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Litecoin creator Charlie Lee has expressed skepticism about the growing trend of real-world asset (RWA) tokenization, questioning whether placing assets such as real estate, stocks, and bonds on blockchain networks provides meaningful benefits.

Speaking on CoinGape’s Voice of Web3 podcast, Lee challenged the core value proposition behind asset tokenization despite the sector’s rapid growth. His comments come as Ethereum continues to dominate the tokenized asset market, reportedly holding more than $203 billion in total tokenized asset value. Meanwhile, the XRP Ledger has also experienced significant growth in the RWA sector, with over $3.6 billion in tokenized assets and nearly $1.9 billion in net inflows during the last 90 days.

Lee specifically focused on real estate tokenization, arguing that blockchain records do not automatically serve as the ultimate proof of ownership. Using a hypothetical example, he questioned what would happen if a property deed stored on a blockchain was stolen by a hacker. According to Lee, possession of the digital record would not necessarily make the hacker the legal owner of the property.

He emphasized that government registries remain the authoritative source of ownership records for assets like real estate. “If the source of truth is not the blockchain, then what’s the point?” Lee asked, suggesting that tokenization only delivers real value when blockchain records themselves are recognized as the definitive ownership record.

The Litecoin founder also highlighted the distinction between tokenized assets and cryptocurrencies such as Bitcoin and Litecoin. In decentralized cryptocurrencies, control of the private key directly determines ownership, and transactions cannot be blocked by a central authority. In contrast, tokenized real-world assets often rely on external legal systems and institutions.

Lee further challenged the common belief that tokenization automatically improves liquidity. While supporters argue that blockchain technology enables global, around-the-clock trading, he stated that liquidity ultimately depends on market demand rather than the technology itself.

“Liquidity only comes if there’s demand. Just putting assets on the blockchain doesn’t automatically create liquidity,” Lee said.

Although he acknowledged that some tokenization projects may prove valuable, Lee remains unconvinced about the long-term benefits of many current initiatives. He compared the trend to previous blockchain movements that prioritized technology before establishing a clear and necessary use case. As competition intensifies among blockchain networks and crypto exchanges to tokenize stocks, bonds, treasuries, and real estate, Lee believes the industry still needs to demonstrate why decentralization is essential for these assets.