The real-world asset (RWA) tokenization sector faces a stark regulatory dichotomy as China enacts a severe prohibition while global experts forecast widespread institutional adoption and standardization by 2026.
In March 2025, the China Financial Industry Association, operating under the People's Bank of China and the China Banking and Insurance Regulatory Commission, officially declared RWA tokenization an illegal financial activity. The association defined it as involving unlicensed fundraising and trading, warning participants of potential legal consequences for supporting domestic or overseas RWA projects. This move escalates China's longstanding crackdown on digital assets, following the 2017 cryptocurrency trading ban and the 2021 mining crackdown. Experts cite motivations to prevent capital flight, maintain monetary policy control, and avoid parallel financial systems operating outside state oversight.
Contrasting sharply with China's stance, industry leaders project 2026 as a pivotal year for RWA maturation in other jurisdictions. Ivo Grigorov, CEO of Real Finance, predicts RWAs will move from "tokenized experiments to repeatable, standardized on-chain financial products." He cites the $130 trillion in outstanding fixed income in real-world markets and persistent TradFi inefficiencies as key drivers. Grigorov expects RWAs to ship with "explicit risk classification, scoring, and embedded protection/insurance as a 'default expectation'" to attract real capital.
The market already shows significant activity, with $19.4 billion of RWAs issued on-chain (though down 20% in six months) and 602,000 asset holders. Tokenized U.S. stocks like Apple, Nvidia, and Tesla, issued as "xStocks" by Backed Finance, have seen total trading volume exceed $457 million since their June debut on major exchanges.
Other executives outlined specific 2026 expectations: Maksym Sakharov (deobank WeFi) anticipates focus on short-duration treasuries and commodities where faster settlement and transparency matter; Edwin Mata (Brickken) foresees TradFi liquidity flowing on-chain with DeFi as a testing ground; Artem Tolkachev (Falcon Finance) predicts a shift toward collateral usability, where tokenized assets unlock liquidity and fit into portfolio frameworks; Nima Beni (Bitlease) believes ownership will become an "active responsibility" with markets rewarding RWAs that limit transferability for stability.
Despite optimism, challenges remain. Wish Wu, cofounder of Pharos, notes fragmented infrastructure, siloed liquidity, and persistent issues with interoperability, security, privacy, and the legal enforceability of on-chain contracts. However, he expects major institutions like BlackRock, JPMorgan, and Franklin Templeton to move from pilots to large-scale, production-ready products in 2026.
