Sustainability Atlas
Crypto & Web3·14 min read··...

Explainer: Tokenization & real-world assets (RWAs) — what it is, why it matters, and how to evaluate options

A practical primer: key concepts, the decision checklist, and the core economics. Focus on incentive design, regulatory surface area, and measurable real-world outcomes.

From $5 billion in 2022 to over $24 billion by mid-2025—a 380% increase in three years—the tokenization of real-world assets represents one of the most significant structural shifts in global capital markets since the dematerialization of securities in the 1990s (CoinGecko, 2025 RWA Report). When BlackRock CEO Larry Fink declares that "the next generation for securities will be tokenization of securities" and commits his firm's $10 trillion asset management operation to this thesis, the transition from speculative experimentation to institutional infrastructure becomes undeniable. This guide examines the mechanics, economics, and evaluation frameworks for RWA tokenization—providing decision-makers with the analytical tools necessary to navigate this rapidly maturing landscape.

Why It Matters

The significance of RWA tokenization extends far beyond technological novelty. Traditional financial infrastructure—built on legacy systems designed in the 1970s and 1980s—imposes substantial friction on capital formation and asset transfer. Settlement times of T+2 (two business days) for securities, limited trading hours constrained to specific time zones, and minimum investment thresholds that exclude the majority of global investors all represent structural inefficiencies that tokenization directly addresses.

According to Boston Consulting Group and Ripple's joint analysis, the tokenized asset market could reach $18.9 trillion by 2033, representing roughly 10% of global GDP (Ripple & BCG, 2024). This projection assumes continued regulatory clarity and institutional adoption—both of which accelerated significantly in 2024-2025. The EU's Markets in Crypto-Assets (MiCA) regulation, fully enforceable since December 30, 2024, provides the first comprehensive regulatory framework for tokenized assets in a major economic bloc. Meanwhile, the U.S. SEC's "Project Crypto" initiative, launched in July 2025, signals a shift toward accommodating tokenized securities within existing regulatory frameworks rather than viewing them as inherently problematic.

The sustainability implications are substantial. Tokenization enables fractional ownership of renewable energy infrastructure, green bonds, and carbon credit portfolios—potentially democratizing access to sustainable investment vehicles that have historically been restricted to institutional investors. A solar farm requiring $50 million in financing can, through tokenization, accept investments as small as $100, dramatically expanding the capital pool for clean energy projects while providing retail investors with exposure to stable, yield-generating assets.

The market composition reveals institutional priorities: private credit dominates at 58-61% of total tokenized RWA value ($14 billion), followed by tokenized U.S. Treasuries at 30-34% ($5.5-8.2 billion), real estate at approximately 6% ($1.4 billion), and commodities at 3-7% ($600 million-$1.7 billion). This distribution reflects a risk-adjusted approach—low-risk, yield-generating assets provide the proving ground for early experimentation, while more complex asset classes await further regulatory clarity.

Key Concepts

What Is Tokenization?

Tokenization is the process of representing ownership rights in an asset as a digital token on a blockchain or distributed ledger. Unlike cryptocurrencies (which are native digital assets), tokenized RWAs maintain a persistent connection to off-chain assets—real estate, government bonds, commodities, private equity, or any other asset class with definable ownership rights.

The technical architecture typically involves three layers: (1) the legal wrapper, establishing the legal relationship between token holders and the underlying asset; (2) the smart contract layer, encoding transfer logic, compliance rules, and dividend distribution mechanisms; and (3) the blockchain infrastructure, providing the immutable record of ownership and transaction history.

Asset Classes in the RWA Tokenization Market

The current market is concentrated in several key categories. According to CoinGecko's 2025 RWA Report, private credit leads with $14 billion in tokenized value, representing on-chain loans and structured credit products. Tokenized Treasuries grew 539% from January 2024 to April 2025, reaching $5.5-8.2 billion. Real estate tokenization remains nascent at $1.4 billion but is gaining traction through fractional ownership platforms. Commodities, including gold, silver, and carbon credits, represent $600 million to $1.7 billion. Equity tokens remain the smallest category at approximately $300 million, with platforms like Backed Finance and Ondo Finance dominating synthetic stock offerings.

Blockchain Distribution and Infrastructure

Ethereum remains the dominant blockchain for RWA tokenization, hosting approximately $12.3 billion in tokenized assets. However, Layer 2 solutions and alternative chains are gaining traction—BNB Chain ($1.8 billion), Solana ($782 million), and Arbitrum (growing rapidly following Robinhood's tokenized stock offering) represent the diversification of infrastructure choices.

The November 2024 announcement that BlackRock's BUIDL fund would expand beyond Ethereum to Polygon, Arbitrum, Solana, Aptos, and Optimism signals institutional recognition that multi-chain interoperability—rather than single-chain dominance—will characterize the mature market.

Regulatory Frameworks: MiCA and SEC

The EU's MiCA regulation establishes three token categories: Asset-Referenced Tokens (ARTs), which are stablecoins backed by baskets of assets; E-Money Tokens (EMTs), pegged 1:1 to single fiat currencies; and other crypto-assets, which require whitepaper notification but not authorization for offerings under €1 million. Tokenized RWAs typically fall under ART classification if value-pegged, requiring EU legal entity establishment, reserve backing, and regular audits.

In the United States, the SEC applies the Howey Test to determine whether tokens constitute securities. Tokenized real estate, private credit, and equity typically meet Howey criteria, requiring registration under Regulation D (private placement), Regulation A+ (mini-IPO up to $75 million), or full S-1 registration. The December 2024 DTC no-action letter established a pilot program for tokenizing securities on approved blockchains while maintaining traditional recordkeeping—a pragmatic hybrid approach.

What's Working

Institutional Treasury Products

The clearest success story in RWA tokenization is the tokenized U.S. Treasury market. BlackRock's BUIDL fund, launched in March 2024, grew from $245 million in its first week to $1.87 billion by March 2025—making it the largest tokenized money market fund globally. Franklin Templeton's FOBXX (BENJI token), the first U.S.-registered mutual fund to use blockchain as its system of record, expanded to six blockchains (Stellar, Polygon, Avalanche, Arbitrum, Aptos, and Base) and enabled peer-to-peer transfers in April 2024 (Franklin Templeton, 2024).

These products work because they solve real problems: 24/7 settlement, reduced counterparty risk through atomic transactions, and programmable dividend distribution. The 4-5% yields on tokenized Treasuries match or exceed traditional money market funds while providing the liquidity and composability advantages of on-chain assets.

Regulatory Framework Development

MiCA, despite its complexity, provides the regulatory clarity that institutional adopters require. The framework establishes clear categories with corresponding authorization, reserve, and disclosure requirements. Single authorization validity across all 27 EU member states through passporting reduces the friction of multi-jurisdictional compliance.

In the United States, the SEC's "Project Crypto" initiative signals accommodation rather than prohibition. Chairman Atkins' November 2025 statement that "most crypto tokens trading today are not themselves securities" and that investment contract status can expire represents a significant doctrinal shift that creates space for compliant tokenization.

Private Credit and Lending Protocols

Platforms like Figure (operating on the Provenance blockchain) have tokenized over $12.5 billion in assets, capturing 42.3% of the market. The efficiency gains are measurable: mortgage origination costs reduced by 30-40%, settlement times compressed from weeks to minutes, and audit trails permanently recorded on-chain.

What's Not Working

Secondary Market Liquidity

Despite $24 billion in tokenized assets, secondary market trading remains thin. Most tokenized RWAs trade through bilateral OTC transactions rather than liquid exchange-based markets. The fragmentation across multiple blockchains, varying legal structures, and incompatible compliance frameworks creates friction that prevents the emergence of deep, liquid markets.

The promise of 24/7 trading remains largely theoretical for most tokenized assets. While blockchain infrastructure supports continuous operation, market makers and institutional traders still operate on traditional business hours. True continuous liquidity requires market structure innovation that lags technological capability.

Interoperability and Standardization

The proliferation of tokenization platforms creates a fragmented ecosystem. A tokenized real estate asset on one platform may not be recognizable—legally or technically—by another platform. Cross-chain bridges introduce security risks (over $2 billion lost to bridge exploits since 2022), and there is no universal standard for representing ownership rights, compliance data, or transfer restrictions.

Industry efforts like the Token Taxonomy Framework and the Tokenized Asset Coalition are attempting to address standardization, but progress is slow and adoption is voluntary.

Regulatory Arbitrage and Compliance Complexity

The divergence between EU (MiCA), U.S. (securities law application), and Asian (jurisdiction-specific frameworks) regulatory approaches creates compliance challenges for global issuers. A tokenized asset legal in Singapore may be an unregistered security in the United States and require ART authorization in the EU. Multi-jurisdictional offerings require separate legal structures, compliance systems, and operational processes—eroding the efficiency gains that tokenization promises.

Key Players

Established Leaders

BlackRock — The world's largest asset manager ($10+ trillion AUM) operates the BUIDL fund, the largest tokenized Treasury product. BlackRock led a $47 million investment in tokenization platform Securitize in May 2024, signaling long-term strategic commitment to tokenization infrastructure.

Franklin Templeton — Pioneer of the first U.S.-registered tokenized mutual fund (FOBXX/BENJI), operating since 2021. The firm has expanded to six blockchains and enabled peer-to-peer transfers, setting precedents for regulatory-compliant tokenized fund structures.

JPMorgan — Operates Onyx, a blockchain platform for institutional asset tokenization and settlement. JPMorgan's infrastructure powers tokenization initiatives for other financial institutions, including Fidelity International's tokenized money market fund launched in June 2024.

Securitize — The dominant tokenization platform by institutional adoption, partnering with BlackRock, KKR, and Hamilton Lane. Announced plans to go public via SPAC in October 2025, signaling market maturation.

Emerging Startups

Ondo Finance — Tokenized Treasury products with $1.6 billion in assets, using BlackRock's BUIDL as reserve asset. Focused on bringing institutional-grade yield products to DeFi protocols.

Centrifuge — Specializes in tokenizing private credit and real-world lending, enabling on-chain financing for small and medium enterprises. Partner with MakerDAO for collateral integration.

Maple Finance — Institutional lending protocol that has tokenized over $2 billion in loans, connecting institutional lenders with crypto-native borrowers through transparent on-chain credit markets.

Key Investors & Funders

a16z Crypto (Andreessen Horowitz) — Significant investments in tokenization infrastructure and RWA protocols, including Centrifuge and multiple blockchain platforms enabling institutional adoption.

Paradigm — Major crypto-focused fund backing tokenization infrastructure companies and Layer 2 solutions that enable RWA markets at scale.

Coinbase Ventures — Strategic investor in tokenization startups, aligned with Coinbase's broader institutional custody and trading infrastructure buildout.

Examples

BlackRock BUIDL Treasury Fund: Launched March 2024 on Ethereum, BUIDL demonstrates institutional-grade tokenization at scale. The fund attracted $245 million in its first week, surpassing Franklin Templeton's three-year-old BENJI fund in less than two weeks. By March 2025, BUIDL held $1.87 billion in assets. Key success factors include BNY Mellon custody, Securitize tokenization infrastructure, and acceptance as collateral on crypto derivatives exchanges including Deribit and Crypto.com. The fund pays daily blockchain-based dividends and settles in USDC, providing seamless integration with crypto-native treasury operations while maintaining full regulatory compliance.

Robinhood Tokenized Securities on Arbitrum: In summer 2025, Robinhood launched tokenized U.S. stocks and ETFs on Arbitrum for European users—the first major retail brokerage to offer blockchain-based securities trading. This initiative bridges traditional equity markets with blockchain infrastructure, enabling 24/7 settlement and reduced custody costs. The choice of Arbitrum (an Ethereum Layer 2) reflects the maturation of scaling solutions and regulatory comfort with established infrastructure. The offering targets retail investors who previously faced barriers to U.S. equity access.

Figure Technologies Home Equity Loans: Figure, operating on the Provenance blockchain, has tokenized over $12.5 billion in home equity loans, capturing 42.3% of the tokenized private credit market. The platform reduces mortgage origination costs by 30-40% through automated document verification, smart contract-based lien placement, and instant settlement. Figure's success demonstrates that tokenization value accrues most clearly in high-friction, document-intensive processes where automation eliminates manual reconciliation. The platform has processed loans for over 100,000 homeowners while maintaining default rates comparable to traditional lenders.

Action Checklist

  • Assess asset suitability: Evaluate whether your asset class benefits from tokenization (high transaction friction, limited liquidity, restricted investor access) or would incur costs without corresponding benefits
  • Conduct regulatory mapping: Identify applicable regulations across target jurisdictions—MiCA requirements in EU, securities law implications in U.S., and local frameworks in Asia-Pacific markets
  • Select appropriate legal structure: Determine whether direct tokenization, SPV-based structure, or fund tokenization best aligns with regulatory requirements and investor expectations
  • Evaluate blockchain infrastructure: Compare Ethereum mainnet, Layer 2 solutions (Arbitrum, Polygon, Optimism), and alternative chains (Solana, Avalanche) based on cost, speed, and institutional adoption
  • Implement qualified custody: Ensure private key management meets regulatory standards—SEC Rule 15c3-3 in the U.S., MiCA custody requirements in EU
  • Build compliance infrastructure: Integrate KYC/AML verification, transfer restrictions, and regulatory reporting into smart contract architecture from the outset
  • Establish secondary market strategy: Plan for liquidity provision through market makers, exchange listings, or OTC desk relationships before launch

FAQ

Q: Are tokenized RWAs considered securities under U.S. law? A: In most cases, yes. The SEC applies the Howey Test to determine whether a token constitutes an investment contract (and therefore a security). Tokenized real estate, private credit, and equity typically meet Howey criteria—investment of money in a common enterprise with expectation of profits from others' efforts. Registration under Regulation D (private placement), Regulation A+ (mini-IPO up to $75 million), or full S-1 registration is generally required. The December 2025 SEC staff guidance clarified that investment contract status can expire as networks decentralize, but this applies primarily to utility tokens rather than RWAs backed by traditional assets.

Q: What are the primary cost drivers for tokenizing an asset? A: Initial tokenization costs include legal structuring ($50,000-$500,000 depending on complexity and jurisdictions), smart contract development and auditing ($30,000-$150,000), platform fees (typically 0.5-2% of issuance), and ongoing compliance infrastructure. Gas costs on Ethereum mainnet can be significant for high-volume transactions—Layer 2 solutions reduce per-transaction costs by 90-99%. Ongoing costs include custody fees (10-50 basis points annually), regulatory reporting, and smart contract maintenance. Organizations should budget 12-18 months for full implementation from legal structuring through launch.

Q: How does MiCA affect RWA tokenization in Europe? A: MiCA requires authorization from national competent authorities for crypto-asset service providers (CASPs) and detailed whitepaper disclosures for token issuers. Asset-Referenced Tokens (ARTs) face stricter requirements including full reserve backing, regular audits, and European Banking Authority supervision for "significant" ARTs with over 10 million holders. The regulation enables EU-wide passporting with single authorization but imposes substantial compliance costs. Transitional periods vary by member state (0-18 months), with full enforcement since December 30, 2024. Organizations should engage local legal counsel in their primary EU jurisdiction early in the planning process.

Q: What distinguishes tokenization from traditional securitization? A: Traditional securitization pools assets into special purpose vehicles and issues securities representing claims on cash flows—a process requiring extensive legal documentation, multiple intermediaries, and weeks of settlement time. Tokenization achieves similar economic outcomes but replaces paper-based processes with smart contracts, enabling programmable compliance, instant settlement, and fractional ownership at any denomination. The key operational difference is that tokenized assets can be transferred peer-to-peer 24/7, dividends can be distributed automatically via smart contracts, and ownership records are maintained on immutable distributed ledgers rather than centralized registries requiring reconciliation.

Q: What should I prioritize when evaluating tokenization platforms? A: Prioritize regulatory track record (platforms with successful SEC or MiCA-compliant offerings), institutional references (adoption by BlackRock, Franklin Templeton, or comparable institutions), technical security (smart contract audits from reputable firms, custody infrastructure, incident history), and ecosystem integration (connections to exchanges, custodians, and compliance providers). Avoid platforms without clear legal entity structure, those operating in regulatory grey zones, or those without demonstrated institutional adoption. Request references from existing clients and verify claimed transaction volumes through on-chain data where possible.

Sources

Topics

tokenizationrealsmart contractsgovernanceRWAcompliancecapex

Related Articles