Ivan Kan, global investor and entrepreneur at the intersection of capital markets, tokenization and emerging tech. Investor in HackIndia.
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Something fundamental has changed in how capital markets work, and most people haven't noticed.
It didn't happen because of a scandal. It happened through the slow accumulation of assets into fewer and fewer hands. According to BlackRock's Q2 2025 earnings release, the firm hit a record $12.53 trillion in assets under management as of June 2025, becoming the first asset manager to cross $12 trillion. Vanguard sits at $12 trillion and State Street at $5.7 trillion. Three firms. Nearly $30 trillion.
What makes this more than a curiosity is something I've watched play out in real time: The same institutions that pool retail capital also hold significant voting stakes across competing companies in the same industries.
The Harvard Law School Forum on Corporate Governance documents this extensively, including a 2025 paper finding that large institutional investors now appear among the top five shareholders in a growing number of firms across developed markets.
When the same capital aggregators sit atop entire sectors, competition shifts. Not because anyone is colluding, but because the incentive structure has. Retail investors funded all of this through 401(k)s and index funds, but the moment their capital pools, their governance rights go with it. At this scale, that's a structural feature.
The same period that produced this concentration also produced an explosion in passive investing. According to the Investment Company Institute's official industry survey, combined U.S. indexed mutual funds and ETFs held $19.09 trillion as of March 2026. Index funds now represent 57% of equity fund assets, up from 36% in 2016.
When money flows into an index ETF, it goes wherever the index points, not where the fundamentals point. Companies added to major indexes receive automatic inflows regardless of valuation. Companies removed face automatic outflows. At $19 trillion in scale, price signals start reflecting flows instead of facts. That gap is structural, not cyclical.
Stack a derivatives market on top, and the picture gets more complicated. The Bank for International Settlements reported notional OTC derivatives hit $846 trillion as of June 2025, a 16% year-over-year increase, the steepest since 2008. When volatility spikes, derivative hedgers are forced into underlying cash markets, amplifying swings.
The BIS flagged explicitly that trade policy uncertainty in early 2025 turbocharged this feedback loop. Nobody is doing anything wrong in isolation. But the system's outputs (price volatility, governance outcomes, competitive dynamics) are the product of mechanics rather than business reality.
The current model requires pooling. You want diversified asset exposure, you pool into a fund, hand over governance rights and accept mechanical capital deployment at scale. Tokenization breaks that trade.
When ownership is a digital token on a transparent ledger, fractional ownership becomes possible without pooling. Compliance is programmable. Settlement is on-chain. The investor holds a direct claim on the underlying asset, not a share of a fund.
The market has already moved. According to Investing.com, the tokenized real-world asset market crossed $30 billion in 2026, a tenfold increase from $2.9 billion in 2022. BlackRock's BUIDL tokenized treasury fund peaked at nearly $2.9 billion in mid-2025, commanding over 40% of the tokenized treasury market and holding the top position since surpassing all competitors in early 2025.
McKinsey projects tokenized assets reaching $2 trillion by 2030, with a bullish scenario of $4 trillion. Standard Chartered has projected $30 trillion by 2034.
Tokenization isn't a cure-all. Wrap digital assets back into pooled vehicles, and the concentration problem persists. But properly built, with direct investor access and programmable compliance, it reduces structural dependency on mechanical flows and the intermediation layers that come with them.
When the ledger is transparent and settlement is programmable, trust stops being a product sold by intermediaries and starts being a property of the infrastructure itself. That is not an incremental improvement. It is a redesign.
Capital markets weren't built this way out of malice. Pooling made sense when settlement was paper-based. It worked until the infrastructure changed around it.
The EU's MiCA regulation, cited in Regulation (EU) 2023/1114 on EUR-Lex, became fully applicable on December 30, 2024, the first comprehensive crypto-asset framework at a continental scale. The U.S. enacted the GENIUS Act in July 2025—its first federal digital assets legislation—and the SEC launched a formal crypto regulatory framework initiative. Singapore's MAS implemented mandatory licensing for digital token service providers effective June 30, 2025.
The legal scaffolding is being built.
If you're an institutional allocator, ask your asset managers whether they offer tokenized ownership structures and how they handle voting rights across competitor stakes. If you're a retail investor, review whether your index fund exposure concentrates governance rights in ways that undercut the competitive dynamics you're assuming. And if you're building in this space, firms that embed programmable compliance from the start will have structural advantages that late movers can't easily replicate.
The technology is ready. The institutions are moving. And increasingly, so are the mass affluent and retail investors who were never supposed to have a seat at this table. Whether the structural imagination exists to match the moment, that part is still being written.
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