What Are Asset Tokenization and RWAs
Tokenization of Real-World Assets (RWA) is one of the foremost trends at the intersection of traditional finance and blockchain. At its core is the digitization of rights to real-world value—ranging from real estate and bonds to commodities—by issuing tokens that are explicitly backed by those assets.
Tokenization broadens access to investing, lowers infrastructure costs, and increases market liquidity. The growth has been striking: the aggregate value of tokenized assets has risen hundreds‑fold over the past five years to ~$21 billion; in just the first half of 2025 the figure more than doubled (from $8.6 billion to over $23 billion, +260%).
Goal of the article: give readers a clear view of how RWAs are already used in finance, what opportunities they unlock for investors and businesses, and which risks and constraints deserve careful attention.
What Are Asset Tokenization and RWAs
Definition: tokenization converts legal rights to real assets into digital form, making them tradable on a blockchain. It’s important to distinguish these concepts early so RWAs aren’t confused with projects’ native utility tokens.
Asset tokenization is the conversion of rights to a physical or financial object into a digital token on a blockchain. A token may represent an entire asset or a fraction of it. Such instruments are classified as Real‑World Assets (RWA)—real assets moved on‑chain. The category includes real estate, securities, precious metals, commodities, and other forms of value from the offline economy.
Difference from utility tokens: utility tokens can trade and have market value, but they do not confer rights to a specific asset. An RWA token is always tied to explicit backing—for example, a fractional interest in a property or a digital bond.
Example of a legal structure: the RealT platform registers a separate limited liability company (LLC) for each property. Investors receive LLC share tokens that confer rights to a share of ownership and rental income.
Technical implementation: most often via smart contracts under ERC‑20 (for fungible fractions) or ERC‑721/1155 (for unique assets).
Legal framework: the token is typically linked to an SPV (special purpose vehicle) that holds the asset, or documented as a receivable/claim. That linkage underpins enforceable ownership.
Compliance: restrictions are embedded in the token architecture from the outset. So‑called “whitelist tokens” use standards such as ERC‑1400/3643, allowing transfers only to addresses that pass KYC/AML. Major infrastructure providers like Tokeny (Luxembourg) offer such solutions; more than $28B of assets have already been tokenized on their technology.
Comparison of Leading RWA Platforms
| 🌐 Platform | 🎯 Asset Focus | 📈 Scale | ⚙️ Features |
|---|---|---|---|
| Ondo Finance 🇺🇸 USA | 💵 U.S. Treasuries OUSG, USDY | ≈$1.3B TVL OUSG ~ $690M | 📑 Tokenized funds for qualified investors (Reg D) |
| Franklin Templeton 🇺🇸/🇪🇺 USA/EU | 💵 Government bonds (money‑market fund) BENJI (FOBXX) | $420M AUM regulated mutual fund | ⛓️ Public blockchain, P2P transfers Avalanche |
| RealT 🇺🇸 USA | 🏠 Real estate residential | 600+ properties $45M+ cumulative | 🪙 LLC tokens rental payouts in stablecoins |
| Centrifuge 🇺🇸/🇩🇪 USA/Germany | 🏦 Private credit factoring, pools | ≈$220M TVL (2025) | 🤝 Integrations with Maker/Aave Tinlake |
| Tokeny 🇱🇺 Luxembourg | ⚙️ Infrastructure for any RWA | $28B+ tokenized | ✅ Compliance platform ERC‑3643 (T‑REX) |
| Matrixdock 🇸🇬/🇭🇰 Singapore/Hong Kong | 💰 Bonds & gold STBT, XAUm | 🚀 Initial issuances since 2023 | 📜 MAS/SFC licensing physical gold redemption |
| Maple Finance 🇺🇸/🇦🇺 USA/Australia | 🏦 Corporate credit, Treasuries custom pools | $22M+ in RWA pool | 🌐 DeFi lending Reg D for the U.S. |
- Ondo and Franklin Templeton strengthen the fixed‑income segment.
- RealT makes residential real estate accessible.
- Centrifuge and Maple cover the private‑credit niche.
- Tokeny provides infrastructure for compliant issuances.
- Matrixdock is testing the Asian market with gold and bonds.
The most mature solutions are in bonds and real estate. Weaker areas include commodity tokens and cross‑regional launches; these are still forming.
Real‑Estate Tokenization
Real estate is the first and most illustrative asset class for tokenization: high entry costs and low liquidity make it ideal for fractional ownership via digital shares.
Tokenization addresses this through a fractional model: a property is split into hundreds or thousands of shares, each issued as a token. Investors can participate with modest tickets—often from $50–$100. Holders of such shares receive rights to income (rents, price appreciation) without operational hassle.
Case: AspenCoin: in 2018 the owners of the St. Regis Aspen hotel raised $18M by selling ~19% via tokens (Reg D). These digital shares later traded on tZERO.
RealT example: the service has tokenized 600+ U.S. residential properties. Minimum ticket is about $50; there are over 65,000 investors; rental income is paid automatically in stablecoins.
How it works. Tokens function as equity securities. Smart contracts automate rental distributions and proceeds on sale, while title is secured through an SPV (the asset‑holding company). In parallel, several countries (Dubai, Switzerland, Singapore) are developing electronic land registries, opening the door to direct on‑chain title recording.
✅ Pros
- Higher liquidity of fractional shares.
- Low entry threshold (from $50).
- Automated payouts and investor registries.
- Straightforward portfolio diversification.
❌ Cons
- Strict securities‑law requirements.
- Dependence on operator and asset‑management quality.
- Potential conflicts of interest.
- Restricted retail access in many jurisdictions.
Main point: tokenization lowers barriers to real‑estate investing and improves liquidity, yet outcomes still hinge on jurisdictional rules and the quality of property management.
Tokenization of Bonds and Debt Assets
Bonds and credit form the most dynamic RWA segment: they provide fixed income and are sought after as reliable collateral in DeFi.
By early 2025, about 30% of the RWA market consisted of tokenized U.S. Treasuries. Outstanding volume grew from <$500M (2022) to >$6B (April 2025). The market for tokenized private credit grew from zero to about $12B over the same period.
Ondo Finance
A pioneer in tokenizing U.S. Treasury bills.
- Flagship product — OUSG, a short‑term T‑bills fund.
- Mid‑2025: TVL (total value locked) ~ $1.3B, of which OUSG ~$690M.
- Launched USDY, a token backed by corporate bonds with 5–6% yield.
Franklin Templeton
A major asset manager, first to launch a fund on a public blockchain.
- FOBXX — a $420M AUM (assets under management) money‑market fund, tokenized as BENJI.
- Trading and P2P (peer‑to‑peer) transfers available on Avalanche.
- Investors can subscribe and redeem in stablecoins.
Centrifuge
A platform for tokenizing private debt and integrating it into DeFi.
- Finances invoices, SME (small and medium‑sized enterprise) loans, and real estate via Tinlake.
- Integrations with MakerDAO and Aave (RWA as collateral).
Maple Finance
A DeFi protocol that expanded into the RWA market.
- A cash‑management pool invests in one‑month T‑bills (4–5% APY, annual percentage yield).
- Initially available outside the U.S., later opened under Reg D 506(c).
Main point: debt assets are the most mature tokenization segment. Bonds and credit attract both institutions and DeFi users, while retail access remains limited due to regulation.
Tokenization of Commodities
Commodities are a natural candidate for tokenization. Metals, energy, and agricultural products become accessible via digital tokens without resorting to bulky futures or physical logistics.
Gold
The most mature commodity segment, backed by physical reserves.
- PAX Gold (PAXG): 1 token = 1 troy ounce of gold in LBMA (London Bullion Market Association) vaults; physical redemption is possible.
- Market capitalization in the hundreds of millions of dollars.
- Tether Gold (XAUT) follows a similar model; these tokens are accepted as collateral in DeFi.
Oil and Energy
A more complex segment: storage and regulation complicate scaling.
- Barrels: a token pegged to Brent with public Proof of Reserves.
- MiCA compliance is declared; market cap remains small for now.
- Illustrative pilots exist, but the market is still in testing.
Other Commodities
Beyond gold and oil, other commodity assets are being tokenized.
- Silver, platinum, palladium — backed tokens from individual issuers.
- Copper — via warehouse receipts.
- Grains — digital receipts and forwards that let farmers borrow “against harvest.”
Infrastructure and Risks
Reliable custodians are the backbone of trust in commodity tokens.
- Matrixdock (XAUm): 1 token = 1 gram of 99.99% gold stored with Malca‑Amit/Brink’s; physical redemption is possible.
- Key risks: price volatility, custody failures, and potential classification as derivatives.
Main point: gold‑backed tokens have become the commodity standard; oil and agri tokens remain experimental. Success hinges on custodian reliability and transparent reserves.
Advantages and Risks of Tokenization
Pros and Cons of Tokenization
✅ Pros
- Accessibility. Lower entry thresholds (investments from tens of dollars) democratize access to expensive assets.
- 24/7 liquidity. Round‑the‑clock markets and faster exits than with traditional deals.
- Lower costs. Smart contracts automate registries and settlements, reducing expenses and operational risk.
- Transparency. On‑chain accounting and Proof of Reserves reduce information asymmetry and build trust.
- DeFi integration. Tokens can be used as collateral, in liquidity pools, and by yield aggregators.
❌ Cons
- Legal uncertainty. In many countries, recognition and enforcement mechanisms for tokens remain unclear.
- Regulatory barriers. Many offerings are limited to accredited investors.
- Technology risks. Potential smart‑contract vulnerabilities, network outages, and implementation bugs.
- Custody risks. Loss of assets due to a custodian’s insolvency or misconduct.
- Thin markets and tax questions. Young markets may lack depth; tax and accounting treatment is unsettled.
Main point: tokenization makes markets more accessible and efficient, but scaling depends on mature regulation, reliable custody infrastructure, and strong smart‑contract security.
The Role of Stablecoins and DeFi
Stablecoins have become connective tissue between RWAs and blockchains: they serve as the settlement layer, while DeFi platforms turn tokenized assets into liquid instruments.
Base Stablecoins
USDC and USDT are used to purchase fractions and distribute income (coupons, rent).
- A class of “RWA‑backed stablecoins” has emerged, with reserves in tokenized bonds.
- Examples include products anchored to BlackRock BUIDL and Franklin Templeton, as well as Ethena, which has shown explosive TVL growth.
DeFi Integration
RWA tokens are increasingly used as collateral and liquidity sources.
- MakerDAO was among the first to accept RWA collateral (Centrifuge pools, Société Générale bonds).
- The share of real assets in DAI reserves at times reached 10–15%.
- Aave launched dedicated RWA pools.
- Aggregators and indices have appeared to simplify portfolio diversification.
Institutional Stablecoins
Used by corporates for instant, 24/7 on‑chain settlement.
- Example: Ondo expanding to XRPL.
- Two‑way convertibility between RLUSD (Ripple) and OUSG enables on‑chain settlements backed by real bonds without banking delays.
Main point: stablecoins have become foundational infrastructure for RWAs—from straightforward payments and distributions to sophisticated DeFi strategies and corporate on‑chain operations.
Regulatory Aspects and Compliance
The RWA market is growing fast, and regulators worldwide are seeking a balance between innovation and investor protection. Approaches vary significantly by region.
United States
- RWA tokens are generally treated as securities under SEC oversight.
- Common frameworks include Reg D, Reg S, and Reg A+, with KYC and off‑chain registries.
- Access is mostly limited to accredited investors (e.g., Maple Finance pools).
- Large managers (Franklin Templeton, BlackRock) have digitized fund shares on public blockchains.
European Union
- MiCA governs crypto‑assets, while security tokens remain under MiFID II and the Prospectus Regulation.
- A DLT pilot regime is testing trading in tokenized securities.
- Examples include EIB digital bonds and the SIX Digital Exchange (Switzerland).
- Projects like Barrels declare MiCA compliance (white paper, Proof of Reserves, investor protections).
Singapore and Asia
- MAS (Monetary Authority of Singapore) leads Project Guardian: pilots with bonds, funds, and trade finance.
- Automated market maker (AMM) pools and atomic delivery‑versus‑payment (DvP) settlement are being tested.
- Licensed venues (e.g., ADDX) have reduced minimum tickets to ~$10k.
- Hong Kong (SFC) and Japan are developing their own regimes for tokenized assets.
Middle East (MEA)
- UAE regulators—ADGM (Abu Dhabi Global Market) and VARA (Dubai’s Virtual Assets Regulatory Authority)—actively license digital‑securities activity.
- Digital bonds and Islamic instruments have already been issued.
- In 2025, the ADX (Abu Dhabi Securities Exchange) saw its first $100M digital‑bond issuance.
- Matrixdock issues RWA tokens (STBT, XAUm) under MAS/SFC oversight.
Main point: regulators are gradually shaping standards for tokenized securities. In the coming years, expect broader retail access on licensed DLT markets and convergence on best practices.
✅ Conclusion
Tokenizing real‑world assets brings traditional classes—real estate, bonds, commodities—into a digital format with instant settlement and transparent on‑chain accounting. Tens of billions of dollars’ worth of such value are already held on blockchains, and integration with DeFi is creating new liquidity and yield scenarios.
At the same time, the sector remains young: legal regimes are fragmented, custody and cyber risks persist, and liquidity in individual issuances is still developing. Scaling is possible only with standardization, mature infrastructure, and close collaboration with regulators.