RWA tokenization expected to reach $50 billion in 2025: report

Getting your Trinity Audio player ready...

The tokenization of real-world assets (RWA) continues to grow, with experts tapping the sector to reach a valuation of $50 billion before the end of 2025.

According to a report by Ozean, the market for tokenized RWA is poised to hit impressive figures in 2025, surpassing its previous records. In 2024, the ecosystem achieved a 32% annual growth rate, its highest increase over the last 12 months, but 2025 metrics are expected to reach new metrics.

Tokenizing real-world assets represents real-life assets like bonds and credit in the form of tokens on distributed ledgers. The upsides for tokenization are myriad, revolving around fractional ownership and improved liquidity for assets, luring new players into the ecosystem.

Ozean’s report reveals several factors that will drive adoption levels for RWA tokenization in 2025. The influx of traditional financial institutions will be the biggest needle-movers in the ecosystem, given their sheer reach and influence in the industry.

The report mentions investment giant BlackRock (NASDAQ: BLK) as an institution spearheading the initiatives for RWA tokenization. The U.S.-based financial giant has since rolled out a tokenized asset fund, which experts say is the first domino among large multinational investment companies.

“BlackRock’s credibility in the RWA movement is paving the way for other institutions to follow suit,” said Clearpool CEO Jakob Kronbichler in an interview with Decrypt.

Standard Chartered (NASDAQ: SCBFF) and Franklin Templeton (NASDAQ: FTGTX) have since rolled out their tokenized funds, with a slew of analytical firms eyeing industry valuations running into trillions of dollars. Analysts at Standard Chartered are predicting a $30 trillion market by 2034, while McKinsey adopts a conservative stance of $4 trillion in 2030. 

Boston Consulting Group (BCG) appears optimistic in its predictions, touting a $16 trillion market capitalization for tokenized RWA by the end of the decade.

A bird’s eye view into the ecosystem reveals frenetic activity in the space, underscored by innovation and rising adoption numbers. Peer-to-peer transfers and 24/7 redemptions are becoming mainstream for the ecosystem, while new political shifts in the U.S. are poised to add steam to the push.

New surveys reveal that 80% of Fortune 500 executives have their sights on tokenization, drawn by its benefits for their operations. Among the lot, 35% of executives say that their firms have begun testing the waters with tokenization projects, with bonds and real estate attracting the most interest.

A cross-section of respondents noted that RWA tokenization offers parties increased transparency and liquidity levels. Apart from the concept of fractional ownership, Kronbichler argues that tokenization can solve a raft of challenges affecting traditional finance.

Hong Kong court pioneers tokenized legal notices to malicious Tron wallets

As regulators take on the fight against virtual currency scams, Hong Kong authorities have served legal notices to the operators of two Tron wallets suspected of holding stolen digital assets.

According to a report, the court orders take the form of “tokenized legal notices” served to the wallet address, warning holders of investigators’ plans to freeze their assets. Typically, law enforcement agencies will obtain a court order before proceeding to confiscate proceeds of criminal activities in line with existing rules.

With digital assets, seizing assets is challenging for authorities since the details of wallet addresses are anonymous. While seizures in decentralized finance (DeFi) circles are an uphill climb, centralized digital exchanges are not a walk in the park either for law enforcement agencies.

By turning to a tokenized legal notice, the Hong Kong legal system is demonstrating its adaptability in the face of next-gen financial technologies. According to experts, the notices will eliminate the use of “ignorance as a defense” for asset holders and their accomplices as the recovery process gets underway.

The notice authorizes investigators to seize 2.65 million USDT stolen from an online scam case, but at the time of reporting, only around 1 million USDT had sat in both wallets.

Authorities leaned on IT firm Macro Systems to issue the notices, with lead consultant Joshua Chu hailing the novelty of the procedure. Going forward, digital currency exchanges bound by Hong Kong’s anti-money laundering (AML) rules will be less likely to interact with the tokens. 

“It will be in violation of criminal law if a transaction follows through, and if centralized exchanges are involved, they would likely be hesitant to engage with these wallets due to their statutory obligations,” said Chu.

Although exact details are unavailable, several plausible strategies for serving notices include the use of on-chain messaging. This method involves sending a minute amount of TRX to the wallet address and inserting details of the notice in the memo field. 

A changing legal landscape

While digital assets have achieved mainstream status in recent years, the legal system is yet to keep pace with the emerging technology. Their inherent borderless nature, novelty, and anonymity complicate matters for prosecutors and judges, underscoring the need for judicial innovation.

Hong Kong is leading the charge, experimenting with on-chain legal notices in recent years via airdrops and tokenized legal documents. Across the world, legal systems are releasing judicial precedents for digital assets, conferring property rights on the asset class, and integrating blockchain into their administrative processes.

Watch: Tim Draper talks tokenization with Kurt Wuckert Jr.