Real Estate Industry Rejects Blockchain Tokenization as Unnecessary, Says Expert

Written by:

Rudi Davis

Date:

15 Jan 2026

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Over the past five years, roughly 30 to 40 companies have tried to tokenize real estate assets using blockchain technology. According to David Rose, founder and CEO of USREM and a fifth-generation real estate professional, all of these attempts have failed. Rose argues that the problem is not technical incompetence, but a fundamental misunderstanding of how the private real estate market operates and what its participants actually want.

“What the sponsors and the existing real estate world want in terms of blockchain is nothing,” Rose says. “They don’t want blockchain. They think it’s the devil’s fault. They want to run as far away as they possibly can from it.”

Tokenization Solves a Problem That Doesn’t Exist

The core disconnect, Rose explains, is that blockchain advocates seek to address issues that real estate professionals do not perceive as problems. Technology companies have promoted tokenization as a means to increase price transparency, facilitate resale, and improve transactional efficiency. However, Rose argues that these are not concerns for those operating in private real estate.

“Blockchain makes things more efficient, price discovery easier, resale, so nobody, those aren’t problems that exist in private real estate,” Rose says. “Making liquidity easier in a market with no liquidity doesn’t make any kind of sense.”

Private real estate markets are intentionally slow and illiquid. Participants value limited liquidity and opacity, which allow for negotiated deals and protect sensitive information. When technology companies propose radical transparency and instant trading, they are not offering enhancements—they are undermining the very features that market participants want to preserve.

Rose contrasts this with artificial intelligence, which is being adopted rapidly because it provides clear, immediate benefits. “With AI, people have this here, a real, immediate benefit. You can type into ChatGPT, ‘Where should I go for dinner?’, and you will immediately receive an answer at no cost and with no commitment. That’s very useful,” Rose says. “What does somebody get out of tokenizing real estate? The answer is nothing.”

Industry Resistance Is Deliberate, Not Reactionary

The repeated failures of blockchain projects in real estate are not evidence that the industry is anti-innovation. Rose believes that real estate will eventually be tokenized, but not until there is a compelling reason. He expects this could occur within five to ten years, but notes that the sequence is essential.

“Real estate is the world’s largest asset class, and I absolutely believe that you will see real estate tokenized across the board within the next five or ten years,” Rose says. “But right now, there are very few specific advantages to tokenizing a property by itself as it exists.”

The main issue is that tokenization requires a functioning market for trading those tokens. Without an established secondary trading infrastructure, creating a digital token for a real estate asset adds complexity without creating true liquidity. Blockchain solutions have not addressed this gap, leaving token holders with assets that are no easier to trade than traditional real estate interests.

Rose argues that the real estate industry will immediately eliminate any effort to implement blockchain-based solutions in the current environment. This is a calculated response from an industry that has operated successfully for centuries without blockchain. There is no incentive to accept additional regulatory complexity, technical risk, and market uncertainty for benefits that remain unproven.

Building Infrastructure Before Tokenization

According to Rose, successful blockchain adoption in real estate depends on first building a robust liquidity infrastructure. The industry requires secondary trading mechanisms that address real problems for real participants. Only when this infrastructure is in place and demonstrates clear value will tokenization become a logical next step.

USREM, Rose’s company, is adopting this approach by creating a marketplace for buying, selling, and borrowing against limited-partner interests in private real estate funds and syndicates. The platform operates as a registered broker-dealer and serves qualified purchasers—investors with at least $5 million in investable assets. Rather than using blockchain, USREM relies on established securities infrastructure to create liquidity.

“There is no advantage to tokenizing real estate for anybody who is involved in real estate,” Rose says. “It might be great for a tokenization platform. It might be great for people who are trying to speculate in cryptocurrency, but it doesn’t make any sense for people who are actually in the industry.”

A Broader Lesson for Technology Adoption

Rose’s perspective offers a cautionary lesson for any industry considering blockchain adoption. Just because a technology is technically possible does not mean it will be adopted. For adoption to occur, the technology must address a real pain point or provide a strong competitive advantage that makes resistance uneconomical.

Until blockchain advocates can demonstrate that tokenization addresses real industry problems—rather than theoretical ones—established players have little reason to experiment with unproven approaches. The technology’s eventual impact on real estate will depend less on what blockchain can do and more on whether it can provide tangible benefits that the market actually demands.