The **tokenization** of **real-world assets** (RWAs) is swiftly gaining traction among various entities, including financial institutions looking for **collateral mobility**, issuers aiming to broaden access to private and alternative assets for retail investors, and crypto enthusiasts engaging in meaningful discussions beyond the previous hype around **NFTs** and **memecoins**. As forecasted earlier this year, tokenization is firmly establishing itself in the “pragmatists” segment of the adoption bell curve. With a market capitalization that ended 2024 at **$50 billion**, it has remarkably surpassed **$65 billion** as of May 2025, excluding stablecoins.
A recent conference, TokenizeThis 2025, served as a platform for industry leaders to explore various aspects of the **tokenization** space. The event celebrated innovation and addressed unresolved challenges that must be overcome for mainstream adoption. Although panel discussions were diverse, two overarching themes emerged: 1) the enhancement of **collateral mobility** and utility for real-world assets, and 2) the transformative effects that tokenization could have on **investment strategies** and workflows.
Adding Utility and Collateral Mobility
According to **Maredith Hannon**, head of business development for digital assets at **WisdomTree**, “The true power of this technology lies in its versatility; a single token can serve various functions for different investors, provided that the risk framework is right.” While the process of **tokenizing assets** is straightforward, the real potential exists in enabling more efficient use of these assets compared to traditional methods, catering to the varying needs of market participants. A dedicated panel illustrated examples of tokenized treasury products designed for both retail and institutional investors. For instance, blockchain allows flexibility in asset movement — a **money market fund** could serve as collateral on a prime brokerage without needing to liquidate the position, allowing the investor to continue earning yield. From the retail perspective, a different application permits fund units to double as payment methods via a debit card linked to these assets. Moreover, higher-risk investment products also benefit from enhanced utility through tailored applications leveraging **blockchain technology**.
Expanding on this, the **lending and borrowing** landscape is undergoing a notable disruption thanks to tokenization. Traditional lending often involves cumbersome processes with institutional lenders. As **Jerome de Tychey**, CEO of **Cometh**, remarked, “Ideally, my kids might apply for their first mortgage anonymously, stating, ‘This is my situation; I want to borrow this for that,’ and receive funding from multiple sources while repaying in stablecoins. The current process in France, where you speak with 20 banks for a single apartment purchase, is daunting.”
Jerome’s observations highlight the potential of **decentralized finance** (DeFi) in expediting individual loan applications. Companies like **Figure** are already using blockchain technology in home equity lines of credit (HELOCs). By issuing, warehousing, and securitizing loans, they have achieved cost savings of 150 basis points in operation. Additionally, a panel on DeFi vaults showcased how vaults streamline processes for investors, exemplified by **Apollo’s** tokenized private credit fund, which enables leverage loops through borrowed stablecoins for asset acquisition and yield maximization, all framed by a rigorous risk model.
Source: Securitize
Nevertheless, challenges persist before such vault systems can gain traction. Issues like significant custody and liquidity provision costs, inadequate **RWA** composability in **DeFi**, and limited appeal to crypto-native users chasing high returns remain obstacles. Despite these hurdles, there’s a palpable excitement about the future possibilities.
How RWAs Are Impacting Traditional Strategies and Workflows
As **Kevin Miao**, head of growth at **Steakhouse Financial**, noted, “The true strength of this technology cannot be overstated; it digitizes the asset life cycle that typically involves numerous intermediaries, each taking a fee and ensuring that financial records align.” The intricate nature of traditional markets often hampers the integration of less liquid, higher-yielding assets into investment strategies due to complex operational requirements related to servicing, reporting, and transfers.
Transitioning these processes to an automated, on-chain system would enhance asset utilization, enabling easier movement in and out of investments, thus leveraging newfound opportunities provided by cryptocurrencies. During a discussion, **Cameron Drinkwater** from **S&P Dow Jones Indices** and **Ambre Soubiran** from **Kaiko** elaborated on how blockchain could unlock previously unavailable portfolio construction tools. They emphasized that this innovation could lead to new **blockchain-native investment strategies** amalgamating crypto and private asset allocations, paving the way for enhanced diversification and yield generation.
However, creating practical integrations necessitates realizing **interoperability** between existing legacy systems alongside blockchain-based frameworks and between various blockchains. Core elements critical for success include aligning workflows, ensuring price transparency, facilitating efficient rebalancing, and providing **on-chain identity** and risk management solutions. Maximizing visibility and creating tools to navigate on-chain markets represent vital steps toward widespread adoption.
In summary, the shift from theoretical discussions about blockchain to real-world applications of **tokenized assets** is palpable within both traditional and decentralized finance. The central focus is now on delivering tangible utility through enhanced collateral mobility, innovative financial products, and streamlined workflows. By improving interoperability and identity frameworks, tokenization is poised to democratize access to illiquid assets and significantly boost financial efficiency. For further insights and recordings from the conference, please visit STM TV on YouTube.