According to CoinDesk, the last six months in crypto markets have been dominated by two main narratives: the prospect of Bitcoin ETFs, which were approved by the SEC in January, and so-called real world assets (RWAs). Both traditional and decentralized finance experts have hailed these related innovations. BlackRock CEO Larry Fink told CNBC, “ETFs are step one in the technological revolution in the financial markets. Step two is going to be the tokenization of every financial asset.”
The final objective for all financial assets should be bringing the entire value chain, not just the end product, on-chain. This includes equities, fixed income, cash equivalents, alternative investments, and the many structured products that build on top of them. Unparalleled efficiency, transparency, and programmability can be enabled from origination and issuance to settlement and custody.
Traditional financial firms like WisdomTree are already pushing past simple token wrappers and embracing broader blockchain capabilities for capabilities like settlement, record-keeping, and exchange infrastructure. J.P. Morgan Onyx is also exploring on-chain settlement and rebalance execution for alternative assets and broader portfolio management. Blockchain-native organizations like Goldfinch and Maple are bringing credit markets on-chain with lending facilities and secured collateral. Other asset classes like real estate (RealT), private equity (Tokeny), and carbon credits (Toucan) are coming on-chain too.
In a future where all assets are built, managed, and distributed on-chain, investors, asset managers, and even regulators will benefit from the transparency, efficiency, and disintermediation that results. Lower costs, global distribution, and more efficient markets await on the other side.