RWA Tokenization Surpasses $10 Billion in 2025 Amid Rising Institutional Adoption

Tokenization of real-world assets (RWA) is moving beyond experimentation and into mainstream finance, offering new ways to own, trade, and manage assets like real estate, government bonds, and receivables. The process involves representing economic rights—such as rent or dividends—through blockchain-based tokens, enabling 24/7 exchange and programmability [1]. This transformation relies on four key pillars: fractionalization, which lowers the barrier to entry; liquidity, which allows for constant trading; programmability, which automates financial logic via smart contracts; and on-chain transparency, which enhances trust and auditability [1].

The tokenization process typically follows a structured cycle. It begins off-chain, where a legal entity—such as a special purpose vehicle (SPV), trust, or company—acquires the asset and assumes its risks and returns. In the next phase, a smart contract issues tokens representing fractions of the asset. For example, a house in Detroit might be divided into 10,000 tokens, or a $100,000 Treasury bond represented by a single token. Investors can purchase these tokens and receive income, such as rent or interest, automatically distributed in stablecoins [1].

A critical step is servicing, which involves collecting income, making payments, and updating asset valuations. This data is then fed into on-chain oracles to ensure real-time accuracy. The more efficient this loop, the more fluid the secondary market becomes [1].

Several platforms are leading the charge in RWA tokenization. RealT tokenizes U.S. residential properties through ERC-20 tokens, enabling investors to receive weekly rent in stablecoin and trade assets instantly. By 2025, it plans to tokenize over 200 properties [1]. Ondo Finance tokenizes U.S. Treasury bonds into OUSG, a 24/7 redeemable token backed by government ETFs. By mid-2025, OUSG’s market cap had surpassed $700 million, while Bank of America recorded over $7 billion in Treasuries on-chain [1]. Centrifuge operates in between, tokenizing invoices and SME loans through DROP and TIN tranches, with daily risk monitoring and integration with DeFi protocols like MakerDAO [1].

Despite its promise, the RWA model faces challenges. Most risks remain off-chain—such as tenant default or price volatility—so conservative loan-to-value (LTV) ratios and insurance are often required. Regulatory clarity is also emerging, with Europe’s MiCA regulation establishing a framework for asset-linked crypto assets [1].

The market has grown rapidly, with tokenized RWAs surpassing $10 billion in 2025, up from $2 billion in 2023, driven by real estate and government bonds. Institutional interest is rising, with Bank of America describing the trend as a “multi-year cycle” [1]. Looking ahead, interoperability is the next frontier. RWA tokens are increasingly moving to low-fee layer-2 networks, and tokenized assets are being used as collateral across blockchain platforms [1].

In conclusion, RWA tokenization is no longer a theoretical concept but a rapidly expanding segment of the financial ecosystem. If key challenges such as standardization, oracle security, and liquidity are addressed, the future of asset ownership may well be defined by lines of code [1].

Source: [1] Tokenization of Real Assets (RWA): How Does It Work? Principles, Steps and Flagship Projects (https://coinmarketcap.com/community/articles/689721f180953114ca891cdd/)