Kevin Rusher, founder of the real-world asset (RWA) borrowing and lending ecosystem RAAC, recently shared his thoughts on several key recent moments for tokenization.
RWAs counter global negativity
“While intense geopolitical tensions have weakened both global and crypto markets, one sector of the on-chain economy saw all of its metrics stay firmly in the green: tokenized RWAs.
“According to data from rwa.xyz, between June 12 and 15, the total value of on-chain RWAs increased by $500 million to hit a new all-time high of $23.9 billion. At the same time, Bitcoin tumbled nearly 3% from $108,680 to $105,483 while the S&P 500 fell 1.13% between June 12 and 13.
“The number of RWA asset holders has also surged 81% in the past month, reaching 185,289. This further demonstrates strong and growing investor appetite for this innovative, uncorrelated asset class during uncertain times.
“This marks a significant milestone for the future of on-chain finance. Known for its volatility, even within crypto, the decentralized finance ecosystem needs the stability that RWAs can bring, and this continued growth is evidence that DeFi is finally getting what it needs.
“With 194 asset issuers now actively contributing to the RWA ecosystem, we’re witnessing the early architecture of what will become DeFi’s most robust liquidity layer.”
The significance of Deutsche Bank mulling tokenized deposits
“Deutsche Bank exploring tokenized deposits is an exciting signal for crypto adoption. With around 20 million customers and over €666 billion in deposits at the end of 2024, Deutsche is one of the 10 largest banks in Europe. So the fact it is considering tokenizing deposits is major news.
“If implemented, this could instantly bring enormous liquidity to the crypto ecosystem; only, though, if Deutsche does it openly.
“If these tokenized deposits stay within private and permissioned blockchains, they will only serve centralized institutions, not the wider ecosystem. That would be great for banks, but clearly not a step toward open, global finance.
“The opportunity that tokenized bank deposits represent is huge. But to achieve their full potential, these deposits must interact with public blockchains and fuel the decentralized finance (DeFi) ecosystem.
“Of course, we need regulated bridges between traditional finance (TradFi) and DeFi, strong KYC/AML, and transparent protocols that allow tokenized funds to support lending and yield opportunities without compromising compliance.
“In order to reach mass adoption and build a global open financial system, sacrificing some features from the early degen hyper-decentralized view is necessary if we want institutional capital.
“Private, permissioned tokenization is not conducive to the growth of either traditional or decentralized finance. TradFi and DeFi builders must collaborate to offer both compliance and financial accessibility. It is this balance that will define the next era of finance.”
Private credit tokenization
“The rise of tokenized private credit, which now boasts over $13.3 billion in on-chain assets, is not all good news for the RWA sector. This is not least because the sector is dominated by Figure, a private home owner lender in the United States. This one entity, operating in one of the highest-risk sectors, has over $12 billion of its loans tokenized.
“Of course, Figure is not the only name in tokenized private credit, where we also see some of the world’s biggest and most reputable asset managers and hedge funds, including Franklin Templeton, BlackRock, and Apollo. “Nonetheless, private credit is one of the highest-risk asset classes in traditional finance. It often involves non-transparent borrowers, complex terms, and very limited liquidity. Arguably, its structure doesn’t fit the ethics of transparency and decentralization that the digital asset and RWA sectors should stand for.
“Ideally, RWAs should be providing safety and stability to a volatile crypto ecosystem. RWAs like tokenized treasuries, property, and gold can and are bringing that stability – especially to decentralized finance, which needs it to grow and thrive.
“And so, despite its obvious success, tokenized private credit is perhaps not the best RWA asset class to help either DeFi or the cryptocurrency sector at large to evolve.”