Chainlink Co-Founder Urges US to Lead in Tokenized Real-World Assets

Chainlink co-founder Sergey Nazarov has emphasized the need for the United States to establish a competitive edge around highly secure tokenized real-world assets (RWAs) to maintain its position in the global financial landscape. Speaking at the Digital Asset Summit in New York, Nazarov highlighted that the US should leverage its robust and reliable capital markets to gain an advantage in the era of borderless, permissionless finance. He noted that unlike previous technological shifts, blockchain technology is a global phenomenon that relies on open-source software and distributed technology.

Nazarov pointed out that the shift to online commerce, which previously gave the US a competitive edge due to its advanced internet infrastructure, is not directly applicable in the age of digital finance. Instead, the US should focus on its strong domestic market and its ability to create highly reliable financial assets. He believes that the administration and legislative bodies are beginning to understand the importance of these advantages.

The potential market for real-world tokenized assets is vast, with predictions suggesting it could reach $100 trillion in the coming years as more of the world's assets are brought on-chain. This transformation could make previously illiquid asset classes, such as real estate, more liquid by eliminating the illiquidity discount inherent in physical properties. Tokenization can fractionalize ownership, reduce intermediaries, and lower settlement costs, as seen in projects like Lumia Towers in Turkey and various developments in the United Arab Emirates.

Nazarov's insights underscore the need for the US to create a competitive moat around tokenized RWAs, ensuring that its financial infrastructure remains at the forefront of global innovation. By doing so, the US can maintain its leadership in the financial sector and capitalize on the growing trend of digital finance. The executive's comments come at a time when real-world tokenized assets, excluding stablecoins, have hit an all-time high, topping $18.8 billion. Private credit took up the lion’s share of the total RWA market capitalization, with over $12.2 billion in tokenized private credit instruments permeating the market.