In 2024 and early 2025, the tokenization of Real-World Assets (RWAs) has transformed from a niche experiment to a credible, well-capitalized sector within the cryptocurrency ecosystem. According to CoinGecko's 2025 RWA Report, the RWA market surged 85% to $19 billion in 2024, driven by institutional adoption from financial giants like BlackRock, HSBC, and Franklin Templeton. Significant growth has been seen in tokenized U.S. Treasuries, which experienced a 544.8% increase to $5.6 billion by April 2025, with BlackRock's BUIDL claiming a 44% market share. Fiat-backed stablecoins, dominated by Tether (USDT) with a 71.4% market share, climbed to a record $224.9 billion in market cap, fulfilling the need for stable exchange units amidst crypto volatility.
Commodities-backed tokens, including gold-backed options like Tether Gold (XAUT) and PAX Gold (PAXG), also showed robust growth. Meanwhile, on-chain private credit reached $546.8 million, and tokenized stocks grew substantially, albeit from a smaller base.
Despite the rapid expansion and integration bridging traditional finance and decentralized finance, concerns remain about hidden systemic risks. Tracy Jin, COO of MEXC exchange, warns that tokenized RWAs could replicate a crisis similar to the 2008 subprime mortgage collapse due to opaque issuer practices and off-chain asset risks masked by flawless on-chain data.
She highlights the dangers of "toxic tokenization," where flawed, overvalued, or unenforceable off-chain assets are represented by seemingly safe tokens, exposing holders to potential severe losses amid market downturns. Private blockchains, preferred by institutions for regulatory control, can undermine the transparency promised by blockchain technology.
To mitigate these risks, Jin advocates for robust regulatory frameworks emphasizing mandatory third-party audits verifying asset quality, clear legal structures granting enforceable ownership rights, and regulated licensing for issuers and custodians. This approach aims to balance innovation with investor protection and systemic stability.