The crypto market is surging—breaking free from the prolonged downturn of 2022 and the stagnant trading range that defined much of 2023. Now, in 2025, momentum is unmistakably upward, fueled by powerful narratives like spot Bitcoin ETFs, macroeconomic shifts, and a transformative trend quietly reshaping finance: tokenization of real-world assets (RWA).
Larry Fink, CEO of BlackRock, described Bitcoin’s recent rally as a reflection of investors seeking “quality” amid global uncertainty. But beyond ETFs and inflation fears, tokenization has emerged as a foundational force driving institutional adoption and long-term market growth.
The Rise of Real-World Asset Tokenization
Tokenization—the process of converting physical or traditional financial assets into digital tokens on a blockchain—is no longer a theoretical concept. It's now a live experiment being conducted by some of the world’s most influential financial institutions.
Take the case of Euroclear, Europe’s major clearing house, which recently launched its Tokenized Securities Issuance (D-SI) service. In collaboration with the World Bank, they issued a $10.6 billion digital bond via Corda blockchain, with TD Securities as dealer and Citi serving as issuing agent and investment manager. This landmark transaction was listed on the Luxembourg Stock Exchange and will fund sustainable development projects through the International Bank for Reconstruction and Development (IBRD).
“This is a clear signal that capital markets are undergoing digital transformation,” said Anshula Kant, MD and CFO of the World Bank.
This fusion of traditional finance (TradFi) and decentralized infrastructure marks a pivotal shift. Giants like JPMorgan, UBS, Goldman Sachs, and Swift are all investing in tokenized asset platforms. Their goal? To unlock greater efficiency, lower operational costs, and enhanced transparency by placing real-world assets—such as bonds, equities, and commodities—on public or permissioned blockchains.
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According to EY-Parthenon, institutional adoption is accelerating:
- By 2026, 91% of institutional investors expect to allocate funds to tokenized bonds.
- High-net-worth individuals (HNWIs) are not far behind, with 83% planning allocations.
- On average, institutions anticipate dedicating 5.6% of portfolios to tokenized assets within three years.
Despite this enthusiasm, actual demand remains limited—especially on the buy side.
Colin Cunningham, Head of Growth at Centrifuge, notes:
“While we talk about institutional adoption, it hasn’t truly materialized yet—at least not from buyers. For risk-seeking institutional investors looking for innovation, this space still doesn’t register.”
So who is driving demand?
It’s not Wall Street—at least not yet. Instead, it’s DAOs, DeFi protocols, and crypto-native ecosystems like Polygon and Arbitrum that have built robust user bases and capital reserves over the past few years. These entities are forming strategic partnerships with TradFi players to bridge liquidity gaps and pioneer new financial models.
Building On-Chain Capital Markets
In the decentralized ecosystem, MakerDAO stands out as a pioneer in integrating real-world assets. Through partnerships with firms like BlockTower Capital, Maker has diversified its $3.7 billion USD-pegged stablecoin (DAI) reserve with approximately **$2.7 billion in tokenized U.S. Treasury securities**.
Launched in July 2022, this move allowed Maker to generate yield during periods of rising interest rates—earning up to 70–80% of its revenue from stable fees tied to RWA investments.
“This proves that DeFi can operate outside closed private blockchains,” says Cunningham. “BlockTower showed that you can launch a credit fund on-chain—even if it’s not plug-and-play easy.”
This development signals more than just financial diversification; it represents the emergence of on-chain capital markets—a concept once dismissed during crypto winters marked by FTX’s collapse, Terra’s implosion, and broader market skepticism.
Even as global interest rates climb and geopolitical tensions persist, the idea of a functional, yield-generating blockchain-based financial system is gaining traction.
To accelerate this vision, industry leaders including Aave Companies, Circle, Coinbase, Base, Centrifuge, Goldfinch, and RWA.xyz formed the Tokenized Asset Coalition (TAC) in early 2025. The coalition aims to promote public blockchain adoption for asset tokenization and institutional DeFi.
As Cunningham emphasizes:
“We need more institutional thinking—more rigor. The TAC is critical for building the right frameworks and practices to scale this movement.”
Smaller credit managers are also stepping up, partnering with DeFi protocols to access global capital pools. Unlike legacy funds with rigid structures, these innovators embrace blockchain's potential for atomic settlement, reduced counterparty risk, and democratized access.
The Surge in Tokenized Treasuries
Currently, tokenized U.S. Treasuries lead the RWA charge. According to RWA.xyz, the market has exploded from around $698 million at the start of 2025 to over **$1 billion**—driven by declining DeFi yields and investor demand for safer returns.
“Crypto created a yield vacuum when DeFi returns dropped,” says Cunningham. “Now, tokenized money markets and Treasury products are thriving because capital is clearly present.”
Coinbase Research highlights that financial asset tokenization has been evolving since 2017. Over time, misconceptions have faded—especially around security and settlement. With atomic settlement reducing counterparty risk and improving finality, confidence in on-chain assets is growing.
While U.S. regulators continue grappling with crypto and stablecoin legislation, forward-thinking jurisdictions are taking action:
- UK’s FCA, Japan’s FSA, Switzerland’s FINMA, and Singapore’s MAS are collaborating under Project Guardian to explore cross-border tokenized asset frameworks.
- Regulatory sandboxes now allow testing for tokenized fixed income, foreign exchange, and asset management products.
Yet challenges remain. EY-Parthenon found that 49% of institutional investors cite regulatory uncertainty as their top barrier.
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Coinbase predicts:
“This could become a key use case for TradFi—and a core component of the next crypto cycle—though full-scale implementation may take another 1–2 years.”
Bridging the Mindset Gap
One of the biggest hurdles isn’t technological—it’s cognitive.
“We must close the education gap between crypto-native on-chain investors and traditional off-chain investors,” says Cunningham.
Traditional investors see crypto as one small part of a diversified portfolio. They have access to vast markets and decades of data. In contrast, on-chain investors often face limitations in product depth and liquidity.
For example: What happens if you invest in a 12-month tokenized bond with no secondary market? How do you assess risk without historical benchmarks?
“Secondary market liquidity is absolutely essential for RWA tokenization to thrive,” Cunningham stresses.
Without it, even high-yield assets risk becoming illiquid traps—undermining trust and scalability.
Frequently Asked Questions (FAQ)
Q: What is asset tokenization?
A: It’s the process of converting ownership rights of physical or financial assets—like real estate, bonds, or commodities—into digital tokens on a blockchain for easier trading and fractional ownership.
Q: Why are U.S. Treasuries being tokenized first?
A: Because they’re low-risk, highly liquid, and generate predictable yields—making them ideal entry points for institutions testing blockchain integration.
Q: Are tokenized assets regulated?
A: Regulations vary by jurisdiction. While countries like Singapore and Switzerland are advancing clear frameworks, others—including the U.S.—are still developing comprehensive rules.
Q: How do I invest in tokenized assets?
A: Through regulated platforms offering tokenized funds or DeFi protocols like MakerDAO and Centrifuge that provide exposure to real-world yields.
Q: Can small investors benefit from tokenization?
A: Yes—tokenization enables fractional ownership, allowing smaller investors to access high-value assets previously out of reach.
Q: Is RWA tokenization secure?
A: When built on secure blockchains with proper legal wrappers and custodial safeguards, yes. Atomic settlement further reduces counterparty risks compared to traditional systems.
The Road Ahead
By 2030, analysts project the tokenized RWA market could reach $10 trillion, becoming a cornerstone of mainstream crypto adoption.
But success depends on collaboration—between regulators, TradFi institutions, and crypto innovators—to build liquid secondary markets, standardized frameworks, and investor protections.
The foundation is set. The players are aligned. And the momentum is real.
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