Things are moving fairly quickly in crypto. It is not even 6 months since there was a switch in administration, bringing a pro-crypto stance to the government.
A lot has occurred during that time.
One thing we see starting to gear up is the push into real world assets (RWA). This was done a bit already, with a few firms tokenizing US Treasuries. According to RWA there is now just shy of $23 billion in assets on-chain.
It is a number that could get a lot bigger over the next 12-24 months.
A few companies are aligning to make a major push.
The Push: Tokenization of Real World Assets (RWA)
In the United States, selling tokenized real world assets, as far as I know, to retail investors is still not allowed. Institutions can create these for wholesale operations. However, when dealing with the general public, this is still undefined.
Kraken is looking to start offering US stocks via blockchain. Anyone interested in buying some Apple or Google with USDC?
Crypto exchange Kraken is planning to offer non-US customers the option of trading tokenized US stocks, part of the company’s push to offer more traditional assets via tokenization.
As mentioned, this cannot be offered to US residents. That said, there is a large market outside the United States which could help to launch this. Here is where we see the total RWA number poised for explosion.
This is also changing the focus of some of these exchanges.
The decision to incorporate more traditional investment options may indicate a shift by Kraken to compete less with crypto-native exchanges like Coinbase and more with larger brokerages like Robinhood, which provide a wide range of investment options.
Getting The United States Into The Game
Robinhood is looking to alter the outlook of this United States in this regard.
This firm is known for its innovative approach the industry. It gained attention by catering to the retail investor, providing crypto and stock trading.
The company is now stepping up, invoking the SEC to establish a national framework for RWA within the United States.
Robinhood submitted a 42-page proposal to the US Securities and Exchange Commission (SEC), calling for a national framework to regulate tokenized real-world assets (RWAs).
The brokerage is seeking to modernize financial infrastructure by making tokenized assets legally equivalent to their traditional counterparts and enabling compliant onchain settlement, Forbes reported on May 20.
The message here is that if the US falls behind, other countries will take the business. It is one benefit to blockchain; it is global. The tokenization can come from anywhere.
In the proposal, Robinhood also revealed plans for creating the Real World Asset Exchange (RRE), a trading platform offering offchain trade matching and onchain settlement for efficiency and transparency.
Robinhood is advocating for uniform federal standards to replace the patchwork of state-level securities regulations that currently apply. The platform would also integrate Know Your Customer (KYC) and Anti-Money Laundering (AML) tools through partners like Jumio and Chainalysis to meet global compliance expectations.
There was a series of funds opened in the last month that highlight the push in this direction. Blackrock did a $150 billion Treasury fund. Libre has the Telegram Bond Fund which is plans on released $500 billion in tokenized debt. MultiBank Group inked a $3 billion tokenization deal with UAE real estate firm MAG.
“The recent surge isn’t arbitrary. It’s happening because everything’s lining up,” Eric Piscini, CEO of Hashgraph, told Cointelegraph. “Rules are getting clearer in major markets. The tech is stronger, faster, and ready to scale. And big players are actually doing it,” he added.
Legitimacy For All Of Crypto
For years, the question within the crypto industry by newer people is "what can I buy with it". This is being answered in many ways.
Legitimacy is added via activity. Much of this depends upon the ability to transact. In the early days, this was slow.
What we are seeing is one major area of purchasing: the financial sector. By this, I am not referring to large funds buying crypto although that is happening. Instead, with RWA, people will be able to use crypto to buy traditional assets. It is the alternate to consumer spending.
A rather large use case for the US dollar, as an example, is the purchase of stocks, bonds, and other assets. People do this on a regular basis. When we look at the volumes in the financial markets, it is mind blowing.
Crypto is about to enter this realm.
Consider the point of getting an airdrop of ABC token. It means nothing to you but has the value of a few dollars. Imagine being able to swap this out into a fractional share of Apple stock.
This is where people have the ability to build wealth. Most of the world is focused upon income since they simply have no assets to speak of. A transition is taking place where people will be able to start building portfolios due to tokenization. For the moment, this applies only to crypto but, as we see, is rapidly moving towards real world assets.