[NEWS] RWA tokenization market expands to 1.68 trillion yen　Binance releases report

Binance announced the latest survey results that the real world asset (RWA) tokenization market has expanded to 1.68 trillion yen.

RWA refers to tokenized tangible and intangible non-blockchain assets such as currency, real estate, bonds, and commodities.

▶︎Trends in on-chain RWA tokens: Excerpt from the report

The total on-chain RWA has now grown to 1.68 trillion yen, a record high. Note that this figure does not include the stablecoin market, which has grown to 24.5 trillion yen.

The main categories of RWA tokens are US Treasury bonds, private credit, commodities, stocks, real estate, and non-US bonds. Emerging categories include air rights, carbon credits, and art.

The participation of institutional investors and traditional financial institutions (TradFi) in the RWA field is driving market growth.

BUIDL, an investment product tokenized from asset management company BlackRock's government bonds, boasts a market capitalization of $500 million (approximately 70 billion yen), making it the largest in the industry. BUIDL is issued on Ethereum (ETH). It has only just launched in March as a fund tokenized from RWA US Treasury bonds, and has reached this size.

BUIDL invests 100% of its total assets in cash, US Treasury bonds, and repo contracts. Investors can earn yields while holding their tokens on the blockchain.

Franklin On-Chain US Government Money Fund (FBOXX), an asset management company Franklin Templeton's US Treasury tokenized fund, is the second largest government bond product, with total assets under management exceeding $400 million (56 billion yen). WisdomTree is expanding the market by turning equity products into digital funds.

RWA's underlying infrastructure includes smart contracts, oracles, identity and compliance, and custody solutions.

Oracles are crucial to ensure that on-chain representations accurately reflect off-chain real-world data.

It also helps to initiate on-chain actions based on off-chain legal agreements. The development of RWA-specific oracles is an area to watch.

Binance's project analysis includes Ondo (structured finance), Open Eden (tokenized government bonds), Centrifuge (tokenization, structuring, credit, aggregation), Parcl (synthetic real estate), Toucan (tokenized carbon credits), and Jiritsu (zero-knowledge tokenization).

US interest rate cuts have an impact 

From the perspective of the current macro economy, interest rates are expected to start to be lowered in the future, which will affect many RWA tokens, especially investment products tokenized from US Treasury bonds.

This is because if interest rates are lowered, there is no hope for a yield. The current tokenized products of US Treasury bonds are popular because they can be expected to have a high yield. This means that if Japan raises interest rates in the future, there is a possibility that tokenized products of Japanese government bonds, which are considered to be the safest in the world, will appear.

Binance also noted that there are still concerns about the legal environment for RWA. However, Centrifuge, a platform that allows for fundraising using a large amount of RWA as collateral, uses a special purpose vehicle (SPV) to store assets. It has a system in place to protect customer assets in the event of default.

As security is further ensured in the future, the RWA tokenization market will likely continue to expand. In Japan, it is predicted to reach several trillion yen in a few years. Globally, it will likely grow to tens of trillions of yen. 

Reference: Binance Report
Image: Shutterstock

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