Tokenization falters when institutions focus on minting

Abdul Rafay Gadit argues many tokenization projects fail because institutions treat minting as the primary goal rather than building legal ownership, custody and compliance into the asset itself. His Layer 1 network, Zigchain, aims to encode eligibility and transfer rules on-chain so those requirements travel with tokens.

Legacy wealth-management systems rely on slow, costly settlement layers in which clearing an asset or verifying an investor can take days. That process often triggers repeated manual checks across multiple intermediaries and creates fragmented records. Gadit described the result as redundant verification where each participant repeats checks performed earlier in the chain.

Zigchain’s design embeds eligibility requirements, geographic restrictions and transfer rules into the token. The ledger holds a single verifiable state for execution, ownership, settlement and reconciliation, so each transfer does not require reconstructing compliance from separate databases. According to Gadit, coding these rules into the protocol gives issuers, distributors, custodians and investors a common source of truth.

Gadit co-founded Zignaly, an application-layer business that has more than 500,000 users and processed over $10 billion in volume. His background includes transaction banking at Standard Chartered and technology exits. That operational experience led his team to build a purpose-built Layer 1 using the Cosmos SDK after encountering settlement, custody and finality bottlenecks with institutional clients.

He rejects the idea that minting a token is the main hurdle for institutional adoption. Gadit said the underlying legal and operational elements determine whether an asset is investable: clear legal ownership, custody arrangements, servicing, valuation and practical redemption mechanisms must exist before a token can represent a real-world asset. In his view, a token only accelerates whatever structure already exists; it does not fix weak legal or operational foundations.

Institutional allocators remain cautious about tokens that are primarily speculative. Gadit noted institutions respond to measurable economics such as fee flows and programmatic buybacks rather than governance rhetoric or emission schedules. He described models that align supply and demand with transaction activity and fee capture as more likely to meet institutional scrutiny.

Operating in the United Arab Emirates and engaging with frameworks such as the Dubai International Financial Centre, Zigchain’s team has worked alongside regulators, fund managers, custodians and service providers in the same ecosystem. Embedding compliance into the protocol does not remove the need for off-chain legal structures, but it makes those structures visible and enforceable on the ledger and aims to reduce repetitive checks in settlement processes.