Real World Assets (RWA). This is what crypto natives and institutions now call on-chain representations of ownership of real estate, debt, stocks, LP fund units and other traditional assets.
Throughout 2024, RWA tokenization gained popularity thanks to key catalysts including:
- BlackRock tokenizes one of its funds and invests in a tokenization company.
- Banks and asset managers move from proofs of concept to production use cases.
- Licenses are being granted such as 21X under the DLT Pilot Regime, Ursus-3 Capital as the first ERIR in Spain and Nomura’s Laser Digital licensed in the Abu Dhabi Global Market (ADGM), to name a few.
- Cryptocurrency natives are starting to understand the value of real-world assets being brought on-chain, and RWAs are the third most profitable narrative.
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What can we expect in 2025? This should be the year tokenization solidifies its position and moves to the “pragmatic” part of the adoption curve. With over $50 billion in RWA already on-chain, by 2025 it is projected to reach at least $500 billion (excluding stablecoins).
Collateral mobility, yield-generating assets backed by other tokens (i.e. stable/yield coins and tokenized liquidity products), more complex financial products, and proven streamlined operations will drive RWA market cap growth tokenized. Over time, this will increase investor preferences towards tokenized versions over non-tokenized ones, leading to greater adoption and inflows. Real estate alone provides over $30 billion in value, demonstrating savings through HELOC tokenization, alternative financing, collateralized loans, on-chain securities, funds, and more.
Regulatory clarity
Regulatory clarity remains one of the main barriers to adoption, but 2025 could bring significant progress. News of the appointment of Paul Atkins as SEC Chairman, Perianne Boring to the CFTC, and David Sacks as Crypto Czar is raising the likelihood of a clear US legal framework for digital assets. This would encourage greater institutional participation, increase investor confidence and stimulate greater innovation in infrastructure for RWAs. The EU, Switzerland and Singapore have already shown that stricter regulation, including a sandbox, will further improve global momentum.
Uniting the Crypto Community Through RWA Governance/Utility Tokens
Tokenization has attracted institutional attention due to cost savings and operational efficiency. This is seen in both testing and production use cases compared to their off-chain counterparts. On the cryptocurrency side, governance and utility tokens offer holders discounted trading fees compared to non-token holders, priority access to transaction flow, decision making, and more.
This is the language spoken by the crypto community, which will redirect cryptocurrency and NFT profits to RWA and encourage the creation of dApps/infrastructure for them. Additionally, investors and issuers should closely watch the Trump administration’s potential tax breaks on profits from US-issued cryptocurrencies (government/utility tokens).
2025 should see the tokenization of financial assets grow as a narrative and application. Adoption by large banks and asset managers will produce tangible results and build confidence to move forward with related efforts at higher levels of the risk curve. Leveraging DeFi ecosystems will continue to boost primary and secondary markets by adding utility and enabling new economic opportunities.
This year we will see the gap between the crypto-native communities and traditional finance begin to narrow. Tokenization is no longer a future concept; It is here and will continue to grow. If you haven’t been paying attention to this space, now is the time. Regulatory clarity, institutional adoption, and improved utility, among other catalysts such as the Bitcoin Strategic Reserve at the state and federal level, will spur exponential growth and adoption.
