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

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 testing and deploying their infrastructure on a large scale. Just last week, traditional financial institutions and native blockchain companies, including BlackRock and Libre, announced advancements in their RWA plans.

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

Ethereum remains the primary hub for RWA tokenization. According to RWA.xyz, the market value of tokenized U.S. Treasury bonds currently stands at $6.5 billion. Ethereum holds a major share of this market, hosting over $4.9 billion in tokenized Treasury bonds.

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

Giants Entering: Acceleration of RWA Tokenization

On April 30, BlackRock submitted an application to create a digital ledger technology share class for its $150 billion Treasury trust fund. It will utilize blockchain technology to maintain a mirrored record of share ownership for investors. This DLT share will track BlackRock's BLF Treasury Trust Fund (TTTXX), which can only be purchased through 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. Reportedly, this is the largest RWA tokenization plan to date.

Eric Piscini, CEO of Hashgraph, stated in an interview with Cointelegraph:

"The recent surge is not coincidental, as everything is moving in a favorable direction. The rules in major markets are becoming clearer, the technology is stronger and faster, and is ready to scale. Giants like BlackRock are taking real action—BlackRock is tokenizing funds, Citigroup is exploring digital asset custody, and Franklin Templeton has already tokenized money market funds on public blockchains."

Kazmierczak noted that the 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 over a dozen enforcement cases against cryptocurrency companies. Additionally, the Department of Justice recently announced the dissolution of its cryptocurrency enforcement division, indicating a softened stance towards the industry.

In addition to regulatory clarity, advancements in technological capabilities, such as wallets, are also playing a key role in driving the popularity of tokenization. Felipe D’Onofrio, CTO of Brickken, stated:

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

Ethereum's Dominance: The Main 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 unparalleled security, developer ecosystem, and institutional adoption, Ethereum remains the most suitable blockchain for large-scale RWA issuance."

However, he noted that specialized RWA ecosystems like Canton Network, Plume, and Ondo Chain are building compelling alternatives designed with features for compliant asset tokenization.

According to RWA.xyz, the current market value of tokenized U.S. Treasury bonds is $6.5 billion. Ethereum holds a major share of this market, hosting over $4.9 billion in tokenized Treasury bonds.

Challenges Remain: Huge Growth Potential

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

Looking ahead, Piscini estimates that by the end of this decade, over 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 forecast that by 2030, the market size in the RWA sector will be between $4 trillion and $30 trillion.

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