Outside Source
As global financial markets face unprecedented challenges, tokenized real-world assets could be a lifeline, with predictable yields and enhanced market liquidity.
Opinion
Opinion by: Abdul Rafay Gadit, co-founder of ZIGChain
America’s tariff regime has apparently fueled a global trade war, forcing investors to explore stable, yield-generating alternatives. A closer look reveals that illiquidity, opacity and scalability challenges have plagued global financial markets for long. They weren’t in great shape anyway, trade war or no trade war.
Tokenized real-world assets (RWAs) have risen to this occasion — thankfully. For one, they ensure predictable yields, providing a haven for investors amid uncertain market conditions and unproductive volatility.
Above all, though, RWAs are a lifeboat for legacy finance, as they enhance market liquidity, bring transparency to opaque markets, and make finance more democratic. Traditional financial markets need to integrate — not resist — RWAs to stay relevant in the coming decade.
RWAs to the rescue
In legacy finance, capital’s “computability” occurs through slow, expensive and unreliable intermediaries like banks. For example, these entities are primarily unable to rebalance portfolios quickly.
This limits market scope, and consumers bear significant losses. There are persistent trust issues across the board, while fund managers face immense administrative burdens in handling clients. The bottom line: Everyone suffers, except the value-sucking go-betweens.
That’s a big reason fundraising in private equity, a key pillar of global financial markets, declined 24% in 2024, per McKinsey’s report. Likewise, as the SIFMA 2025 Capital Markets Outlook revealed, US equity issuance has decreased by 0.6% annually since 2020. Initial public offerings have been down 8.5% during this period.
RWAs fix these. They make portfolio management more straightforward and seamless, with scalable capital deployment even in turbulent markets.
Tokenization automates verifiable transactions, enabling precise, deterministic, trustless economies — turning the status quo on its head. It also provides investors with low-risk, low-cost and rapid access to existing and emerging global financial markets.
Recent: 5 ways real-world asset tokenization is transforming TradFi
No wonder onchain RWAs increased 85% to over $15 billion in 2024. And this trend still has momentum. RWAs are poised to remain a top investment category in crypto.
RWAs reached a new all-time high recently, surpassing $17 billion, with over 82,000 asset holders. Notably, tokenized private credit is the largest asset in the RWA industry, with over $11 billion in valuation.
It’s clear that investors chose RWAs in the face of a $10-billion liquidation and general, persistent market volatility. Moreover, this asset class is making private credit great again, laying the foundation for future financial markets.
“Smart money” bets on RWAs
JPMorgan, BlackRock, UBS, Citi, Goldman Sachs — all the big names in legacy finance have moved into RWAs. Capital inflows from such “smart money” entities helped onchain private credit grow 40% last year, while tokenized treasuries surged 179% overall.
All this could very well be routine diversification and capital expansion. But funds like Franklin Templeton’s Franklin Onchain US Government Money Fund (FOBXX) and BlackRock’s US dollar Institutional Digital Liquidity Fund (BUIDL) signal a more long-term motive.
This article first appeared at Cointelegraph.com News
