Barry Sternlicht, Chairman and CEO of Starwood Capital Group, has publicly criticized U.S. regulatory barriers for preventing his firm from tokenizing its massive $125 billion portfolio of real-world assets (RWA). Speaking at the World Liberty Forum in Palm Beach, Sternlicht stated, "We want to do it right now and we’re ready. It’s ridiculous that our clients can’t do it in token." He framed blockchain-based tokenization as a superior technological leap, calling it "the future" and comparing its early adoption stage to that of artificial intelligence.
The core obstacle lies in the intersection of tokenized real estate offerings with existing U.S. securities law, broker-dealer registration rules, custody requirements, and investor eligibility standards. This legal uncertainty creates a significant gap between the operational readiness of large asset managers and the regulatory permission needed to proceed at scale. Sternlicht did not specify particular provisions but emphasized that regulatory clarity is the primary gating factor.
Despite the hurdles, the potential market is enormous. A Deloitte report projects that tokenized real estate could grow from less than $0.3 trillion in 2024 to $4 trillion by 2035, representing a 27% compound annual growth rate. The report highlights that tokenization could overcome challenges like operational inefficiency, high administrative costs, and limited retail participation. Some firms, like Propy, are already testing the model with a $100 million expansion plan to digitize U.S. property title processes, though these efforts remain small relative to the broader, manual documentation-heavy market.
Sternlicht's comments underscore a broader industry belief that blockchain can streamline ownership records, reduce settlement friction, and widen access to illiquid markets like real estate. The timeline for change may be influenced by political shifts, with some observers suggesting rules could evolve under a potential new presidential administration.
