In crypto, speed is worshipped.

In finance, certainty is.

That tension sits at the heart of tokenization, and it’s why so many projects stall somewhere between a whitepaper and reality.

In this Offscript conversation, we sat down with Arnold (ex Deutsche Bank), a senior banking and blockchain lawyer with over 30 years of experience across Deutsche Bank, corporate banking, capital markets, and now blockchain regulation, to unpack what tokenization actually is, why it’s legally complex, and why that complexity isn’t a bug - it’s the price of scale.

Here are some key points discussed in the episode:

Traditional Finance Didn’t Disappear - It Adapted

For more than a decade, blockchain narratives predicted the end of banks.

It didn’t happen.

Not because blockchain failed, but because finance is structurally resilient. Banks didn’t vanish when the internet arrived. They didn’t vanish with fintech. And they won’t vanish because of tokenization.

Instead, what emerged is coexistence:

• Traditional finance

• Fintech

• Decentralized finance

Each occupying different roles, speeds, and risk profiles.

Arnold makes this point clearly: blockchain didn’t kill banks. It forced them to observe, experiment, and eventually participate - cautiously, but deliberately.

JP Morgan’s JPM Coin.

Deutsche Bank’s asset-management pilots.

German and Swiss digital securities frameworks.

Slow? Yes. Dead? Not even close.

Why Compliance Eats 70–80% of a Bank’s Costs

One of the most sobering moments in the conversation was this statistic:

Between 70 and 80% of a bank’s operational costs are compliance-related.

KYC.

AML.

CTF.

ABC.

Cross-border correspondent banking obligations.

Compliance isn’t a department — it’s the operating system.

And here’s the uncomfortable truth: most of that burden exists because finance is still built on fragmented, intermediary-heavy systems that require constant verification.

Blockchain could help here. Immutable records. Continuous audit trails. Real-time transparency.

But banks haven’t fully exploited this yet — not because it doesn’t work, but because changing core systems is existentially risky.

What a Token Actually Is (And What It Isn’t)

This is where many Web3 narratives break down.

A token is not magic.

It’s not ownership by default.

It’s not a shortcut around the law.

Technically, a token is simply:

A digital entry in a distributed database.

Legally, most tokenized assets today represent contractual claims, not direct ownership.

That distinction matters.

You can’t “own” an office building just because you hold a token — unless the legal system recognizes that token as a property right. And most jurisdictions don’t. Yet.

So what do we do instead?

The same thing traditional finance has done for decades:

• Use special purpose vehicles (SPVs)

• Tokenize shares or debt of that entity

• Let the entity own the asset

• Let the token represent a claim on the entity

It’s not a workaround.

It’s continuity.

Germany’s Digital Securities Law: A Quiet Breakthrough

Germany quietly made one of the most important legal moves in tokenization.

By introducing electronic securities registries, the law effectively says:

“Let’s legally pretend a token is a physical security.”

That legal fiction unlocks something huge:

• Tokens can represent real ownership

• Assets can be registered in licensed crypto registries

• Bonds - and now even stocks - can exist natively in digital form

This is tokenization done inside the system, not around it.

Switzerland and Liechtenstein moved earlier.

Germany matters because it’s large, conservative, and influential.

This is how markets actually change.

MiFID II, Prospectuses, and Why Regulation Is Technology-Agnostic

Another myth worth killing: regulators care about blockchains.

They don’t.

From a regulatory perspective:

• Paper certificate

• Global certificate

• Database entry

• Blockchain token

If it behaves like a security, it is a security.

That’s why MiFID II, prospectus requirements, and investor-protection rules still apply — regardless of how modern the technology looks.

This frustrates crypto founders.

It reassures institutional capital.

And institutions write the biggest checks.

Stablecoins and the Quiet Reinvention of US Debt Demand

One of the most fascinating parts of the discussion moved beyond Europe — straight into geopolitics.

Stablecoins like USDC and USDT now hold hundreds of billions in value. To function, they must be backed by highly liquid, low-risk assets.

That asset is… US Treasuries.

Which leads to an unexpected outcome:

Stablecoin issuers are becoming some of the largest buyers of US government debt.

At a time when traditional buyers (China, Japan) are rebalancing, stablecoins are quietly absorbing supply.

The GENIUS Act in the US didn’t invent this — it recognized it.

This isn’t crypto versus the dollar.

It’s crypto reinforcing dollar dominance - accidentally or not.

Europe vs the US: Regulate First or Innovate First?

Arnold doesn’t mince words here.

Europe tends to:

• Regulate first

• Innovate later

• Then wonder why capital moves elsewhere

The US, especially Silicon Valley, does the opposite:

• Build fast

• Break things

• Then over-comply once product-market fit is clear

Ironically, US startups often end up more compliant - simply because they can afford it. Oversized legal teams. Massive funding rounds. Speed plus resources.

Europe has talent.

It lacks risk capital - and patience.

The Real Advantage: Shortening the Distance Between Idea and Execution

One of the most important reframes in the conversation:

Innovation isn’t just about new ideas. It’s about shortening the distance between idea and execution.

This is where startups like Penomo matter.

Not because they “disrupt regulation” — but because they:

• Turn one-off regulatory work into repeatable products

• Automate bureaucracy instead of fighting it

• Translate institutional constraints into scalable systems

That’s how real adoption happens.

What Assets Actually Make Sense to Tokenize?

Forget hype. Forget memes.

Tokenization works best where:

• Capital requirements are high

• Cash flows are predictable

• Access has historically been limited

That includes:

• Real estate

• Energy and infrastructure

• Private credit

• Certain IP-driven assets (with strong demand)

Tokenizing something no one wants doesn’t create demand.

Lowering access barriers to something people already want does.

Basic business principles still apply — even on-chain.

Final Principle: Regulatory Certainty Beats Regulatory Freedom

When asked what matters most in designing a legal framework for digital assets, Arnold’s answer was blunt:

Regulatory certainty.

Not absence of rules.

Not loopholes.

Certainty.

Founders don’t need zero regulation.

They need to know what game they’re playing.

And the ones who win in regulated finance are the ones who:

• Engage regulators early

• Treat them as stakeholders

• Build with constraints, not against them

It’s slower.

It’s harder.

And it’s the only path that scales.

Watch the full video here:

About Penomo

Penomo is a digital asset infrastructure platform specializing in tokenized energy and AI infrastructure financing.* Through tokenization technology, Penomo is streamlining financing processes, enhancing liquidity, and enabling efficient financing for the global energy transition and AI expansion.

The time to lead is now!

→ Curious if tokenized capital fits your project? Take 2 minutes to find out.

Connect with us: Website | X | Telegram | TG Announcements | Discord | LinkedIn