Kula founder: Tokenization risks becoming a market of digital wrappers

​Tokenization is rapidly moving into traditional finance, but but owning a token does not necessarily mean owning the underlying asset. Kula founder Chris Turner believes today’s market will eventually split between tokens that carry legally recognized ownership and those that simply represent assets held elsewhere. In an interview with Traders Union, he explains explains which part of the tokenization market he expects to survive the hype and where the technology could create genuinely new investment opportunities.

From international development to blockchain

Chris Turner spent around 25 years working in international development, primarily on health-related projects. It was there that he encountered the problem that would eventually lead him to blockchain: huge budgets did not always translate into meaningful results on the ground.

“About 15 years in, I noticed how badly waste and impact were measured. I saw billion-dollar projects where only a few hundred thousand dollars ever reached the grassroots. And beyond the money, communities were consulted but rarely given real decision-making power over projects that shaped their lives.”

The turning point came in 2017 at a blockchain conference. Turner learned about a shipping company that had put its entire annual inventory on-chain. The system allowed a container to be tracked from Shanghai to San Francisco, with verification at every step.

“That really impressed me, as it solved billions in lost inventory for them. And this also got me thinking that if you can verify a container that precisely, you can verify how development capital moves, and what it actually achieves.”

That idea later became the foundation for Kula. Turner set out to use blockchain not only to verify how funds were used and what impact they had, but also to give local stakeholders real governance rights through tokenized participation.

Not every token means ownership

Turner has little doubt that tokenization will remain part of the financial system. However, he believes today’s market brings fundamentally different models under the same term.

The main problem, he says, is that many RWA tokens simply point to an asset while legal ownership remains recorded in a traditional register. In this model, blockchain adds another technological layer without changing how ownership itself is recorded.

“What this means is the token points to an asset held somewhere else, while legal ownership still sits in a traditional register. That's a layer of representation, not a change in who legally owns what. When trading volumes cool, or a dispute lands in court, a lot of that activity will be exposed as repackaging rather than innovation.”

Turner sees more long-term potential in a different model: title tokenization. In this case, the token does not merely represent an asset but can serve as a legally meaningful record of ownership where the relevant legal framework recognizes it.

“Title tokenisation is different, and it's the part that will last. Here, the token doesn't just point at the asset. It carries the title itself. In jurisdictions that recognise on-chain registers in national law, that token can constitute legal ownership, not just reference it. So my view is that tokenisation will absolutely endure, but the market will fork. Referential instruments in time will be remembered as the hype cycle, and title tokenisation will be what emerges in the long term.”

Turner believes this is also why existing technical standards need to evolve. Kula recently proposed six new Ethereum token standards designed to extend frameworks such as ERC-3643. According to him, today’s infrastructure still lacks mechanisms for reliable asset-token binding and cross-border compliance.

The biggest opportunity lies beyond stocks and bonds

Much of the attention around tokenization today is focused on stocks, bonds and money markets. Turner acknowledges that these areas are already being tokenized at scale but believes some of the more interesting opportunities lie elsewhere.

He points to markets where ownership records are fragmented, opaque, making assets difficult for outside investors to access.

“The key question isn't whether an asset can be put on-chain. It's whether the token represents legally enforceable ownership and solves a genuine registry problem. If a jurisdiction doesn't recognise an on-chain register, the token is simply another referential or contractual claim rather than the ownership record itself.”

In such cases, Turner argues, tokenization can actually add another layer of complexity. For him, its real value emerges when the law recognizes the token itself as the ownership record.

That model, he believes, can unlock capital for markets and projects that traditional financial infrastructure struggles to support.

How it works in real-world projects

One area where Kula applies this model is renewable energy. Turner points to the company’s work in Nepal, where Kula invests in legally recognized local operating companies linked to hydroelectric projects.

Under what he describes a typical structure, Kula acquires around a 40% stake, while about 20% is allocated to the local community. Ownership is reflected on-chain, while governance rights, profit distributions and milestone-based funding are linked to tokens through smart contracts tied to the legal entity.

“Token holders therefore own an economic stake in the project rather than simply holding a digital representation of it. Renewable energy is particularly well suited to this model because project performance can be verified continuously.”

Turner says investors can track electricity generation, emissions reductions and local employment through on-chain reporting. The projects can also generate verified carbon offsets, which can then be tokenized.

Kula also has a significant presence in Africa. Turner says the attraction is not a lack of assets or capable local operators, but rather gaps in the ownership infrastructure needed to connect them with outside capital.

“The region has an abundance of productive assets in various sectors, including energy, agriculture, transport, and commodities, and there’s no shortage of capable operators. What is missing is the ownership infrastructure that lets outside capital participate on fair, verifiable terms.”

Fragmented registries and opaque reporting are particularly problematic, he says, when local communities bear much of the cost of a project but own little or none of the underlying asset. At the same time, Kula is not limited to developing markets and is actively exploring opportunities in North America and Europe.

A tokenized stock does not always mean stock ownership

For investors, one of the key distinctions is between a token that carries legal ownership rights and an instrument that merely provides economic exposure to the underlying asset.

Where tokenized securities are legally recognized, Turner believes a tokenized share can provide the same rights as a traditional security while also offering faster settlement, greater transparency, fractional ownership and more direct participation in governance.

“The important distinction is that not every tokenised asset works this way. In some cases, the underlying shares remain with an intermediary and the token simply gives investors economic exposure. That's a perfectly valid structure, but it isn't the same as holding legal title.”

That is why Turner says investors should start with a simple question before buying a tokenized asset: does the token itself carry legal ownership?

Verifying the existence of the underlying asset is equally important. Tokenization does not eliminate the need for audits, legal documentation or careful examination of the investment structure.

“Investors should be able to review the legal structure behind the asset, understand how the token relates to ownership, and see ongoing information about the project's performance, whether that's financial results, operational data or independent verification. Tokenisation doesn't remove the need for due diligence, but it can make ownership and reporting far more transparent.”

Legal protection also depends on the structure behind the token. Turner says that in many jurisdictions, investor rights may be limited if the issuer becomes insolvent or the underlying asset is seized.

He points to Switzerland, Germany and the UAE as examples of jurisdictions where tokenized securities or digital ownership registers have received legal recognition.

“That's why the legal framework matters more than the technology itself. In jurisdictions such as Switzerland, Germany and the UAE, where tokenised securities and digital ownership registers are recognised in law, tokens can represent legal ownership. In those structures, investor rights are defined by the underlying legal framework and are less dependent on the issuer remaining solvent. Before investing, it's important to understand how ownership is established, what rights the token confers, and how those rights would be treated if the issuer or the underlying asset became the subject of legal proceedings.”

What it will take to build a $16 trillion market

Some forecasts suggest the tokenized asset market could reach $16 trillion by 2030. Turner believes that scenario is possible, but says the headline figure means little without understanding which assets will drive the growth.

In his view, if the market expands primarily through traditional financial instruments that simply receive a tokenized wrapper, the impact will be limited. Such a model may improve distribution and trading but would not fundamentally change how assets are owned.

“The real expansion comes from assets that have never been easily investable because ownership has been difficult to record, transfer or verify. In those cases, a legally recognised token will create new markets that previously haven’t existed.”

Turner sees legal change as the key factor. Until legal systems begin treating digital ownership as equivalent to traditional ownership, he expects many tokens to continue functioning as digital wrappers around existing structures.

“What ultimately determines the size of the market is whether legal systems begin recognising digital ownership as equivalent to traditional ownership. Until that happens, many tokenised assets will remain digital wrappers around conventional structures housed in siloed financial products held by legacy players. The industry needs to resist treating tokenisation as a packaging exercise. Lasting growth will come from creating legally enforceable ownership structures, not simply putting existing financial products on a blockchain.”

For Turner, this is the key dividing line for the next stage of tokenization: the technology already makes it possible to issue digital assets, but the ultimate scale of the market will depend on whether the law can catch up.