The Race For Market Leadership In RWA Tokenization

The Tokenization Race: Traditional Finance and New Finance Are Battling for Market Leadership in the Tokenization of Real-World Assets

Traditional finance is fast encroaching on what was once the brainchild of the fintech pioneers playing in the blockchain sandbox. You used to need a cryptocurrency exchange to buy and sell Bitcoin. Now Grayscale and other financial firms can do it for you, protected by the rules of the Securities and Exchange Commission. Fintech guys came up with another idea: let's tokenize real world assets (RWA) and build a market there.  Wall Street got wind of it. Now they're in on it, too.

Tokenization is the process of converting real-world assets into digital tokens on a blockchain. This is reshaping traditional markets, and sets the table for a whole host of investment opportunities for retail investors who prefer to work within the rules of TradFi rather than the hackable world of the blockchain. 

Fintech companies started tokenizing things like U.S. Treasury bonds, real estate and private equity. Toronto-based Polymath (POLY) is often credited as one of the pioneering fintech companies in this space. They  also developed Polymesh, an institutional-grade blockchain tailored for regulated assets, emphasizing security and compliance for investors who don't want to lose their shirts in new investment schemes.

"Tokenization marks a change in how value is transferred to investors," said Alex Zhang, Chief Executive Officer of the Pharos Network, a Layer 1 blockchain platform focused on RWAFi.

"In the traditional investment world, buying bonds or private equity often requires high minimum investments, long lockup periods, and unclear processes. Tokenization aims to make these assets tradable, fractional, and programmable," said Zhang. "They become more like a DeFi product while still being tied to real value." 

Pharos was founded by former AntChain and Alibaba blockchain leaders around two years ago. The network is currently in its internal development phase, having launched a public testnet on March 6, 2025.

Wall Street regulars are diving into this trend hard, promising more liquidity, easy access and security. 

TradFi Moving Into Tokenization of Real World Assets

BlackRock, Franklin Templeton, and Goldman Sachs are the main ones offering digital versions of traditional assets to investors of all sizes.

• BlackRock's BUIDL Fund: Tokenized U.S. Treasuries on seven different blockchain platforms. In March 2024, BlackRock launched the BlackRock USD Institutional Digital Liquidity Fund on Ethereum. This tokenized money market fund hit $657.41 million in assets under management within six weeks. BUIDL offers daily dividends and seamless blockchain-based transfers, making it a game-changer for institutional and retail investors seeking decent yield in digital assets.
• Franklin Templeton's On-Chain Money Market Fund (FOBXX): Franklin Templeton's FOBXX fund, tokenized on Stellar (XLM) and Polygon (MATIC), allows investors to use tokens as liquid collateral, reducing risks during market volatility. By enabling peer-to-peer transfers, the fund enhances liquidity for U.S. Treasury-backed assets, appealing to investors who want 24/7 access to high-quality, low-risk investments without traditional settlement delays.
• Citibank's Private Equity Tokenization Experiment: In February 2024, Citibank partnered with Ava Labs to explore tokenizing private equity funds on the Avalanche blockchain. 

"Blockchain tokenization isn't about inventing new assets—it's about putting the same Treasury bills, apartment buildings and private-equity units you already know on faster, tamper-proof rails," said Denis Petrovcic, CEO and Co-Founder of Blocksquare,

"BlackRock's new $150 billion tokenized Treasury share class and Franklin Templeton's money-market fund still follow 1940-Act rules; their shareholder ledgers now live on the Avalanche blockchain instead of with a traditional financial transfer agent. Plus you get faster settlement times and lets smaller tickets trade around the clock," Petrovcic said.

Blocksquare exists to "offer world class real estate investment deals to anyone with an internet connection," according to their YouTube channel. They most recently worked with Florida's Vera Group, bringing a $1 billion U.S. real estate portfolio on-chain—fractionalizing Vera Group's property portfolio for retail investors. 

"Sixteen independent marketplaces already operate on our network, and we expect that number to rise sharply as this market grows," Petrovic said. "There isn’t a minimum investment—you could purchase a fractional stake as small as $1 in a $100 million property. The true innovation lies in the ability to create a diverse, REIT-like portfolio on-chain that spans different continents with just a few hundred dollars, all while avoiding the typical operational expenses associated with traditional REITs," he said of real estate investment trusts.

What Tokenization Provides Investors

High-value assets like real estate or private equity become accessible to retail investors and it seems like the big traditional finance firms are willing to put this on the blockchain rather than create an ETF, for example.  

Tokenized assets are like Bitcoin. Investors can buy and sell any time of day, something that can surely not be done in traditional real estate and private equity, let alone selling stocks on a Saturday.

Blockchain-based trades enable near-instantaneous transactions, reducing the traditional T+3 of traditional markets.
Traditional finance brings more security to these blockchain trades, giving investors the feeling that their money is safely in the hands of long-time, trusted, Wall Street investment houses. 

Some of these assets offer high yield. Tokenized private credit, for instance, offers average yields of 9.42%, attracting investors with a higher risk profile.

"For tokenization to grow, the blockchain itself must include compliance, identity rules, and asset transfer rules from the start," said Zhang. 

Solana (SOL), Ethereum (ETH) and Polygon are the top three host blockchains for tokenization of real world assets. 

"We are focused on merging the speed and openness of DeFi with the legal and regulatory needs of traditional finance," Zhang said. "This is a long-term change. In the short term, it is about yields and liquidity. But in the long term, it is about transforming how capital markets operate."

Many new companies will sprout out of this. But despite traditional Wall Street players getting in on the act, they are contracting with the old hands in the blockchain space. Investors might be relying on the traditional Wall Street names to buy tokenized assets. But those same firms are relying on major, investable blockchains and other fintech outfits that will also benefit from the growth in this market. 

Tokenization of the Treasury bond market is seen reaching around $300 billion by 2030, a 30-times increase from 2023/24 levels. This implies a compound annual growth rate (CAGR) of around 60%, according to McKinsey.

The Financial Times reported on July 7 that total assets held in tokenized Treasury products have jumped 80% so far this year to $7.4 billion, citing data group RWA.xyz. Funds run by BlackRock, Franklin Templeton and Janus Henderson Anemoy have grown rapidly, with inflows reportedly driven by crypto traders who are choosing these assets to diversify away from stable coins and staking.

The real money is in real estate.

The tokenized real estate market is forecast to grow from around $300 billion in 2024 to $4 trillion by 2035, a 27% CAGR over that time period, according to Deloitte. 

This summer, Dubai-based digital assets investments platform, Prypco, tokenized and sold a villa worth 1.75 million dirhams ($476,515) in under five minutes. 

Disclosure: The author of this article is an investor in the Grayscale Bitcoin ETF.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.