles require substantial sums (e.g., $250,000 minimum investment from Hamilton Lane), accredited investor status and multi-year capital lockup periods. These barriers effectively exclude teachers, nurses and middle-class families from participating in prime real estate properties, such as a $50 million residential development project, which usually come with minimum investment periods of 3-5 years.

Tokenization fundamentally changes this equation. Through fractionalizing ownership and leveraging DeFi protocols for liquidity provision, investors can participate with as little as $100, receive proportional income distributions (e.g., from rent payments) and eventually trade their positions on specialized secondary markets like those being developed by Atomoic and Aegis. The demand for this democratized access is enormous, even if secondary market liquidity initially lags behind liquid markets.

Sonnenschein's suggestion that tokenization does not "translate well" to representing ownership in real estate further highlights a lack of understanding regarding the blockchain's potential.

The technology excels precisely at creating transparent, secure fractional investment opportunities with minimal overhead. A $50 million residential development project can be divided into 500,000 tokens, each getting an equal share of the rental income and potential appreciation. This dramatically lessens the barriers to entry while maintaining the core benefits of real estate as an asset class.

This fractionalization capability is what fundamentally transforms how people can build wealth through real estate. Previously, REITs offered the only realistic path to diversified property exposure, often with high fees, no control and limited transparency.

Tokenization allows investors to build personalized portfolios across multiple property types, all managed through a single digital wallet. This isn't a hypothesis; it's the operational reality of projects like Harvest, which has already launched a tokenized interval fund on the Chainlink Network focusing on U.S. commercial real estate.

What does not "translate well" isn't the technology; it's the rapid evolution of the ecosystem in a landscape of persistent skepticism. The UAE government, in striking contrast, recognizes this necessity, supported by its recent initiative to tokenize $1 billion in real estate assets.

The conservative stance on RWA growth projections also misses the accelerating infrastructure development. BlackRock's tokenized money market fund BUIDL is quickly approaching $3 billion in assets, demonstrating a significant institutional appetite for tokenized investment vehicles.

This isn't an isolated case. UBS Asset Management, Hamilton Lane, Franklin Templeton and many more have launched tokenized investment vehicles, signaling a fundamental shift in how traditional finance views tokenization technology.

What critics consistently underestimate is the network effect of financial infrastructure. Each institutional entrant doesn't just add linearly to the ecosystem; it exponentially increases connectivity and liquidity pools. We're witnessing the early stages of a self-reinforcing cycle where each new participant reduces friction for subsequent entrants.

The narrative shouldn't center on current limitations; rather, there should be a spotlight on what's being built. Secondary marketplaces optimized for real-world assets are emerging, regulatory clarity is increasing in key jurisdictions and each development