Bryan Choe, Head of Research at RWA.xyz, says the tokenized real-world asset market is entering a new phase, but warns that the industry still misunderstands what is required to turn tokenized products into functioning markets.
With roughly $30 billion worth of tokenized real-world assets on-chain and major financial institutions increasingly experimenting with tokenized products and blockchain-based distribution models, a growing number of market participants view tokenization as one of the most important trends shaping the future of finance.
Yet the market’s most important questions have changed and whether assets can be tokenized is no longer questioned. The debate rises up whether tokenization can create functioning markets around those assets. While issuing a token is pretty straightforward, what is far more complicated is building liquidity and infrastructure, along with distribution and user trust.
To better understand where tokenization stands today—and where it may be heading next—I spoke with Bryan Choe, Head of Research at RWA.xyz, a data and analytics platform tracking tokenized real-world assets across public blockchains.
On-Chain Capital Markets Are Still in Their Infrastructure Phase
According to Choe, one of the biggest misconceptions about tokenization is that it was always a technology problem:
“Every market needs infrastructure and participant buy-in to develop, and tokenization is no exception.”
Actually, tokenization remained largely a niche concept for years, although the technology already existed.
It was institutions that first brought tokenized assets closer to the financial mainstream. Custodians, broker-dealers, fund administrators, auditors, oracles, and other service providers entered the ecosystem, making institutional investors increasingly comfortable holding and transacting in tokenized assets, according to Choe, and not because the technology improved overnight.
The second catalyst came from stablecoins, which Choe sees as the capital base that made today’s tokenized asset market possible. The rapid growth and broader acceptance of stablecoins since 2022 helped create the conditions for tokenized assets to scale.
“We view total stablecoin market capitalization as a useful proxy for on-chain ‘dry powder’ that can rotate into tokenized assets.”
At the same time, the macro environment changed. Higher interest rates and declining DeFi yields after the 2022 bear market pushed crypto-native capital toward tokenized Treasury products, he notes.
On the institutional side, asset managers began looking at tokenization through a different lens — not only as a cost-saving tool, but also as a revenue opportunity.
“BlackRock’s 2024 launch of BUIDL helped establish a playbook and encouraged other financial institutions to tokenize existing products or launch new ones,” he argues.
That difference between institutional and crypto-native demand helps explain why the first scalable use cases did not follow the consumer-focused narrative.
“We are still in the early stages of building a new on-chain capital market, and liquidity infrastructure use cases are the first major phase of this evolution.”
As Choe puts it:
“For the reasons above, crypto-native capital initially moved into tokenized Treasury products for treasury management and yield. From there, onchain allocators have become more comfortable venturing out the risk curve as they have become more comfortable with additional structural risks that tokenized assets carry. Some investors are now seeking longer-duration or higher-risk opportunities that can generate incremental yield. We expect this progression to continue as onchain capital markets mature.”
According to him, it is also worth distinguishing these products from non-yielding assets such as tokenized stocks and commodities, which are seeing stronger consumer-facing adoption in certain markets.
“These products provide easier access to dollar-denominated assets for offshore and non-U.S. users, particularly those already using stablecoins,” he explains.
The Rise of Exposure Without Ownership
While tokenized Treasury products have attracted capital looking for yield and operational efficiency, another corner of the market has been growing for almost the opposite reason: exposure.
Recent months have seen rapid growth in synthetic RWA products and equity-linked perpetuals, highlighting demand that extends well beyond traditional notions of ownership.
“This shows that the market is split into two broad segments: participants who want exposure to an asset’s price performance, and participants who want ownership of the underlying asset,” Choe says.
According to Choe, demand currently appears strongest from the first group. Many of the characteristics that made crypto markets attractive in the first place — leverage, 24/7 trading, and frictionless directional exposure — naturally translate to synthetic RWA products.
Actual tokenized securities are much harder.
“They are directly connected to the underlying securities and therefore need to account for corporate actions, transfer-agent integration, custody, disclosures, redemption mechanics, voting rights, tax treatment, and legal enforceability. …
Full story available on Benzinga.com
