Asset tokenization is shaping the future of finance by converting fiat currencies, government securities, and a broad range of real-world assets into digital tokens. Stablecoins remain a core use case, while real-world asset tokenization (RWA) aims to broaden access to illiquid assets such as real estate, art, ships, aircraft, and raw materials. The market operates around the clock, enabling participation from a diverse set of investors and boosting liquidity. Currently, more than 80% of tokenization market volume comes from U.S. Treasuries and money market funds (MMFs).
Short-dated government securities, CPs, and CDs are rapidly embraced by MMFs for low risk and high liquidity. Tokenized MMFs offer real-time trading and asset transfers without redemption windows. As of December 25 last year, average yields stood at 3.79%, slightly above the U.S. policy rate of 3.75%. JPMorgan entered the space last year with its own tokenized MMF, MONY, following BlackRock’s early lead with BUIDL.
The ECB is exploring a single standard for issuing, settling, and safekeeping traditional assets on a blockchain, with Pontes trials planned to connect the euro system’s payment infrastructure with private DLT platforms within 3–4 quarters this year. This would mark a pivotal shift as central banks embed blockchain into core financial infrastructure, with MUFG set to roll out a short-duration MMF this year to reinforce government bonds as a backbone in the digital asset ecosystem. Tokenization is expanding beyond securities into real estate and other asset classes, with fractional ownership enabling investors to acquire tiny slivers such as a 0.01% stake in a building. Securities themselves are being tokenized and traded on platforms like Kraken’s XStocks and Robinhood’s Stocks Tokens, while Deutsche Bank Research projects a market of roughly $1.5–2 trillion by 2030 excluding stablecoins.
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