Will "Real World Asset (RWA) tokenization" be the "next ETF"?

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Abstract generation in progress

The wave of tokenization of real-world assets (RWA) is sweeping through the financial sector, transforming from an abstract concept into a practical financial tool.

Institutional investors are actively testing and deploying their infrastructure. Just last week, traditional financial institutions and native blockchain companies, including BlackRock and Libre, issued announcements to advance their RWA plans.

Marcin Kazmierczak, the co-founder of RedStone, stated that the recent announcement "indicates that tokenization has moved from theoretical discussions to actual applications by market leaders."

Ethereum remains the main hub for RWA tokenization. According to data from RWA.xyz, the market value of tokenized U.S. Treasury bonds is currently $6.5 billion. Ethereum holds a major share of this market, custodizing over $4.9 billion in tokenized Treasury bonds.

Piscini estimates that by the end of this decade, over 10% of global financial assets may be tokenized. However, whether this promise can be fulfilled remains to be seen.

Influx of giants: RWA tokenization is accelerating

On April 30, BlackRock submitted an application to create a digital ledger technology share class for its $150 billion government bond trust fund. It will utilize blockchain technology to maintain a mirrored record of share ownership for investors. The DLT share will track BlackRock's BLF Treasury Trust Fund (TTTXX), which can only be purchased from BlackRock Advisors and Bank of New York Mellon (BNY).

MultiBank Group has signed a $3 billion RWA tokenization agreement with UAE real estate company MAG and blockchain infrastructure provider Mavryk. It is said to be the largest RWA tokenization program to date.

During an interview with Cointelegraph, Hashgraph CEO Eric Piscini stated:

"The recent surge is not a coincidence, as everything is moving in a favorable direction. The rules of the main markets are becoming clearer, the technology is more powerful and faster, and it is ready to scale. Giants like BlackRock are taking concrete actions—BlackRock is tokenizing funds, Citibank is exploring digital asset custody, and Franklin Templeton has already tokenized money market funds on public blockchains."

Kazmierczak stated that people's renewed interest in RWA tokenization is primarily driven by Trump's pro-cryptocurrency administration and the increasingly clear regulatory environment.

Since Trump won the election, the U.S. Securities and Exchange Commission has dropped or suspended more than a dozen enforcement cases against cryptocurrency companies. Additionally, the Department of Justice recently announced the disbandment of its cryptocurrency enforcement division, indicating a softened stance toward the industry.

In addition to regulatory clarity, advancements in technological capabilities such as wallets have also played a key role in promoting the adoption of tokenization. Felipe D’Onofrio, the Chief Technology Officer of Brickken, stated:

"At the same time, macroeconomic pressures are prompting institutions to seek efficiency and liquidity in markets that traditionally lack liquidity."

The Dominance of Ethereum: A Key Hub for RWA Tokenization

Ethereum remains the primary hub for RWA tokenization, thanks to its mature ecosystem, extensive developer support, and robust infrastructure. Kazmierczak stated:

"Due to its unmatched security, developer ecosystem, and institutional adoption, Ethereum remains the most suitable blockchain for large-scale RWA issuance."

However, he pointed out that specialized RWA ecosystems like Canton Network, Plume, and Ondo Chain are building compelling alternatives designed with features for the tokenization of compliant assets.

According to data from RWA.xyz, the current market value of tokenized US Treasury bonds is $6.5 billion. Ethereum holds the majority share of this market, hosting over $4.9 billion in tokenized Treasury bonds.

The challenges still exist: enormous growth potential.

However, obstacles still exist. Regulation remains a significant barrier, especially for risk-averse institutions that require assurances around compliance and privacy. In addition, technological limitations still persist, primarily due to the lack of interoperability between blockchain platforms.

Looking ahead, Piscini estimates that by the end of this decade, more than 10% of global financial assets may be tokenized. D’Onofrio also made a moderate prediction, estimating that by 2030, 5% to 10% of global financial assets may be tokenized. Kazmierczak from RedStone predicts that by the end of this decade, approximately 30% of the global financial system will be tokenized.

In numerical terms, STM.co predicts that by the end of 2030, the global RWA market size will be between $30 trillion and $50 trillion. Most companies predict that by 2030, the market size in the RWA sector will be between $4 trillion and $30 trillion.

According to Tren Finance's research report, if the industry reaches a forecast median of approximately $10 trillion, it will grow more than 50 times its current value (about $185 billion, including the stablecoin market).

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The content is for reference only, not a solicitation or offer. No investment, tax, or legal advice provided. See Disclaimer for more risks disclosure.
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