Without RWA tokenization, the traditional financial market will not be able to survive.

Source: Cointelegraph Original text: "If there is no RWA tokenization, traditional financial markets will not survive"

The opinion comes from: Abdul Rafay Gadit, co-founder of ZIGChain

The U.S. tariff system has clearly fueled a global trade war, forcing investors to explore stable and profitable alternatives. In-depth analysis shows that issues of liquidity, opacity, and scalability have long plagued global financial markets. Whether or not there is a trade war, they were already not very healthy.

Tokenized Real World Assets (RWAs) have emerged - fortunately. First, they ensure predictable returns, providing investors a safe haven in uncertain market conditions and ineffective volatility.

Most importantly, RWAs are a lifeboat for traditional finance as they enhance market liquidity, make opaque markets more transparent, and democratize finance. Traditional financial markets need to integrate - rather than resist - RWAs in order to remain relevant over the next decade.

The rescue role of RWAs

In traditional finance, the "computability" of capital is achieved through slow, expensive, and unreliable intermediaries (such as banks). For example, these institutions are primarily unable to quickly rebalance portfolios.

This limits the scope of the market, and consumers have suffered significant losses as a result. There is a widespread issue of trust, and fund managers face a tremendous administrative burden. The end result is that everyone, except for those intermediary institutions that profit from it, is at a loss.

This is also why private equity financing declined by 24% in 2024 (according to the McKinsey report). Similarly, as revealed in the SIFMA 2025 Capital Markets Outlook, the volume of U.S. stock issuance has decreased by an average of 0.6% per year since 2020. During this period, initial public offerings also fell by 8.5%.

RWAs solves these problems. They make portfolio management simpler and seamless, allowing for scalable capital deployment even in volatile markets.

Tokenization automates verifiable transactions, driving precise, deterministic, trustless economies – fundamentally disrupting the status quo. It also provides investors with low-risk, low-cost, and quick access to existing and emerging global financial markets.

No wonder on-chain RWAs grew by 85% in 2024, exceeding $15 billion. This trend continues to maintain its momentum. RWAs are expected to remain a top investment category in the crypto space.

RWAs have recently reached a new all-time high of over $17 billion, with more than 82,000 asset holders. Notably, tokenized private credit is the largest asset in the RWAs sector, with a market capitalization exceeding $11 billion.

Clearly, in the face of $10 billion in liquidations and ongoing market volatility, investors have opted for RWAs. Moreover, this asset class is allowing private credit to rise again, laying the foundation for future financial markets.

"Smart money" bets on RWAs

JPMorgan, BlackRock, UBS, Citigroup, Goldman Sachs—all renowned companies in the traditional finance sector have entered the realm of RWAs. The capital inflow from these "smart money" institutions has helped on-chain private credit grow by 40%, while tokenized government bonds have seen an overall increase of 179%.

All of this may just be conventional diversification and capital expansion. But funds like Franklin Templeton's Franklin Onchain U.S. Government Money Fund (FOBXX) and BlackRock's U.S. Institutional Digital Liquidity Fund (BUIDL) suggest longer-term motives.

Initiatives like FOBXX and BUIDL focus on transforming the currency market through improvements such as shorter settlement times, easier access to liquidity, and better trading environments.

They leverage tokenization technology to introduce new yield-generating opportunities in traditionally illiquid markets (such as the private credit sector). According to PwC data, this could represent a $15 trillion disruption. S&P Global also believes that private credit tokenization is the "new digital frontier," addressing issues of liquidity and transparency.

As a result, RWAs are becoming a viable and more attractive option for institutional investors, who control nearly a quarter of the $450 trillion traditional financial markets. This is already a strong warning signal—and the demand for RWAs from "retail" users (i.e., the remaining three-quarters of the market) is also on the rise.

Retail investors are the ultimate goal of RWAs.

It is very important for institutions to adopt RWAs to enhance their initial awareness. Nevertheless, their actions will affect the market. However, in the long run, individual retail users will be the group that benefits the most from RWAs.

RWAs make capital markets more accessible to ordinary investors, including those who have never been part of the banking system. For example, fractional ownership allows investors with less capital to access large assets that were originally only available to wealthy family offices and institutions.

It is precisely because of these advantages that retail users will choose RWAs over traditional, exclusive financial assets and markets. Now, through solutions such as social investment platforms, retail users can access new financial opportunities in a more intuitive and hassle-free way, making it all self-evident.

Multiple reports from Mastercard, Tren Finance, and VanEck showcase the enormous growth potential of RWAs. This growth could range between 50 billion to 30 trillion dollars over the next four to five years.

The widespread adoption of retail will drive this growth; unless traditional markets adapt to or adopt RWAs, they will lose most of their users. With the influx of institutional and retail capital into this emerging field, traditional systems will face a test of survival.

Currently, there are powerful tools and platforms leveraging RWAs to bridge the gap between traditional financial markets and emerging markets. This makes the issue more about intent and priorities rather than anything else.

Catch up or be eliminated - this is the core of information. It is an urgent challenge because it has waited too long. The best part is that traditional assets on the blockchain and the market utilizing RWAs will create a win-win effect for issuers, institutions, and retail users. This is exactly what the world needs from a financial perspective, and it is worth all the effort.

The opinion comes from: Abdul Rafay Gadit, co-founder of ZIGChain.

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This article is for general informational purposes only and does not constitute legal or investment advice. The views, thoughts, and opinions expressed in the text are solely those of the author and do not represent or reflect the views and opinions of Cointelegraph.