Institutions are betting big on RWAs and expecting large returns

The tokenization of real-world assets (RWAs) is emerging as a prominent trend, drawing substantial institutional interest and investment. 

This movement has fueled forecasts of explosive growth in the RWA sector, with estimates ranging from $4 trillion to $30 trillion in market size by 2030. 

As reported by Cointelegraph, research by Tren Finance suggests that the RWA tokenization sector could see 50x growth by 2030 .

Major players like BlackRock and Boston Consulting Group are placing serious bets on this market, recognizing its potential to revolutionize how assets are traded, owned and invested.

Michael Bucella, co-founder and managing partner of Web3 investment firm Neoclassic Capital, said big investors are drawn to real-world asset tokenization because it addresses pricing inefficiencies in both traditional finance and crypto. 

Bucella told Cointelegraph, “A market will naturally tend to pricing inefficiencies. To TradFi, that is mispriced credit facilities (i.e., cost of capital) or exposure to underpriced volume. To crypto-native, that is low-volume, secure assets.”

Bucella said pricing gaps, or “mispricings,” happen in traditional finance and crypto because the key elements — like technology, financial services and regulations — are closely linked and grow together. These gaps exist because these areas are still developing and not fully synced.

As more assets move onto the blockchain, these pricing gaps will likely shift, making real-world asset tokenization more appealing to big investors.

Bucella said, “In time, this will change, as digitally native assets originate and securitize onchain, existing capital markets move onchain, and all new financial instruments come into existence due to blockchain innovation.”

Dan Spuller, senior director of industry affairs at the Blockchain Association, a US trade group promoting pro-crypto policies and regulations, said that RWA tokenization and decentralized physical infrastructure networks (DePIN) are some of the fastest-growing areas in the blockchain space.

Spuller told Cointelegraph, “Traditionally illiquid assets like real estate, commodities and private debt can now be fractionalized, making them accessible to a broader range of investors while diversifying risk.”

He added, “I believe blockchain tech further enhances this by offering both transparency and security, with clear records of ownership and transaction history. As this adoption grows and digital asset regulations become clearer, this trend is expected to gain momentum, particularly among institutional investors.”

Institutional аdoption and RWAs

In 2024, the RWA sector experienced significant growth, highlighting the increasing commitment of finance giants to onchain assets. BlackRock, a global asset management leader, announced over $1 billion in tokenized treasuries, with a plan to scale this to $10 billion by the end of the year. 

Similarly, the Assetera protocol, recently launched on the Polygon network, has targeted TradFi markets with regulated, onchain investment opportunities in Europe. These moves are just the beginning, with predictions indicating that RWAs will dominate capital markets within the next decade.

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Regarding the future potential for RWAs, projections such as those from Boston Consulting Group (BCG) suggest a total addressable market for RWAs of up to $16 trillion by 2030, which is over 2,030x higher than the current market cap of $7.88 billion .

Top real-world asset coins by market capitalization. Source: Forbes

Sergey Nazarov, Chainlink’s co-founder, projected at the TOKEN2049 event that RWAs may soon surpass cryptocurrencies in market value, showing the potential for RWAs to change the finance space. As more traditional institutions adopt these assets, the market gains momentum toward a transformative role in the financial ecosystem.

Industry estimates vary on the projected growth rates of the RWA market. McKinsey provides a more conservative forecast of around $2 trillion by 2030.

Key drivers of growth for RWAs

Several factors drive the growth of RWAs, which align with the demands of institutional and retail investors for efficiency, transparency, and broader market access. 

Tokenization offers substantial benefits, such as enhanced liquidity, by enabling assets like real estate and bonds to be divided into smaller, tradable units on the blockchain. 

This fractionalization lowers the barrier to entry, democratizing investment opportunities and allowing a broader range of investors to participate in traditionally exclusive markets like real estate or fine art.

Blockchain-based tokenization also significantly reduces transaction costs by eliminating intermediaries and enabling faster settlement times. 

Transactions that take days in traditional markets can occur instantly onchain, adding liquidity and reducing counterparty risks. This efficiency is particularly appealing to institutional investors looking to cost-effectively optimize portfolios.

Also, tokenized assets allow automated compliance, where regulatory obligations are embedded directly into the tokens. This reduces the need for manual oversight and enables cross-border investments with fewer administrative complexities. 

Integrating these assets with decentralized finance (DeFi) protocols also introduces new financial products and revenue streams. By bridging TradFi and DeFi, tokenization leverages blockchain’s transparency and security, facilitating a more inclusive and accessible financial ecosystem.

Is continued growth realistic?

One reason for the optimism is the unprecedented institutional adoption and the technology’s evolving maturity. Tokenized US government bonds, for instance, have increased by 450% this year, boosted by favorable yields and enhanced accessibility on platforms like Ethereum. 

Bucella and Spuller are optimistic about the continued growth of RWAs. “Yes, the growth is inevitable. I believe a key market that remains undercovered is the financialization of IP (intellectual property) — an area of the market developing at a rapid pace in the East,” Bucella said, adding:

“There are troves of IP value in Japan and Korea, and the financialization of those assets is a key focus for corporations and regulators alike. I think this is the breakout RWA, or onchain finance sector in the coming years.”

Spuller chimed in, saying, “Yes, this trend is likely to continue, driven by institutional interest and technological advancements. Tokenization’s liquidity, transparency and security appeal widely, and as regulatory frameworks and industry standards evolve, growth in tokenized real-world assets should accelerate.”

Yet, rapid growth also depends on how well blockchain technology can address scalability and interoperability challenges that are critical to supporting large-scale tokenized asset trading.

Moreover, traditional finance institutions bring both credibility and stringent regulatory requirements. Their involvement suggests that tokenization will need to adhere to regulatory frameworks and risk management practices, potentially slowing the sector’s growth but ensuring its resilience and stability.

Roadblocks to RWA growth

The growth of RWAs faces several practical challenges. One of the main issues is the absence of unified verification standards. 

Currently, RWA verification is fragmented, with various protocols and practices leading to inefficiencies and increasing the potential for fraud. 

Spuller also said that standardized verification is important for the continued growth and adoption of RWAs. Spuller said, “Verifying tokenized assets brings challenges in authenticity, ownership validation and regulatory compliance.”

He continued, “As an industry, we can help address these challenges through efforts such as setting standards for asset classification, introducing regulatory measures and implementing third-party certification.” Spuller added that standardized token issuance and custody processes could “boost investor confidence and streamline regulatory approval.”

Another big challenge in RWA tokenization is managing custody, or safe-keeping, of both the digital token and the physical asset it represents. This extra step adds cost and complexity, reducing some of the savings that onchain finance may offer. 

Bucella points out that custody is another major hurdle in RWA tokenization, as “the cost efficiencies of onchain finance are diminished by the need to custody both the digital representation of the assets, as well as the bearer assets themselves (in the case of bonds).” 

He sees custody as one of many obstacles. Still, he emphasizes that these issues are being addressed, with “productive conversations happening between crypto-native and traditional institutions at events like the RWA Summit in New York last month.”

This inconsistency raises investor concerns, as it reduces transparency and trust in custodial management practices​.

Proving legitimacy is a major challenge with RWA growth because anyone can easily create a non-fungible token (NFT), but not all NFTs represent actual ownership. Its value is questionable without legal or market recognition that an NFT is the official proof of ownership for a physical asset, like property or art. 

This lack of inherent legitimacy is a big hurdle for establishing RWAs as reliable representations of ownership.

Then there’s the issue of court acceptance . Courts can transfer ownership of physical assets with traditional documents, but enforcing ownership on the blockchain is more complex. 

Unlike physical deeds, the only way for a court to compel a transfer onchain would be to have the owner’s private key. Without this kind of enforceability, it’s hard to resolve disputes involving tokenized assets in a legally binding way.

The scalability of blockchain technology also poses a challenge. Managing complex assets like real estate requires frequent valuation updates and compliance processes, which the current blockchain infrastructure struggles to support efficiently. 

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Integrating these processes with traditional finance is technically challenging, as blockchain systems need to scale in security, interoperability and reliability to meet the demands of high-value asset transactions.

Finally, there’s the security of token contracts themselves. Like other smart contracts, these are vulnerable to hacks. If someone hacks a tokenized asset contract, it raises questions about who owns the physical item represented by the token. 

Securing these contracts is critical to prevent unauthorized transfers and avoid confusion and disputes that could undermine trust in RWA tokenization.

The tokenization of real-world assets is reshaping the financial landscape, offering unprecedented opportunities for investors and institutions. 

While growth projections remain speculative, the momentum behind RWAs is undeniable. By addressing regulatory, technological and scalability challenges, the sector can harness the benefits of blockchain while ensuring security and compliance. 

As more institutional players engage with this innovative market, RWAs are poised to be a cornerstone of future finance, combining ttraditional assets' reliability with blockchain technology's flexibility