Original source: Weilin, PANews
Reprinted: Koala, Mars Finance
Recently, as Trump won the U.S. election, the heat of the cryptocurrency market has risen, and the RWA sector has frequently welcomed new dynamics. For example, on November 14, Tether announced the launch of the asset tokenization platform Hadron by Tether, while Visa also released the tokenized asset issuance and management platform Visa Tokenized Asset Platform (VTAP) in early October.
Against the backdrop of gradually clarifying regulatory policies, the industry's optimism about the future of tokenization is also increasing. Jesse Knutson, head of operations at Bitfinex Securities, recently pointed out that large financial institutions will become the main driving force behind the growth of the tokenization industry. BlackRock CEO Larry Fink has also viewed the tokenization of financial assets as "the next step in future development."
Giants and platforms such as Tether and Visa are competing to lay out tokenization platforms.
The core concept of RWA tokenization is to mint financial assets and other tangible assets onto an immutable blockchain ledger, thereby enhancing investor accessibility, increasing liquidity for these assets, creating more trading opportunities, while saving transaction costs and improving security.
According to data from rwa.xyz, as of November 18, the top five issuers in the RWA sector by total value (excluding stablecoins) are BlackRock ($542 million), Paxos ($506 million), Tether ($501 million), Ondo ($452 million), and Franklin Templeton ($410 million).
The RWA sector is heating up alongside the overall rise in the cryptocurrency market. On November 14, Tether, the issuer of the stablecoin USDT, announced the launch of the asset tokenization platform Hadron by Tether, which simplifies the process of converting various assets into digital tokens. The platform allows users to easily tokenize stocks, bonds, commodities, funds, and reward points. According to official introductions, Hadron aims to open up new opportunities for individuals, businesses, and even network states to raise funds using tokenized collateral. Hadron not only provides risk control, asset issuance and destruction, KYC, and anti-money laundering compliance guidance but also supports blockchain reporting and capital market management.
Technically, Hadron supports Ethereum, Avalanche, and Blockstream's Bitcoin scaling network Liquid, and will soon add the TON network and other smart contract chains.
At the same time, traditional financial giants are not falling behind. On October 3, Visa launched the Visa Tokenized Asset Platform (VTAP), designed to simplify the issuance and management of tokenized assets, including tokenized deposits, stablecoins, and central bank digital currencies (CBDC). Through VTAP, financial institutions can create and test their own fiat-backed tokens using the sandbox environment provided by the Visa developer platform.
While providing support for institutions, some projects are also starting to focus on the potential of the retail market. On October 8, the EU tokenization protocol Midas opened the mTBILL and mBASIS tokens to retail traders. It is reported that this tokenization company has received regulatory approval from the Liechtenstein Financial Market Authority to open these funds to retail traders, making Midas's real-world asset (RWA) tokens the only regulated crypto tool in Europe without a $100,000 minimum investment limitation.
On the other hand, the tokenization of specific asset types is also attracting the attention of professional investors. At the end of October, the tokenized fund platform Elmnts, supported by oil and gas royalties, announced its public beta launch on Solana. Elmnts is a compliant investment fund tokenization platform. These funds are supported by royalties generated from companies that extract oil and gas from land owned by the fund. The platform currently primarily targets institutions and high-net-worth individuals.
In addition, participants in the DeFi space are also trying to explore more innovative paths through collaboration with traditional financial giants. Earlier this year, the DeFi protocol Ondo began utilizing BlackRock's dollar institutional digital liquidity fund (BUIDL) to tokenize money market funds to develop its derivatives.
RWA Ecosystem Overview Source: Tren Finance
Regulations are expected to become clearer, ushering in the third revolution in asset management.
The global consulting firm Boston Consulting Group (BCG) referred to RWA tokenization as "the third revolution in asset management" in a paper published on October 29. Some believe that ETFs are at the core of asset management 2.0, while tokenization may represent the era of asset management 3.0. BCG anticipates that within just seven years, the managed assets of tokenized funds could reach 1% of the managed assets of global mutual funds and ETFs, which means that by 2030, managed assets will exceed $60 billion; it is expected that this trend will continue for some time, especially when regulated on-chain currencies (such as regulated stablecoins, tokenized deposits, and CBDC) projects come to fruition.
According to the more aggressive forecast in the October report by Tren Finance, the scale of the real-world asset (RWA) tokenization industry may exceed $30 trillion by 2030, with an expected growth of more than 50 times. The rapid development is driven not only by flexible financial institutions and mainstream financial entities but also by advancements in blockchain technology and clearer regulations.
Against the backdrop of the continued rise in the cryptocurrency market, the increase in regulatory clarity has injected new confidence into the industry. Venture capital firm a16z Crypto pointed out in a recent post aimed at crypto founders: "The good news is that there is now a pathway for constructive engagement with regulators and legislators that can bring regulatory clarity, and you should all feel empowered to explore all groundbreaking products and services supported by blockchain, including tokens."
The post specifically pointed out that token issuance is an activity that founders can pursue with more confidence: "For many of you, concerns about overregulation have led to delays in using tokens to allocate project control and build community; now you should feel more confident in using tokens as a legitimate and compliant tool for your projects."
At the same time, Jesse Knutson, head of operations at Bitfinex Securities, stated that large financial institutions will become the main driving force behind significant growth in the tokenization industry. Knutson noted that institutions are already driving significant growth in the crypto industry, and this impact may further extend to the tokenization field.
The positive expectations for RWA tokenization have also received responses from more professionals. Larry Fink, CEO of the world's largest asset management company BlackRock, recently stated, "The tokenization of financial assets will be the next step in future development." He pointed out that in the future, every stock and bond will have a unique identification code (similar to CUSIP), and all transactions will be recorded on a unified ledger, allowing investors to have exclusive identification. Fink stated that tokenization can effectively prevent illegal activities, and more importantly, it can achieve instant settlement, significantly reducing settlement costs for stocks and bonds. In addition, tokenization will bring the possibility of personalized investment strategies and enhance corporate governance efficiency, ensuring that every shareholder can exercise voting rights in a timely and accurate manner. Tokenizing real-world assets such as real estate, commodities, wine, or artwork means creating blockchain tokens that represent ownership, making it easier to trade these traditionally difficult-to-sell assets.
Specifically, according to a paper by State Street Global Advisors, bonds are expected to lead the large-scale adoption of tokenized real-world assets due to their structural characteristics. The report states that the bond market is mature and suitable for tokenization; the complexity of these instruments, the repetitiveness of issuance costs, and the intense competition between intermediaries both support rapid adoption and provide space for significant impact; blockchain technology can play an important role in markets that prioritize transaction speed (such as repos and swaps).
