Tokenized RWA market surpasses $12b, led by U.S. treasuries

According to Binance, the market for tokenized real-world assets, excluding stablecoins, has surpassed $12 billion.

This growth is largely driven by tokenized US Treasury bonds, with significant participation from major financial institutions like BlackRock and Franklin Templeton, according to a report by Binance Research published on September 13.

This total does not include the $175 billion stablecoin market that remains separate from RWAs.

Tokenization is the fractionalization of traditionally illiquid assets such as real estate, government bonds and commodities, making them more accessible to a wider range of investors. It also simplifies processes such as record keeping and payments, potentially transforming the trading and management of assets in traditional finance.

The report notes that the market value of tokenized U.S. Treasury funds alone exceeds $2.2 billion.

BlackRock’s BUILD Treasury leads the category with about $520 million in assets, followed closely by Franklin Templeton’s FBOXX at $434 million. That milestone comes less than five months after the market reached $1 billion in late March, according to the report.

US interest rates

The report noted that rising interest rates in the U.S. have been a major factor in the proliferation of tokenized Treasury bonds, which offer yields that appeal to investors seeking stable returns.

However, the Binance Research report noted that the Federal Reserve’s upcoming rate cuts could reduce the appeal of yield-generating instruments like tokenized Treasury bonds. Still, the company noted that significant rate cuts would be necessary to significantly impact demand.

Other RWA formats

In addition to Treasury bonds, the Binance Research report also examined other segments of the on-chain RWA market, including private credit, tokenized commodities, and real estate.

The tokenized private credit market is valued at approximately $9 billion, but represents only 0.4% of the $2.1 trillion global private credit market in 2023.

“While the on-chain private credit market is only worth about 0.4% of this, it continues to grow at ~$9 billion (2), with active loans up ~56% last year.”

Binance Research

Risks of RWAs

Despite this growth, Binance Research has highlighted several risks associated with RWAs.

First, RWA protocols often tend toward centralization due to regulatory requirements, leading to concerns about control and transparency. They also rely heavily on off-chain intermediaries for asset custody, adding layers of third-party dependency.

The complexity of these systems sometimes outweighs the returns they produce, raising questions about whether that return justifies the operational challenges, the report said.

Moreover, privacy and compliance remain key issues, and zero-knowledge technology emerges as a promising tool to balance regulatory demands with user autonomy.