Tokenized Real-World Assets Market Surges Past $12B, Driven by US Treasuries: Binance Research

The market for tokenized real-world assets (RWAs), excluding stablecoins, has soared past $12 billion, according to Binance.

The market for tokenized real-world assets (excluding stablecoins) has now surpassed $12 billion, according to Binance. This surge is largely driven by tokenized U.S. Treasuries, bolstered by major participation from financial institutions like BlackRock and Franklin Templeton, as detailed in a Binance Research report on September 13.

This total does not include the $175 billion stablecoin market, which is considered separate from RWAs.

Tokenization involves dividing traditionally illiquid assets like real estate, government bonds, and commodities into fractional shares, making them accessible to a broader range of investors. It also simplifies processes like record-keeping and settlement, offering a transformative shift in traditional asset trading and management.

Notably, tokenized U.S. Treasury funds alone now exceed $2.2 billion. BlackRock’s BUILD Treasury product leads the sector with nearly $520 million in assets, followed closely by Franklin Templeton’s FBOXX at $434 million. This growth is even more impressive considering it occurred within just five months, after the tokenized Treasuries market surpassed $1 billion in March.

U.S. Interest Rates’ Influence on Tokenized Treasuries

Elevated U.S. interest rates have been a key factor driving the expanding tokenized Treasuries market, as they provide attractive yields for investors seeking stable returns. However, Binance Research highlights that upcoming rate cuts from the Federal Reserve could potentially reduce the appeal of these yield-bearing assets. At the same time, the report suggests that substantial rate reductions would be necessary to significantly impact demand.

Other Segments in the RWA Market

In addition to Treasuries, the Binance Research report also provides insights into other segments within the tokenized RWA market, such as private credit, commodities, and real estate.

The tokenized private credit market is currently valued at approximately $9 billion, which represents only 0.4% of the $2.1 trillion global private credit market in 2023.

Despite its small size, the report highlights the rapid growth in the tokenized private credit market, with active loans increasing by 56% over the past year.

Risks Associated with RWAs

Despite their growth, tokenized RWAs also present some inherent risks. Many RWA protocols lean towards centralization due to regulatory requirements, which raises concerns about control and transparency. These protocols often rely on off-chain intermediaries for asset custody, introducing third-party risk. Additionally, the operational complexity of these systems can sometimes outweigh the yields offered, leading to questions about their long-term viability.

Privacy and regulatory compliance also pose challenges in this domain. Binance Research suggests zero-knowledge technology as a potential solution to balance regulatory demands with user autonomy in this evolving market.

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