Blockchain Bridges Traditional Finance with $16B in Tokenized Credit Growth

Active tokenized private credit loans are approaching $16 billion, with APRs dropping below 10% as of late 2025, according to recent data from the cryptocurrency and real-world asset (RWA) sectors. This growth reflects a broader trend in financial markets where blockchain technology is increasingly being used to tokenize traditional assets, making private credit more accessible and efficient for both investors and borrowers [1].

The rise of tokenized private credit is being driven by a combination of factors, including the expansion of institutional-grade RWAs, the integration of stablecoins, and the growing acceptance of tokenized assets as collateral in decentralized finance (DeFi) lending protocols. According to Binance Research, DeFi lending protocols have experienced a 72% increase year-to-date in total value locked (TVL), rising from $53 billion at the start of 2025 to over $127 billion by late September 2025. A key driver of this growth is the adoption of tokenized RWAs, particularly in the private credit and U.S. Treasury bond sectors [2].

Tokenized private credit has emerged as the largest category of RWAs onchain, representing $15.9 billion of the total $27.8 billion in RWA value. This trend is being supported by platforms like Raze Finance, which recently partnered with EMBD Finance to launch a next-generation Special Purpose Vault (SPVault) focused on private credit. The collaboration aims to tokenize high-yield assets and offer institutional-grade access to real-world yields, with over $100 million expected to move on-chain through the initiative. This represents one of the largest tokenized private credit deployments to date and underscores the growing institutional interest in compliant yield products [1].

In addition to private credit, the tokenized fund market has expanded rapidly, reaching over $10 billion in value by September 2025. Traditional asset managers such as BlackRock and Franklin Templeton are playing significant roles, with BlackRock’s BUIDL tokenized fund alone holding $2.9 billion in assets under management (AUM). At the same time, DeFi-native platforms like Ondo Finance, Spiko, and Midas are challenging traditional players by offering innovative structured yield products and automated investment strategies [2].

The integration of tokenized assets into DeFi protocols is also facilitating new financial innovations. For example, Aave Labs’ Horizon, an institutional-grade lending market, allows borrowers to use tokenized RWAs as collateral for stablecoin loans. This development is expected to unlock additional liquidity and further bridge the gap between traditional and decentralized finance [2]. Similarly, platforms like Maple Finance and Euler have seen explosive growth in TVL, with Maple Finance rising by 586% and Euler by 1466% year-to-date, illustrating the strong institutional interest in tokenized assets.

However, the rapid expansion of tokenized private credit and DeFi lending is not without its risks. The use of U.S. Treasuries as collateral for leveraged crypto trading has introduced new risk transmission pathways, as highlighted by Moody’s in a June 2025 report. This has raised concerns about potential cascading effects across DeFi protocols and traditional markets, prompting a need for careful risk management [2]. Despite these challenges, the tokenization of private credit and other RWAs is expected to continue gaining momentum, driven by regulatory clarity, technological advancements, and the demand for more efficient and accessible financial instruments [1].

The European private credit market is also beginning to catch up with its U.S. counterpart, with Moody’s reporting that it is poised for significant growth. Regulatory reforms, untapped market potential, and the need for financial autonomy in the context of deglobalisation are key factors supporting this development. European private credit firms are also diversifying their offerings to include payment-in-kind (PIK) loans and bespoke credit structures, catering to sectors such as defense and infrastructure that have been historically underfunded [6]. As the market matures, European players like Apollo Global Management are exploring opportunities in areas such as artificial intelligence, defense, and infrastructure, signaling a broadening focus and increased competitiveness [6].

The tokenization of private credit and other real-world assets represents a significant shift in the financial landscape, enabling more efficient capital allocation and greater transparency. As institutional participation grows and DeFi protocols continue to evolve, the integration of traditional and digital finance is likely to accelerate, reshaping global markets and investment strategies [1][2].

Source:

[1] Raze Finance Powers Embedded Finance Partnership with $100M Tokenized Private Credit Vault (https://www.wjbf.com/business/press-releases/ein-presswire/845790279/raze-finance-powers-embedded-finance-partnership-with-100m-tokenized-private-credit-vault)

[2] DeFi Lending Rises 72% on Institutional Interest, RWA Collateral Adoption (https://cointelegraph.com/news/defi-lending-rises-72-institutional-rwa-collateral-adoption)

[3] 14 Tokenized Funds Powering the $10B On-Chain Boom (https://www.ccn.com/education/crypto/top-tokenized-funds-on-chain-boom)

[4] KBRA | Private Credit (https://www.kbra.com/private-credit)

[5] Insights | J.P. Morgan Private Bank U.S. (https://privatebank.jpmorgan.com/nam/en/insights)

[6] European Private Credit Market Gaining Ground on US (https://www.privateequitywire.co.uk/european-private-credit-market-gaining-ground-on-us/)