When it comes to RWA, everyone may be familiar with it.
A few months ago, RWA triggered extensive discussions with its strong concept of asset digitization, causing the market to speculate on secondary narratives. For a time, RWA concept tokens emerged one after another, and they came to seize the first pot of gold brought by institutions. However, similar to all concepts that stand out from the crowd, due to various restrictions such as supervision and scenarios, RWA has returned to calm after large institutions and regional governments have made their platforms short-lived.
**I thought that everyone would just disappear, but what I didn’t expect was that a few months later, the RWA track became popular again. The key person who ignited this fire is BlackRock. **
On March 20, BlackRock announced the launch of its first tokenized fund issued on a public blockchain, the BlackRock USD Institutional Digital Liquidity Fund (BUIDL). It is reported that BUIDL will be subscribed through Securitize, a digital asset securities company focusing on RWA, to serve qualified investors, and the funds will be held by the official custodian, Bank of New York Mellon. The fund invests 100% of its total assets in cash, U.S. Treasuries, and repurchase agreements, allowing investors to earn income while holding tokens on the blockchain.
BlackRock issued an announcement, source: BlackRock official website
**According to the announcement, the fund’s minimum initial investment is US$5 million. BUIDL seeks to provide a stable value of $1 per token, and owning the tokens generates dividends, with BlackRock paying out daily accrued dividends as new tokens directly into investors’ wallets. In short, investors can obtain fund income through token holdings while avoiding complicated procedures and storage costs. **
Regarding this new product, BlackRock CEO Larry Fink said bluntly, “We believe that the next step will be the tokenization of financial assets, which means that each stock and each bond will have its own basic QCIP. It will be recorded in on every investor’s ledger, but most importantly, through tokenization we can tailor strategies to suit each individual.”
Since the adoption of the Bitcoin spot ETF, BlackRock has become a benchmark in the hearts of crypto practitioners. This move has undoubtedly directly stimulated the market's pursuit of RWA. Coincidentally, DigiFT, a Singapore-based on-chain real world asset (RWA) exchange, also announced the launch of depository receipt tokens based on U.S. Treasury bills.
With multiple benefits, the RWA track protocol tokens experienced a general rise within a week. Among them, the representative project Ondo Finance token ONDO doubled, exceeded 0.9 US dollars, and is now trading at 0.95 US dollars. Not to be outdone, the Realio Network token RIO has risen by 108% in the past week, while the real estate token investment market Propchain token PROPC has also risen by more than 61.9%.
ONDO price rises rapidly within a week, source: Coingecko
And the narrative of RWA has once again come to the market with the rolling wheels.
From a conceptual point of view, broad real world assets (RWA) refer to the tangible assets existing in the physical world being put on the chain for tokenized sales, that is, capital market products are used as the subject, and the value is provided in the form of tokenized digital securities. to investors. **The most direct effect of changing from an entity to a token is that it is easily divisible, more liquid, and has lower storage and issuance costs. Theoretically, due to the characteristics of blockchain that cannot be tampered with and ownership is divisible, almost all real assets can be tokenized on the chain. Therefore, the subject products cover a wide range of real estate, artworks, commodities, gold, etc. Even just stocks purchased by investors can be included. **
For this reason, RWA is also considered by practitioners to be the most convenient and feasible track for the traditional financial industry to intervene in the Web3 field, and traditional institutions are naturally also interested. Starting in 2019, many traditional institutions such as JPMorgan Chase, Goldman Sachs, DBS Bank, UBS, Santander, Société Générale, and Hamilton Lane have successively begun to explore this track and have tested and issued some products.
As the access point between traditional finance and Web3, the financial industry with a market value of hundreds of billions can recreate an encrypted world with only 1% investment. The potential of this track is self-evident. Market analysis agency Bernstein predicted last year that about 2% of the global money supply will be tokenized in the next five years, amounting to approximately US$3 trillion.
The imagination is quite beautiful, but in practice it is not so simple. **In addition to infrastructure that needs to be optimized, issues such as liquidity, supervision, and cost are still insurmountable. The legal chain involved is particularly complex. Looking around the world, there is no region with a high degree of STO completion. Even the United States and Singapore are only in the early stages of exploration. **In the long term, this track has development potential, but it should also be based on the fact that Web3 itself has become extremely common.
**If you want to explore further, RWA seems to only have foreseeable prospects in the direction of tokenization of government bonds. The reason is that the underlying assets in RWA are extremely critical in the entire process. In addition to government bonds with sound supervision and mature development, other types or many There may be less problems such as valuation, fraud, and liquidity. **
For the traditional world, RWA seems to be too advanced, but in the encryption field, it has a relatively long history of evolution and development. The well-known USDT and other centralized stablecoins anchored by legal currency are actually typical RWA assets. As tokenized versions of pegged fiat currencies, stablecoins exist as a stable unit of exchange in the ups and downs of the crypto environment. Since 2014, companies such as Tether and Circle have successively issued tokenized stablecoins, backed by collateral such as bank deposits, short-term bills, and physical gold.
In recent years, with the popularity of Defi, the market has become familiar with the distributed transformation of traditional finance. After the stimulus of the bear market, the market has to look for crypto assets with valuable anchors, which has also led to the booming development of RWA in the past two years. Although large institutions are still focusing on bonds, so far, art, precious metals, and even private debt have also boarded the Noah's Ark for crypto users to invest in RWA.
RWA ecological map, source: tokeny
In 2021, the emergence of unsecured lending platforms such as Maple, Goldfinch and Clearpool has given rise to the private credit market, allowing established institutions to borrow funds against their own credit. However, due to the impact of Luna, 3AC and FTX in 2022, a large number of defaults occurred in projects focusing on private credit.
As the bear market enters in 2023, DeFi yields decrease, and at the same time the Federal Reserve interest rates continue to rise, tokenized government bonds represented by stabilization returns have experienced explosive growth. Projects such as Ondo Finance, Franklin Templeton and OpenEden received large inflows of funds, and the TVL of tokenized treasury bonds surged 641% from $114 million in January 2023 to $845 million by the end of the year.
In fact, so far, in the field of encryption, RWA has been mainly divided into the above four types, namely stable coins, commodity tokens, tokenized treasury bonds, and private credit. The following also quotes the data from Coingecko’s report. a brief introdction.
From the perspective of the market structure, stablecoins linked to the US dollar have an absolute advantage, and the stablecoin field also naturally has the characteristics of winner-take-all and high market concentration. The top three U.S. dollar stablecoins account for 95% of the market, with USDT at $103.7 billion, USDC at $32.1 billion, and Dai at $4.7 billion. USDT dominates as usual, with a market share of 71.12%, while USDC’s market share fell sharply after its brief decoupling during the U.S. banking crisis in March last year, and it has yet to recover.
According to Coingecko data, stable assets other than USD stablecoins account for only 1% of the market, such as Euro Tether (EURT), Mexican Peso Tether (MXNT), EURC (EURC), Stasis Euro (EURS) and BiLira (TRYB) )wait.
The market capitalization of stable assets rose rapidly from $5.2 billion in early 2020 to a peak of $150.1 billion in March 2022, before gradually declining throughout the bear market. Currently affected by the broader market, the market value of stablecoins will increase by 18.09% by 2024, from US$128.2 billion at the beginning of the year to US$151.4 billion as of March 26.
The market value of commodity-backed tokens is approximately US$1.1 billion, but it only accounts for 0.8% of the market value of stablecoins with legal currency as the underlying asset. In terms of products, commodity-backed tokens have a similar pattern. Among them, tokenized precious metals such as Tether Gold and PAX Gold account for 83% of the market value of commodity-backed tokens. Tokens such as XAUT and PAXG are anchored by one ounce of physical gold, while Kinesis Gold and VeraOne are anchored by one gram of gold.
While tokenized precious metals dominate, tokens backed by other commodities have also been launched. Take the Uranium308 project as an example. It released tokenized "uranium", the price of which is linked to the price of 1 pound of U3O8 uranium compound, and can even be redeemed under strict compliance agreement conditions.
**Tokenized U.S. Treasury bonds were the category that users paid the most attention to during the bear market, and their market value increased by 641% in 2023, from US$114 million to US$845 million. However, this growth momentum has stalled since the macro improvements in 2024, with tokenized U.S. Treasury bonds growing only 1.9% in January, with a market capitalization of $861 million. **
Franklin Templeton is currently the largest issuer of tokenized U.S. Treasury bonds. The U.S. Government Monetary Fund on its chain has issued $332 million in tokens, with a market share of over 38.6%. Most tokenized treasury bonds are built on Ethereum, which accounts for 57.5% of the market share. However, traditional companies such as Franklin Templeton and Wisdomtree Prime choose to issue on Stellar, which is commonly used by institutions. Stellar currently accounts for 39%. market share.
**Relatively speaking, private credit is more sensitive. Compared with commodities and treasury bond products with stable product endorsements, it is quite similar to third-party credit institutions in real life. This category is naturally suitable for large-scale consumer goods, such as car purchases and Buying a house. **
Of the $470.3 million in outstanding loans issued under current private credit agreements, about 42% ($196 million) is for auto loans, while debt in the fintech and real estate sectors accounted for 19% and 9% respectively. Auto loans grew rapidly in 2023, with approximately 60 loans disbursed exceeding $168 million, while no new loans were issued by the fintech industry during the same period.
The real estate and cryptocurrency trading sectors received 840 loans, but only 10% are currently active. The rest, if they have not been repaid, are already in default and dead debt status. Notably, 13 loan defaults occurred in the crypto space following the collapse of Terra and 3AC.
Judging from user profiles, most borrowers are from emerging markets such as Africa, Southeast Asia, Central America, and South America. About 42 loans or 40.8% of all loans are from African countries.
As mentioned before, although RWA seems very tempting, from a regulatory perspective, RWA still has many problems. After all, it involves financial assets, and off-chain laws and regulations will be more important. In addition to common reasonable valuations, issuance and circulation that meet regulatory approval standards, have sufficient market depth, and ensure that smart contracts have no security loopholes should be taken into consideration.
Current regulatory requirements for STOs in the United States, source: Zhi De Law Firm
**In fact, in terms of Regulation A1 and A2, Regulation D, Regulation Crowdfunding and Regulation S, which are based on the current securities issuance exemption in the United States, the current issuance of RWA is concentrated in the D and S categories that do not involve the SEC, while the other categories that the SEC does Category, especially Category A, there is currently no precedent for successful issuance under Regulation A. **Strictly speaking, the BlackRock USD Institutional Fund is also a Regulation D506(c) series according to the implementation requirements. The income earned by investors holding the fund is not registered with the U.S. SEC. For this reason, the interest generated from staking BUIDL may not be listed on any cryptocurrency trading platform.
Of course, with the continuous intervention of institutions, regulatory issues may always be solved at some point in the future. In the short term, it is inevitable that there will be policies and countermeasures at the meeting. For investors, no matter what the wonderful story is, they are ultimately more concerned about the actual growth of the token.
**In any case, institutions have broadened their funding channels, qualified investors have obtained subscription products, and for retail investors who are not enough to purchase funds, the secondary market has become popular, which is also a happy event in another sense. **
references:
Coingecko：RWA Report 2024—Rise of Real World Assets in Crypto
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The content is for reference only, not a solicitation or offer. No investment, tax, or legal advice provided. See Disclaimer for more risks disclosure.
BlackRock is “coming” and RWA is “popular” again
When it comes to RWA, everyone may be familiar with it.
A few months ago, RWA triggered extensive discussions with its strong concept of asset digitization, causing the market to speculate on secondary narratives. For a time, RWA concept tokens emerged one after another, and they came to seize the first pot of gold brought by institutions. However, similar to all concepts that stand out from the crowd, due to various restrictions such as supervision and scenarios, RWA has returned to calm after large institutions and regional governments have made their platforms short-lived.
**I thought that everyone would just disappear, but what I didn’t expect was that a few months later, the RWA track became popular again. The key person who ignited this fire is BlackRock. **
On March 20, BlackRock announced the launch of its first tokenized fund issued on a public blockchain, the BlackRock USD Institutional Digital Liquidity Fund (BUIDL). It is reported that BUIDL will be subscribed through Securitize, a digital asset securities company focusing on RWA, to serve qualified investors, and the funds will be held by the official custodian, Bank of New York Mellon. The fund invests 100% of its total assets in cash, U.S. Treasuries, and repurchase agreements, allowing investors to earn income while holding tokens on the blockchain.
BlackRock issued an announcement, source: BlackRock official website
**According to the announcement, the fund’s minimum initial investment is US$5 million. BUIDL seeks to provide a stable value of $1 per token, and owning the tokens generates dividends, with BlackRock paying out daily accrued dividends as new tokens directly into investors’ wallets. In short, investors can obtain fund income through token holdings while avoiding complicated procedures and storage costs. **
Regarding this new product, BlackRock CEO Larry Fink said bluntly, “We believe that the next step will be the tokenization of financial assets, which means that each stock and each bond will have its own basic QCIP. It will be recorded in on every investor’s ledger, but most importantly, through tokenization we can tailor strategies to suit each individual.”
Since the adoption of the Bitcoin spot ETF, BlackRock has become a benchmark in the hearts of crypto practitioners. This move has undoubtedly directly stimulated the market's pursuit of RWA. Coincidentally, DigiFT, a Singapore-based on-chain real world asset (RWA) exchange, also announced the launch of depository receipt tokens based on U.S. Treasury bills.
With multiple benefits, the RWA track protocol tokens experienced a general rise within a week. Among them, the representative project Ondo Finance token ONDO doubled, exceeded 0.9 US dollars, and is now trading at 0.95 US dollars. Not to be outdone, the Realio Network token RIO has risen by 108% in the past week, while the real estate token investment market Propchain token PROPC has also risen by more than 61.9%.
ONDO price rises rapidly within a week, source: Coingecko
And the narrative of RWA has once again come to the market with the rolling wheels.
From a conceptual point of view, broad real world assets (RWA) refer to the tangible assets existing in the physical world being put on the chain for tokenized sales, that is, capital market products are used as the subject, and the value is provided in the form of tokenized digital securities. to investors. **The most direct effect of changing from an entity to a token is that it is easily divisible, more liquid, and has lower storage and issuance costs. Theoretically, due to the characteristics of blockchain that cannot be tampered with and ownership is divisible, almost all real assets can be tokenized on the chain. Therefore, the subject products cover a wide range of real estate, artworks, commodities, gold, etc. Even just stocks purchased by investors can be included. **
For this reason, RWA is also considered by practitioners to be the most convenient and feasible track for the traditional financial industry to intervene in the Web3 field, and traditional institutions are naturally also interested. Starting in 2019, many traditional institutions such as JPMorgan Chase, Goldman Sachs, DBS Bank, UBS, Santander, Société Générale, and Hamilton Lane have successively begun to explore this track and have tested and issued some products.
As the access point between traditional finance and Web3, the financial industry with a market value of hundreds of billions can recreate an encrypted world with only 1% investment. The potential of this track is self-evident. Market analysis agency Bernstein predicted last year that about 2% of the global money supply will be tokenized in the next five years, amounting to approximately US$3 trillion.
The imagination is quite beautiful, but in practice it is not so simple. **In addition to infrastructure that needs to be optimized, issues such as liquidity, supervision, and cost are still insurmountable. The legal chain involved is particularly complex. Looking around the world, there is no region with a high degree of STO completion. Even the United States and Singapore are only in the early stages of exploration. **In the long term, this track has development potential, but it should also be based on the fact that Web3 itself has become extremely common.
**If you want to explore further, RWA seems to only have foreseeable prospects in the direction of tokenization of government bonds. The reason is that the underlying assets in RWA are extremely critical in the entire process. In addition to government bonds with sound supervision and mature development, other types or many There may be less problems such as valuation, fraud, and liquidity. **
For the traditional world, RWA seems to be too advanced, but in the encryption field, it has a relatively long history of evolution and development. The well-known USDT and other centralized stablecoins anchored by legal currency are actually typical RWA assets. As tokenized versions of pegged fiat currencies, stablecoins exist as a stable unit of exchange in the ups and downs of the crypto environment. Since 2014, companies such as Tether and Circle have successively issued tokenized stablecoins, backed by collateral such as bank deposits, short-term bills, and physical gold.
In recent years, with the popularity of Defi, the market has become familiar with the distributed transformation of traditional finance. After the stimulus of the bear market, the market has to look for crypto assets with valuable anchors, which has also led to the booming development of RWA in the past two years. Although large institutions are still focusing on bonds, so far, art, precious metals, and even private debt have also boarded the Noah's Ark for crypto users to invest in RWA.
RWA ecological map, source: tokeny
In 2021, the emergence of unsecured lending platforms such as Maple, Goldfinch and Clearpool has given rise to the private credit market, allowing established institutions to borrow funds against their own credit. However, due to the impact of Luna, 3AC and FTX in 2022, a large number of defaults occurred in projects focusing on private credit.
As the bear market enters in 2023, DeFi yields decrease, and at the same time the Federal Reserve interest rates continue to rise, tokenized government bonds represented by stabilization returns have experienced explosive growth. Projects such as Ondo Finance, Franklin Templeton and OpenEden received large inflows of funds, and the TVL of tokenized treasury bonds surged 641% from $114 million in January 2023 to $845 million by the end of the year.
In fact, so far, in the field of encryption, RWA has been mainly divided into the above four types, namely stable coins, commodity tokens, tokenized treasury bonds, and private credit. The following also quotes the data from Coingecko’s report. a brief introdction.
From the perspective of the market structure, stablecoins linked to the US dollar have an absolute advantage, and the stablecoin field also naturally has the characteristics of winner-take-all and high market concentration. The top three U.S. dollar stablecoins account for 95% of the market, with USDT at $103.7 billion, USDC at $32.1 billion, and Dai at $4.7 billion. USDT dominates as usual, with a market share of 71.12%, while USDC’s market share fell sharply after its brief decoupling during the U.S. banking crisis in March last year, and it has yet to recover.
According to Coingecko data, stable assets other than USD stablecoins account for only 1% of the market, such as Euro Tether (EURT), Mexican Peso Tether (MXNT), EURC (EURC), Stasis Euro (EURS) and BiLira (TRYB) )wait.
The market capitalization of stable assets rose rapidly from $5.2 billion in early 2020 to a peak of $150.1 billion in March 2022, before gradually declining throughout the bear market. Currently affected by the broader market, the market value of stablecoins will increase by 18.09% by 2024, from US$128.2 billion at the beginning of the year to US$151.4 billion as of March 26.
The market value of commodity-backed tokens is approximately US$1.1 billion, but it only accounts for 0.8% of the market value of stablecoins with legal currency as the underlying asset. In terms of products, commodity-backed tokens have a similar pattern. Among them, tokenized precious metals such as Tether Gold and PAX Gold account for 83% of the market value of commodity-backed tokens. Tokens such as XAUT and PAXG are anchored by one ounce of physical gold, while Kinesis Gold and VeraOne are anchored by one gram of gold.
While tokenized precious metals dominate, tokens backed by other commodities have also been launched. Take the Uranium308 project as an example. It released tokenized "uranium", the price of which is linked to the price of 1 pound of U3O8 uranium compound, and can even be redeemed under strict compliance agreement conditions.
**Tokenized U.S. Treasury bonds were the category that users paid the most attention to during the bear market, and their market value increased by 641% in 2023, from US$114 million to US$845 million. However, this growth momentum has stalled since the macro improvements in 2024, with tokenized U.S. Treasury bonds growing only 1.9% in January, with a market capitalization of $861 million. **
Franklin Templeton is currently the largest issuer of tokenized U.S. Treasury bonds. The U.S. Government Monetary Fund on its chain has issued $332 million in tokens, with a market share of over 38.6%. Most tokenized treasury bonds are built on Ethereum, which accounts for 57.5% of the market share. However, traditional companies such as Franklin Templeton and Wisdomtree Prime choose to issue on Stellar, which is commonly used by institutions. Stellar currently accounts for 39%. market share.
**Relatively speaking, private credit is more sensitive. Compared with commodities and treasury bond products with stable product endorsements, it is quite similar to third-party credit institutions in real life. This category is naturally suitable for large-scale consumer goods, such as car purchases and Buying a house. **
Of the $470.3 million in outstanding loans issued under current private credit agreements, about 42% ($196 million) is for auto loans, while debt in the fintech and real estate sectors accounted for 19% and 9% respectively. Auto loans grew rapidly in 2023, with approximately 60 loans disbursed exceeding $168 million, while no new loans were issued by the fintech industry during the same period.
The real estate and cryptocurrency trading sectors received 840 loans, but only 10% are currently active. The rest, if they have not been repaid, are already in default and dead debt status. Notably, 13 loan defaults occurred in the crypto space following the collapse of Terra and 3AC.
Judging from user profiles, most borrowers are from emerging markets such as Africa, Southeast Asia, Central America, and South America. About 42 loans or 40.8% of all loans are from African countries.
As mentioned before, although RWA seems very tempting, from a regulatory perspective, RWA still has many problems. After all, it involves financial assets, and off-chain laws and regulations will be more important. In addition to common reasonable valuations, issuance and circulation that meet regulatory approval standards, have sufficient market depth, and ensure that smart contracts have no security loopholes should be taken into consideration.
Current regulatory requirements for STOs in the United States, source: Zhi De Law Firm
**In fact, in terms of Regulation A1 and A2, Regulation D, Regulation Crowdfunding and Regulation S, which are based on the current securities issuance exemption in the United States, the current issuance of RWA is concentrated in the D and S categories that do not involve the SEC, while the other categories that the SEC does Category, especially Category A, there is currently no precedent for successful issuance under Regulation A. **Strictly speaking, the BlackRock USD Institutional Fund is also a Regulation D506(c) series according to the implementation requirements. The income earned by investors holding the fund is not registered with the U.S. SEC. For this reason, the interest generated from staking BUIDL may not be listed on any cryptocurrency trading platform.
Of course, with the continuous intervention of institutions, regulatory issues may always be solved at some point in the future. In the short term, it is inevitable that there will be policies and countermeasures at the meeting. For investors, no matter what the wonderful story is, they are ultimately more concerned about the actual growth of the token.
**In any case, institutions have broadened their funding channels, qualified investors have obtained subscription products, and for retail investors who are not enough to purchase funds, the secondary market has become popular, which is also a happy event in another sense. **
references:
Coingecko：RWA Report 2024—Rise of Real World Assets in Crypto