- RWA is still in its infancy, but BlackRock’s move could increase momentum.
- Securitize founders believe mainstream adoption is possible once RWA reaches $1 trillion.
Carlos Domingo, founder and CEO of Securitize, reiterated that tokenized real assets (RWA) will gain momentum once it reaches the $1 trillion milestone.
Domingo, whose company handles the redemption and placement of BlackRock’s tokenized BUIDL Fund tokens, Emphasize that;
“For tokenized real-world assets, I think we are in the early stages, just like we were with previous cryptocurrencies. Even with the addition of stablecoins, we still haven’t reached the $200 billion/$300 billion level.”
He added,
“As an industry, we believe that once we reach $1 trillion in on-chain real assets, that’s when this becomes an important part of capital markets and financial services.”
However, the RWA sector can achieve the $1 trillion milestone in the next 2-5 years. This is especially true as momentum builds following BlackRock’s entry with its Ethereum (ETH)-based BUIDL fund.
Beyond BUIDL Funds and Tokenized U.S. Treasury Bonds
After impacting the spot Bitcoin (BTC) ETF, market watchers have been keenly tracking BlackRock’s digital asset strategy.
The shift to tokenized real assets (RWAs) via the Ethereum-based BlackRock USD Institutional Digital Liquidity (BUIDL) fund has heated up tokenized U.S. Treasury bonds.
Total tokenized U.S. Treasury bonds hit $1 billion shortly after BUIDL’s debut, according to Dune Analytics. data.
With the total market capitalization of stablecoins at around $152 billion, adding $1 billion in tokenized U.S. Treasury bonds still makes RWA less attractive to some players, according to Domingo.
However, Domingo emphasized that credit will be the next target in the tokenization pipeline after U.S. Treasuries and securities.
“Tokenized cash is number one. We then tokenized government bonds and money market funds. But the next step is credit, which has less liquidity but higher yields.”
Ondo Finance echoed similar sentiments, noting that tokenizing a portion of US money market funds could allow the RWA sector to surpass the BTC market cap.
Citing a recent Cumberland report, Ondo highlighted,
“At the start of 2023, money market fund AUM was approximately $8.4 trillion.” And if 1.5% of that issuance moves on-chain, it would be larger than the current market capitalization of stablecoins. “If 7.5% of that moved on-chain, that would be bigger than Bitcoin.”
Put differently, tokenizing around 10% of a money market fund’s AUM (assets under management) would be enough to compete with BTC.
If BlackRock’s RWA move through the BUIDL Fund attracts more players, the $1 trillion mark could be reached quickly.