The trend of tokenizing real-world assets (RWAs) in the crypto markets has been gaining traction in 2024, with various entities in the traditional finance (TradFi) industry also incorporating blockchain and asset tokenization into their portfolios.
Victor Sanchez and Alan Keegan, the co-founders of the RWA-focused blockchain project Kinto, shared their insights with Cointelegraph Markets on the market potential of tokenized RWAs. They discussed the factors driving the rapid growth of RWAs and why major institutions like BlackRock are optimistic about this asset class.
Sanchez highlighted the advantages of RWAs, such as eliminating intermediaries, a highly liquid market, and transparent ledgers. He also mentioned the significant growth of tokenized treasury products in 2023, which reached over $931 million in value by February 1.
Keegan emphasized the multitrillion-dollar opportunity presented by RWAs and how blockchain technologies can rapidly evolve in a bullish market. He also touched on the benefits of unlocking liquidity from RWAs, enabling global asset transfers with instant settlement and various cost-efficient transaction types.
The discussion delved into the challenges of fragmented liquidity in RWAs and how DeFi infrastructure can provide advantages over traditional alternatives in certain transaction types. The co-founders explained the need for a compliance framework at the blockchain level to facilitate seamless transactions and composability in RWAs.
Kinto aims to bridge the gap between TradFi and RWAs by implementing a safety-first approach with KYC/KYB requirements at the chain level. This ensures compliance with counterparty risk management while enabling composability for RWAs on their platform.
While RWAs have primarily been accessible to institutional investors and fund managers, Kinto plans to expand its offerings to a wider audience by addressing regulatory requirements and enhancing security measures. The ultimate vision for Kinto involves mainstreaming RWAs in TradFi, allowing for tokenized assets to be traded on-chain and various financial services to be provided in a decentralized manner.
Overall, the co-founders envision a future where traditional financial assets and services are seamlessly integrated into blockchain technology, benefiting both institutional and retail investors. It is important to note that this article does not provide investment advice, and readers are encouraged to conduct their own research before making any financial decisions.