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Tokenized Real-World Assets: The $16 Trillion Opportunity for Institutional Finance

  • Writer: Harsim Ranjit Singh
    Harsim Ranjit Singh
  • Jan 9
  • 8 min read

Jan 9th, 2025 | RWA | Crypto | By Harsim Ranjit Singh


Introduction – A Paradigm Shift in Asset Ownership:

Global finance is on the cusp of a paradigm shift as real-world assets (RWAs) move onto blockchain rails. Tokenization – the process of creating digital tokens on blockchain that represent ownership in tangible assets – promises to unlock trillions in value. Boston Consulting Group projects that asset tokenization of illiquid assets could be a $16 trillion business opportunity by 2030, roughly 10% of global GDP1. To put that in perspective, it’s more than double the total assets under management of all ETFs in 20201. Institutional investors are taking notice of this tremendous opportunity. In the first quarter of 2025 alone, the on-chain market capitalization of tokenized RWAs approached $20 billion, marking a decisive shift from experimentation to execution2. Major players like BlackRock, Apollo Global, and Fidelity have already launched real tokenization projects, signalling that institutional adoption of blockchain is no longer theoretical – it’s happening now2.


Market Trends Driving Tokenization:

Several trends are converging to drive this tokenization boom. Institutional search for yield in a low-rate environment has pushed investors toward private credit, real estate, and other alternatives – and tokenization is making these asset classes more accessible and liquid. Technological maturity of blockchain and smart contracts now enables secure, fractional ownership at scale. For example, Ethereum-based smart contracts can automate complex processes and enforce rights immutably, reducing reliance on intermediaries. Meanwhile, regulatory clarity is gradually improving in leading financial centres, giving traditional finance (TradFi) players the confidence to pilot blockchain projects. Larry Fink, CEO of BlackRock, wrote in 2023 that “the next generation for markets…the next generation for securities, will be tokenization”, emphasizing how fractionalized digital ownership can democratize access and streamline market infrastructure 1 3. This top-down endorsement is encouraging banks and asset managers to view tokenization not as hype, but as a serious innovation to reduce settlement times, increase liquidity, and broaden investor reach.


The $16 Trillion Opportunity – Breaking It Down:

What does that eye-popping $16 trillion figure encompass? Essentially, a significant portion of today’s illiquid or alternative assets could be tokenized: private equity and venture capital stakes, commercial real estate, infrastructure projects, fine art and collectibles, commodities, even patents and intellectual property1. Many of these asset classes are currently siloed in opaque markets with high barriers to entry. Tokenization can shorten value chains and reduce costs by replacing paper-based processes and multiple middlemen with transparent code3. For example, real estate tokenization allows property ownership to be split into digital shares, lowering investment minimums from millions to mere hundreds of dollars, and enabling peer-to-peer trading of those shares globally on a 24/7 basis. Private credit and loans can be bundled and issued as security tokens, turning what were previously illiquid loan portfolios into tradeable assets. This means a family office in Singapore could invest (with appropriate compliance) in a pool of U.S. middle-market loans via tokens, earning regular interest on-chain, whereas previously such access was limited to large institutions. Even revenue streams like music royalties or auto loans can be securitized and tokenized, expanding the investable universe. In short, tokenization has the potential to bring any asset with an income stream or value – from bonds to buildings to Barbadian art – onto a blockchain ledger for more efficient ownership transfer.



What Makes Up the $16 Trillion Tokenization Opportunity?
What Makes Up the $16 Trillion Tokenization Opportunity?

Key Technologies and Players Enabling RWA Tokenization:

This revolution is powered by a tech stack and ecosystem that has rapidly matured. Blockchain platforms like Ethereum (and its layer-2 networks), Polygon, and others provide the base infrastructure; many tokenized assets utilize Ethereum’s ERC-20 or ERC-1400 standard for representing securities. Smart contracts handle compliance (e.g. enforcing transfer restrictions to accredited investors), corporate actions (automatic distribution of dividends or interest), and cap table management. Major DeFi protocols have embraced RWAs to enhance their services and yields. For instance, MakerDAO – one of the earliest and largest DeFi platforms – now uses real-world assets as collateral for its DAI stablecoin. As of early 2025, roughly 46% of DAI’s collateral comes from RWAs, including short-term bonds and loan portfolios, generating 48% of Maker’s revenues4. This integration has helped stabilize DAI’s value and boost protocol earnings, illustrating the tangible benefits of RWAs in DeFi. Another leader is Ondo Finance, which launched tokenized U.S. Treasury funds that let crypto investors indirectly hold T-bills on-chain; by 2025 Ondo had over $1 billion in tokenized T-bills, and its yield-bearing USDY token grew 641% in 2023 alone4. Infrastructure providers are also crucial – companies like Securitize, Provenance, and Tokeny provide end-to-end tokenization services (investor onboarding/KYC, token issuance, custody solutions) for institutions. Likewise, major custodians such as Coinbase Custody and Anchorage offer insured storage for security tokens5 addressing a key requirement for institutional involvement.


Use Cases and Case Studies – From Theory to Practice:

Beyond the buzz, real-world use cases of tokenization are already live, delivering value to institutions:


  • Bond Issuance and Trading: In 2023, Societe Generale’s blockchain subsidiary Forge issued a €100 million bond as a security token on Ethereum5. That tokenized bond was later used as collateral to secure a loan through a DeFi platform (MakerDAO), demonstrating how on-chain infrastructure can interoperate with traditional assets. Governments are experimenting too – the Hong Kong Monetary Authority issued HK$800 million (~US$100m) of tokenized green bonds in 2023, the world’s first tokenized government bond6. It settled T+1 and showcased efficiency gains in distribution to investors. The European Investment Bank has also issued multiple digital bonds on public blockchains (2021–2022), with immediate settlement and reduced intermediaries, partnering with major banks in a clear signal of things to come.


  • Asset Management – Tokenized Funds: Franklin Templeton’s On-Chain U.S. Government Money Market Fund is a live example of an SEC-registered fund whose shares are recorded on blockchain. By early 2025, it had over $700 million in assets tokenized on Ethereum and Stellar7. Investors can buy and redeem fund tokens through traditional brokers, but benefit from the efficiencies of a shared ledger (e.g. faster settlement and potentially extended trading hours). The fund’s success (now among the largest tokenized funds) proves that even highly regulated products can leverage blockchain within existing law. Likewise, in Europe, asset managers are launching tokenized feeder funds for private equity – Hamilton Lane, for example, tokenized portions of its flagship funds via Securitize, enabling smaller institutions and wealth managers to get exposure with lower minimums and improved liquidity windows.


  • Private Credit and Loans: DeFi platforms like Goldfinch and Maple Finance have facilitated on-chain lending to real-world borrowers. In these models, crypto liquidity is lent to fintech lenders or businesses in emerging markets, with loans tokenized and interest paid back to on-chain pools. Despite some challenges (e.g. credit risk and underwriting quality), these protocols have enabled global investors to earn yields from private debt that were previously hard to access. For instance, Goldfinch has funded loans to small businesses in countries like Nigeria and Mexico by connecting them with DeFi capital, generating yield in the range of 8–15% APY for liquidity providers. Traditional finance is also tapping DeFi rails: In November 2022, JP Morgan executed a landmark DeFi trade on a public blockchain (Polygon) as part of a Monetary Authority of Singapore pilot. They issued 100,000 tokenized Singapore dollars (roughly US$71k) and swapped it for tokenized Japanese yen with another bank, using a modified Aave protocol smart contract8. This “Project Guardian” trade was the first ever by a major bank on public DeFi and validated that regulated institutions can transact in a compliant manner using tokenized deposits and bonds8.



Benefits for Institutions – Why Pursue Tokenization Now:

For institutional finance, the upside of tokenized RWAs is compelling.


  1. Access and liquidity: Previously illiquid holdings like commercial real estate can be fractionated and traded, allowing institutions to rebalance portfolios more easily and unlock value without full asset sales. Portfolio diversification improves too – a regional bank treasury can hold a token that represents a slice of a diversified private credit fund, for example, rather than concentrating exposure.


  2. Operational efficiency and cost reduction: Settlement and registry maintenance via blockchain can cut days of processing and coordination. One study estimated tokenization could save $100 billion annually in asset management by eliminating manual processes and intermediaries1. Smart contracts also automate compliance checks, interest payments, and corporate actions, which today entail significant overhead.


  3. Transparency and risk management: Blockchain’s immutable ledger provides real-time insight into asset provenance and ownership. This can reduce fraud and simplify audits – think of knowing exactly which loans back a tokenized debt security and tracking cashflows instantly on-chain.


  4. Tokenization enables new financial products and revenue streams. Banks can originate loans or mortgages and immediately issue tokenized slices to investors globally, accelerating capital recycling. Asset managers can broaden their investor base by offering tokenized share classes that appeal to tech-savvy or smaller-ticket clients.


Risks and Challenges – Tempering Expectations:

Of course, alongside the massive opportunity come challenges that institutions must navigate. Regulatory uncertainty remains a hurdle in some jurisdictions. Firms must ensure tokenized offerings comply with securities laws, which often means limiting offerings to accredited investors or through regulated platforms. There is also technology risk – reliance on smart contracts introduces new forms of operational risk. Bugs or vulnerabilities in code could lead to losses or frozen assets. Moreover, market liquidity for certain tokenized assets is not a given. Simply putting an asset on blockchain doesn’t guarantee active trading. Price discovery may be challenging if the underlying asset (say a piece of fine art) doesn’t have frequent transactions. We have seen “liquidity fragmentation” where different platforms tokenize different assets and liquidity pools are siloed5. This is driving efforts toward interoperability (for instance, bridges and networks that connect various blockchains to aggregate liquidity). Custodial and key management risks are also new considerations for institutions – losing a private key could mean losing the asset. Institutions mitigate this by using professional custodians or multi-signature solutions. Lastly, there’s a cultural and educational gap: CIOs and operations teams need to become comfortable with blockchain concepts. Change management and finding the right talent or partners are critical for firms to successfully implement tokenization projects.


Strategic Outlook – Act or Be Left Behind:

Despite challenges, the trajectory is clear: real-world asset tokenization is poised to transform capital markets over the next decade. Forward-looking institutions like BlackRock and JPMorgan are already building internal expertise and partnering with fintechs to pilot use cases – they understand the cost of inaction could be loss of competitiveness. Over time, we expect secondary markets for tokenized assets to deepen, perhaps through consortium-led exchanges or integration with existing venues. Regulatory frameworks will continue to evolve to support this innovation, as evidenced by the EU’s pilot regime and Hong Kong’s recent tokenization-friendly rules. Importantly, tokenization could democratize access to asset classes historically limited to the few, unlocking new sources of capital. For institutional finance, this means a broader investor base for fundraising and liquidity events.


Most transformative, however, is the idea that financial markets could operate on a more open, interoperable infrastructure. Imagine a future where a bond issued by a European bank is instantly available to a pension fund in Dubai via a compliant blockchain network, or where a private equity fund’s interests trade on a secondary market providing continuous liquidity to investors. That future is increasingly plausible. As one report succinctly put it: Experts believe that most, if not all, financial assets will eventually be represented on blockchain, and tokenization is seen as a key driver of mainstream adoption of this technology9 . In other words, tokenized RWAs are not a side-show – they could very well become the main stage of global finance in the years ahead. The $16 trillion opportunity beckons, and institutions that develop a tokenization strategy today may reap outsized benefits tomorrow.


Why Institutions Are Embracing Tokenization
Why Institutions Are Embracing Tokenization

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