What are the main risks of tokenised real-world assets?

Custody: who holds the asset?

The BIS defines custody risk as the risk of losing assets held by a custodian, through its insolvency, carelessness, fraud or poor record-keeping.¹ For tokenised assets, it says, this risk can apply to the token and to the asset behind it.¹

The OECD gives a blunt example. A dishonest custodian could sell the real assets while the tokens keep trading on-chain, with nothing behind them.³

There is your own custody too. Franklin's prospectus says investors who use their own wallets must keep their private key safe from loss or theft.⁴

Redemption: can you get out?

A token may promise that you can cash out at any time. The FSB warns that if the assets behind it are slower to sell, the risk of a run on redemptions might rise. A run could force sales of those assets, and spread losses to other markets.² The BIS adds that the speed at which users can turn tokens back into ordinary assets may drain cash from the system.¹

The fine print shows the limits.^4,5,6

• Business hours. Franklin's fund takes orders at any time, but only processes them during normal business hours on business days.⁴
• No guarantee of $1.00. Franklin's fund says you could lose money, and it cannot guarantee $1.00 a share. It is not a bank account, and no government agency insures it.⁴ BUIDL's launch release said it may not always keep $1.00 per token.⁷
• Limits and minimums. As of October 2026, Ondo's documents say it limits how much OUSG can be redeemed instantly in any 24 hours.⁵ They give minimums of $5,000 for instant redemptions and $50,000 for others.⁸
• Buyback caps. An interval fund only buys back 5% to 25% of its shares in each repurchase offer. If too many holders ask, each gets a pro rata share, so you may sell only part of what you asked.⁶

An IMF note warns that automatic redemption features, if badly designed, can speed up outflows in a crisis. It says this is especially true for open-ended funds holding assets that are hard to sell.⁹

Law: will a court back the token?

The BIS calls this legal risk: the law may not apply clearly to tokens.¹ Its example: in the US, repurchase agreements get special treatment in bankruptcy, an advantage that may not extend to tokenised versions.¹

The FSB lists other gaps. A token may not be legally recognised off the chain, and the right to redeem it for the real asset may not be enforceable.² The WEF says ownership rights in assets outside the blockchain remain legally uncertain.¹⁰

Timing matters too. Settlement finality is the legal moment when a transfer can no longer be undone.¹ The BIS says a transfer on the ledger and legal finality may not happen at the same moment. A transfer could then be reversed later, for example through legal action.¹

Technology: code and price feeds

Smart contracts may contain errors that could lead to theft, data corruption or outages.¹ Oracles are services that bring outside data, such as prices, onto a blockchain. The FSB warns they may be hacked or manipulated, and may fall outside regulation.²

The FSB also warns that a token's price can drift away from the price of the asset behind it. A token's price can reflect the issuer's credit risk and legal risks, not just the asset.²