RWA tokenization brings traditional assets such as bonds, gold, real estate, and private credit onto blockchain networks. But the asset itself does not move on-chain. Instead, a token represents a legal or economic claim on it.
So what does an RWA token give you, how does the process work, and does putting an asset on-chain make it more liquid?
What RWA tokenization actually means
RWA stands for real-world asset. In crypto, the term refers to assets that exist outside the blockchain but are represented by digital tokens on-chain. A house counts, so does a gold bar, a government bond, or a slice of a private loan. The asset itself does not change. What changes is how a claim on it gets recorded and moved.
The Bank for International Settlements describes the process as moving a claim on an asset from a traditional ledger onto a "programmable platform." First, an issuer has to establish a legal claim on the asset, then wrap that claim in a token that a blockchain can process under its own rules. That connection between the old system and the new one works like a bridge between two separate databases, translating a record that exists in one place into a format the other can read. Nothing about the underlying property registry disappears. A token is simply a new layer on top of it.
What you own when you buy the token
The ownership is the part people mix up most. Buying a tokenized share of an apartment building through a platform like RealT does not hand you the deed. It usually gives you a stake in the LLC that holds the deed, and you collect rental income in stablecoins based on your share. RealT says it has returned $15 million in net rental income to token holders so far. LABS Group runs a similar model with a minimum buy-in as low as $100. In both cases, your legal claim runs through the entity structure, not directly through the blockchain, and whether courts in a given country even recognize that claim still depends on local law. That legal gap is one reason RWA tokenization has moved faster in jurisdictions with clear frameworks, such as Singapore or Switzerland, than in places without them.
Real estate gets the most attention, but it is not the largest category by value. Gold dominates tokenized commodities: a16z put tokenized gold at roughly $5 billion out of a $5.1 billion commodities total, driven almost entirely by products like Tether Gold and Paxos's PAXG. Government debt is even larger, and Securitize partnered with BlackRock in 2024 to launch an RWA fund; BlackRock's CEO Larry Fink called tokenization "the next generation for markets." Private credit, agricultural commodities through platforms like Agrotoken, and fine art through Masterworks and Artory round out the picture, each with its own custody and legal setup.
Why institutions bother, and who actually runs it
The appeal comes down to three technical shifts: tokenization, encryption, and programmability. Put an asset on a shared, programmable ledger, and a trade can settle the moment both sides fund it, instead of waiting on separate databases to reconcile. Smart contracts can also bundle steps that used to require several intermediaries, a property researchers call composability. For a $140 trillion global bond market where transactions today crawl through multiple banks and clearinghouses, even a small efficiency gain adds up across enough volume.
None of this runs on smart contracts alone, though. BCG's breakdown of platforms like ADDX shows a typical setup: an issuer registers the asset, a custodian holds it or the rights to it, compliance rules get written directly into the smart contract, and a broker dealer often still sits between the platform and individual investors. ADDX itself is regulated by the Monetary Authority of Singapore, and it has helped push minimum private-market ticket sizes down from around $1 million to $10,000.
Where the money actually is
Growth in this sector has been sharp. a16z reports the tokenized asset market, stablecoins aside, sat under $3 billion in mid-2024 and crossed $30 billion within two years, a tenfold jump tied to clearer U.S. stablecoin rules under the GENIUS Act and a wave of institutions that moved from blockchain pilots to live systems. Tokenized U.S. Treasuries lead that growth, giving crypto investors a way to earn traditional money-market yields on stablecoins that would otherwise sit idle. BlackRock and Franklin Templeton have both built products around exactly this demand.
Here is the part that gets less attention: most of these tokens barely touch decentralized finance. Only about 5% of the tokenized bond supply, around $800 million out of $15.2 billion, sits inside DeFi protocols. Gold shows similarly low usage. Smaller categories show a different pattern. Reinsurance tokens have 84% of their supply active in DeFi, and private credit sits at 33%, because those categories were built for on-chain use from day one. Pantera Capital's token presence index ranks more than three-quarters of tokenized assets in its lowest tier for how natively on-chain they actually are. Much of what gets called tokenization today is closer to digitization: records move onto a blockchain without the composability that made the technology interesting in the first place.
The risks that don't go away
Regulatory treatment still varies sharply by country. Investor rights depend on how courts view a token's legal standing, which remains untested in most jurisdictions. Custody adds another layer of trust, since someone still has to verify that the gold, the property, or the loan backing a token actually exists and matches the claims on chain. Smart contracts carry their own bugs and exploit history. None of this makes tokenized assets automatically safer or cheaper than their traditional counterparts, and BIS researchers explicitly note that gains tend to be smallest where tokenization is easiest to execute, because those markets were already efficient.
Liquidity, and what comes next
BCG frames the core promise as unlocking liquidity for assets that trade rarely, such as private equity or commercial real estate. Fractional ownership does lower the entry ticket and widen the pool of possible buyers. But a lower minimum investment does not guarantee a buyer shows up when you want to sell. Tokenized real estate and private credit still depend on someone finding a counterparty, same as an unlisted LLC share does today. What tokenization reliably delivers so far is a faster, cheaper way to represent and transfer a claim. Whether that claim becomes genuinely liquid depends on whether an active secondary market grows around it, and for most asset categories outside Treasuries and gold, that market is still thin.
Forecasts for where the market goes diverge wildly depending on what gets counted. McKinsey's base case puts the market at $2 to $4 trillion by 2030. Standard Chartered projects more than $30 trillion by 2034. BCG and Ripple land at $19 trillion by 2033. The gap comes down to definitions: some forecasts include stablecoins and deposits, others stick to bonds, funds, and equities. What most agree on is direction, not scale. Clearer regulation, deeper custody infrastructure, and more protocols built for composability from the start would likely decide which forecast ends up closer to right. Regulatory fragmentation across jurisdictions, and the slow pace of connecting these tokens to actual DeFi usage, are the more likely brakes on that growth.
Matvii Diadkov
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