As for the tokenization of equities, I can see how it could provide efficiency gains at the settlement level and introduce some level of added transparency. However their implementation would inevitably come at the expense of the very elements that make these technologies so transformational. STOs would maintain exposure to seizure, censorship, and a reliance on data from trusted central authorities. Hardly a step forward.
I am inclined to believe that while fractional ownership of art may appear to be an obvious solution, I suspect in practice it is a lot more complex, and its benefits much less certain than at first appears.
Your question regarding custodian valuation is particularly interesting. Inevitably they would begin to resemble securities exchanges, albeit securities exchanges with significant exposure to theft, damage, and destruction. Not to mention the immense trust burden that would exist on the determination of provenance, and subsequent perpetual audit. Museums would operate as very different institutions.
For many artworks there are very few individuals capable of determining their authenticity and the margin for error is not insignificant. Due diligence in the art world is an incredibly complex area. Buyers usually conduct fairly rigorous due diligence, which often comes at quite significant expense to them (fortunately they tend to be highly motivated/informed and very wealthy). These processes are often fairly intimate and the buyer maintains a substantial amount of control over whom they choose to conduct the process and whether or not they choose to accept the verdict. If an artwork were to be democratized through tokenization, who assumes responsibility over the audit/due diligence process, particularly as it relates to quality and frequency?
Introducing democratization and liquidity into such a market would likely make it prone to market influence and pump/dump schemes between colluding artists and custodians (or whatever entity is responsible for public issuance) at the point where a particular piece is offered to the public, in many respects not unlike the current startup-VC-IPO landscape. However unlike the current ‘IPO’ bubble where mispriced assets can be fairly easily identified through examination of company performance (WeWork), this would be near impossible in the case of art. The art world currently operates as a shadowy pyramid scheme-like industry plagued with collusion, I’m not convinced that providing an exit through the public markets would be a good thing. Much of the value that flows through it flows precisely because it operates in such a shadowy capacity.
In short, I suspect that the barrier to entry to the artworld is high for a good reason, and individual/syndicated ownership of these assets is probably more of a good thing, than bad. This is also likely the case for many other illiquid assets, such as real estate. As for the tokenization of securities, an incremental step forward, but a poor/misleading demonstration of decentralized technologies in my opinion.
With all of the above being said, I too would be very interested to see the economic implications if such assets were to be tokenized. I have not come across any reading on the subject worth noting either.