Chung Hei Sing

Chung Hei Sing

I work at the intersection of institutional capital allocation, governance, and financial infrastructure, with a focus on real-world assets and long-term investment decision-making.

Why Tokenized Funds Will Scale Before Tokenized Projects

Fiduciary Risk, Governance Continuity, and the Logic of Sequenced Adoption

Abstract

Tokenization of real-world assets is frequently presented as a uniform technological shift across asset classes. In practice, adoption has followed a distinct and predictable pattern — one shaped by institutional structure rather than technological readiness. Tokenized investment funds — particularly money market funds, short-duration government bond vehicles, and similar pooled vehicles — have attracted early institutional participation, while tokenized infrastructure and project-level assets remain largely experimental.

This paper argues that this sequencing reflects structural differences in fiduciary risk, governance complexity, and market design requirements — not technological readiness or regulatory timing. Tokenized funds scale first because they inherit established legal structures, standardized governance, and familiar risk allocation frameworks. Tokenized projects, by contrast, introduce bespoke legal, operational, and governance challenges that institutional investors are structurally constrained to avoid. Fiduciary duty is the binding constraint, not the limiting technology.

The analysis has direct implications for asset managers, regulators, and platform designers seeking to understand how institutional capital absorbs financial innovation — and why governance compatibility, not programmability, determines adoption sequencing.

Key Implications

  • Institutional adoption of tokenization is governed more by fiduciary compatibility than by technological feasibility.
  • Financial innovation diffuses sequentially, scaling first where existing legal and governance structures can absorb incremental change.
  • Tokenization succeeds when it preserves clarity of authority, accountability, and enforceable oversight rather than attempting to bypass them.
  • Project-level tokenization faces structural limits not because of immature technology, but because it disrupts established governance and risk-allocation frameworks.

Keywords

Real-world asset (RWA) tokenization; tokenized funds; institutional adoption; market design; fiduciary risk; governance structures; legal standardization; regulatory compatibility; project finance; financial infrastructure.

Recommended citation: Sing, C. H. (2024). Why tokenized funds will scale before tokenized projects: Fiduciary risk, governance continuity, and the logic of sequenced adoption. Working paper.
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