Original Title: RWA Tokenization: Key Trends and 2025 Market Outlook

Original Source: Brickken, Cointelegraph Research

Original Compilation: DePINone Labs

Editor's Note: At a crucial stage in the cryptocurrency market's transition from "concept" to "industry," Real World Asset (RWA) Tokenization is undoubtedly a core trend connecting the on-chain and off-chain asset worlds. This report, titled "RWA Tokenization: Key Trends and 2025 Market Outlook," authored by the Brickken team, systematically outlines:

· The development journey of on-chain Real World Assets (RWAs);
· The current status of mainstream asset classes (such as bonds, equities, real estate, funds, ABS, etc.) in terms of implementation;
· The value gains brought to real-world assets by tokenization, such as how it reduces transaction and management costs, enhances liquidity, and impacts pricing efficiency. By reading this report, you will understand how tokenization creates value through lowering underwriting and listing fees, compliance and reporting costs, achieving fractional ownership, and reducing market entry barriers;
· The key technologies driving RWA, such as blockchain and distributed ledger technology (DLT), smart contracts, and oracles;
· The design of RWA issuance, from transaction structuring to digitization, primary distribution, and post-tokenization management.

This report combines depth with practicality, detailing precise cases and data ranging from J.P. Morgan's ABS pilot, Franklin Templeton's on-chain money market fund, to a $30 billion real estate asset on-chain. This will help us understand the RWA market trends clearly. The full reprint of the report by DePINone Labs is as follows:

1. What Is Real World Asset Tokenization?

Real World Asset (RWA) tokenization refers to representing ownership and management rights of physical assets (such as real estate, commodities, bonds, and even intellectual property) in the form of digital tokens on a blockchain. These tokens can be traded 24/7, and compared to traditional financial transactions, they are more accessible, efficient, and transparent.

There are other significant benefits to tokenizing real-world assets, including increased liquidity, enhanced transparency, reduced transaction costs, and the ability to achieve real-time settlement through smart contracts. By representing assets as digital tokens, tokenization also enables decentralized ownership.

This has made markets that were originally illiquid or had high entry barriers more democratized. Investors can purchase smaller fractions of assets, thus expanding the investor base and increasing liquidity. Furthermore, the use of decentralized networks has also reduced reliance on intermediaries, simplifying transaction processes and enhancing security.

Historical Background and Evolution

The concept of asset tokenization emerged with the development of blockchain technology. Blockchain initially focused on digital currencies like Bitcoin and later expanded to various financial instruments and services. The mid-2010s marked the beginning of real-world asset tokenization. Companies like RealT and RedSwan CRE1 were pioneers in issuing digital tokens representing property shares, enabling decentralized ownership of real estate. This initiative not only increased market liquidity but also opened up traditionally closed investment markets. While off-chain ownership was already possible, tokenization streamlined the process for investors and issuers, making it more easily scalable.

As technology matured, other asset classes such as commodities, bonds, and funds also began to be tokenized. This shift benefited from the widespread adoption of decentralized finance (DeFi) protocols, which integrated tokenized assets for lending, borrowing, and trading. Today, tokenization is considered a transformative trend in the financial industry. By 2030, the market size of tokenized assets is expected to reach $30 trillion to $50 trillion. Asset tokenization is no longer limited to the financial market but has expanded into other industries such as supply chain management, art, and intellectual property. It has the potential to disrupt traditional practices and create new economic models.

2. Overview of Blockchain Technology and Its Role in Real-World Asset Tokenization

Blockchain technology is the foundation of real-world asset tokenization. It provides a decentralized, secure, and tamper-proof ledger system for recording and validating transactions. This can enhance the transparency and security of asset management. Key aspects of blockchain technology that support RWA tokenization include:

· Security and Transparency: Blockchain technology ensures that all transactions are recorded in a transparent and tamper-proof ledger, reducing fraud risks and enhancing trust among market participants. When managing high-value tokenized assets, the integrity of transaction records is crucial.

· Smart Contracts: A significant advantage of blockchain is its ability to execute smart contracts, which are self-executing contractual terms written in code. Smart contracts can automate payments, compliance checks, and asset transfers, reducing the need for intermediaries and lowering operational costs.

· Interoperability and Composability: Blockchain can interact with a variety of digital financial tools and platforms, allowing tokenized assets to seamlessly integrate into various ecosystems. This fosters secondary asset trading and the use of assets as collateral on DeFi platforms.

· Reserve Proof and Data Oracle: Standards like Chainlink's Reserve Proof and Data Oracle enable real-time validation of the reserve backing tokenized assets through connections with off-chain auditing entities, adding an additional layer of security and trust to the ecosystem. These mechanisms help maintain integrity and provide transparency.

· Lower Transaction Costs and Real-Time Settlement: Tokenized assets benefit from reduced transaction costs and nearly instant settlement brought by decentralized infrastructure.

3. Overview of Tokenizable Asset Categories

While theoretically any asset category can be tokenized, five financial asset categories are most common: debt, equity, asset-backed securities (ABS), funds, and real estate (see Figure 1).

According to data from the Security Token Market, as of December 2024, the total value of tokenized assets in all these categories exceeds $500 billion. As tokenization continues to impact the capital markets, this figure is expected to further rise in 2025 (see Figure 2).

Source: http://stm.co/

Equity tokenization allows the digitalization of company shares into tokens, enabling decentralized ownership and attracting a broader base of investors. The tokenization platform Brickken employs this approach to distribute ownership of existing companies and create tokens to provide seed funding for startups. Equity tokenization not only broadens participation but also brings liquidity to traditionally less liquid equity instruments.

Asset-backed securities (ABS) represent another key area of tokenization. Digital tokens backed by loan or receivables pools enhance transparency and streamline the securitization process. Traditional securitization relies on intermediaries, cumbersome documentation, and complex reporting, raising costs. Tokenization automates some steps through smart contracts. For example, smart contracts can transparently manage payment distributions to investors, eliminating the need for manual reconciliation.

A notable example is JPMorgan Chase's tokenization of car loan receivables. The project showcases how blockchain brings efficiency and transparency to the securitization market. Its primary aim is to enhance the security and efficiency of payment processing. By replacing sensitive payment data with tokens, the bank reduces the risks of data breaches and fraud, as the tokens are meaningless if intercepted. This approach not only protects customer information but also simplifies transactions, as token processing is faster than traditional data.

In addition, tokenization reduces the storage of sensitive information, thus reducing compliance burden and related costs.

Tokenization is also reshaping the fund management industry. Investment funds can issue tokens representing fund shares, thereby reducing administrative expenses and making fund participation more convenient. Franklin Templeton utilized this method when issuing the Franklin OnChain US Government Money Fund on the Stellar blockchain, where the fund processes transactions and records shared ownership. This enables the fund to lower operating costs and provide greater transparency than traditional financial products. Another notable example is the proof of concept conducted by JPMorgan Chase and Apollo Global Management in 2023, demonstrating a system for real-time rebalancing of tokenized investment portfolios across multiple blockchains. It is projected that this could reduce operating costs by 98% and unlock a $400 billion annual revenue opportunity for the asset management industry.

The transition from proof of concept to production environment is progressing smoothly, with 2024 marking the deployment of tokenized products such as liquidity tools, bonds, and private equity funds. In 2025, institutions are expected to further embrace tokenization by introducing more asset classes (such as private credit) onto the blockchain. Real estate, long considered an ideal candidate for tokenization due to its historical illiquidity, is set to undergo significant tokenization. Tokenized real estate offers numerous benefits, including decentralized ownership, instant transaction settlement, enhanced liquidity options, and simplified mortgage processes. Investors who have been locked into real estate positions for nearly a decade can now more easily sell their equity or partial ownership through the tokenization market.

Furthermore, tokenized real estate assets can be used on DeFi platforms as collateral, enabling borrowers to access liquidity more efficiently than through traditional banking systems. The practical applications of tokenized real estate cover a wide range of use cases, from tokenizing entire properties for on-chain trading to fractional ownership of commercial and pre-development projects. Tokenization is also applied in innovative areas such as the seamless issuance of Home Equity Line of Credit (HELOC), warehousing, and securitization.

An upcoming report by STM is expected to provide insights into the number of real estate properties that have been tokenized, project reserves, and analysis of past successes and challenges. This information will guide the next phase of adoption of tokenized real estate. The report states that $300 billion worth of real estate assets have already been tokenized or are in tokenization reserves within the industry (see Figure 3).

Source: http://stm.co/

While institutional adoption is a key driver of tokenization, the technology also presents significant opportunities for retail investors. By simplifying issuance and operation, tokenization opens up asset classes traditionally inaccessible to smaller investors. Significant examples include tokenized whisky funds, diamonds, art, renewable energy projects, as well as niche areas such as car financing and Bitcoin mining.

3.1 Tokenized Bond Issuance

Tokenized bond issuance has enhanced the efficiency and accessibility of the traditional bond market. Firstly, tokenized bonds enable a broader set of investors to participate in the bond market through ownership decentralization. Tokenization also creates liquidity as tokens are easier and more frequently traded compared to traditional bonds. Similar to blockchain transactions for other asset classes, market transparency can increase, reducing misconduct and boosting investor confidence.

The benefits of tokenized bonds extend beyond faster settlement and lower transaction costs; they also support complex structures such as multi-tiered and multi-currency instruments. HSBC facilitated the issuance of a HK$6 billion equivalent digital green bond for the Hong Kong Monetary Authority, covering four currencies: HKD, RMB, USD, and EUR. Infrastructure providers like Brickken focus on streamlining the tokenization process for issuers, further accelerating the adoption of alternative assets. The continued growth of tokenization in both institutional and retail markets highlights its transformative potential. With increased adoption, the financial industry is moving closer to a future where all asset classes can seamlessly integrate into the digital ecosystem.

This issuance was conducted through HSBC's Orion platform, marking the world's first multi-currency digital bond issuance. The adoption of tokenized bonds varies by country, reflecting different levels of participation in this innovative financial instrument (see Figure 4).

In May 2024, the Eurozone completed its first experiment settling wholesale central bank transactions using blockchain, involving 16 private companies to assess the interaction of TARGET services with blockchain platforms. The European Central Bank conducted further experiments between May and November 2024, involving over 60 institutions with transactions totaling over €1.59 billion. The ECB collaborated with technology pioneers like Brickken through its European sandbox initiative. Consequently, wholesale central bank transactions in Europe may soon be processed by blockchain infrastructure.

In Germany, the Federal Financial Supervisory Authority (BaFin) has played a crucial role in bond tokenization by providing a clear regulatory framework that encourages innovation. Well-known German companies like Deutsche Börse have launched platforms such as Digital Bond Issuance (DBI), simplifying the bond issuance process. Several other regulatory bodies and central banks have also created frameworks or are in the process of clarifying mechanisms for digital token issuance (see Figure 5).

3.2 Debt and Money Market Fund Tokenization

By 2024, tokenized liquidity products had seen significant growth, with major institutions expanding their product range or increasing their assets under management (AUM). Liquidity products are attractive due to their explicit terms, standardized structure, and transparent on-chain auditability. Their utility extends beyond investment to serving as collateral in decentralized finance (DeFi) and institutional financial applications. For example, the $BUIDL unit has been used as collateral on platforms like FalconX and Hidden Road. Hashnote's USYC has a similar function on Deribit.

Traditionally, securities lending was limited to private banking clients. However, these forms of collateral are now open to everyone due to the lower transaction costs of blockchain infrastructure and simpler onboarding processes.

Recently launched products include Franklin Templeton's $BENJI, WisdomTree's various tokenized funds, Hashnote's USYC, and BlackRock's dollar-denominated institutional digital liquidity fund ($BUIDL) launched on Securitize. Within just 40 days of its launch, $BUIDL became the largest tokenized fund, with a market cap exceeding $375 million in six weeks (see Figure 6).

As of December 31, 2024, its AUM had reached $648.5 million, showcasing the rapid appeal potential of tokenized liquidity products. Subsequently, Hashnote's USYC surpassed $BUIDL.

Key Features of BUIDL:

· Asset Composition: BUIDL invests in high-quality, short-term instruments, including U.S. Treasuries and repurchase agreements, aiming to maintain a stable net asset value while providing daily liquidity.

· Blockchain Integration: BUIDL initially launched on the Ethereum blockchain and expanded in November 2024 to include five additional blockchains: Aptos, Arbitrum, Avalanche, Optimism, and Polygon.

· Investor Accessibility: BUIDL is primarily targeted at institutional investors, offering shares pegged to the U.S. dollar, with dividends distributed monthly in the form of new tokens.

Franklin Dampson has also integrated blockchain technology with traditional financial products through his Benji Investments platform. The platform enables investors to access the Franklin On-chain U.S. Government Money Market Fund (FOBXX). FOBXX is a U.S.-registered mutual fund that uses a public blockchain to process transactions and record ownership.

Each share of the fund is represented in the form of BENJI tokens, and investors can interact with the fund through the Benji Investments application via a digital wallet. The Franklin On-chain U.S. Government Money Market Fund invests at least 99.5% of its total assets in government securities, cash, and repurchase agreements fully collateralized by government securities or cash. The fund aims to provide investors with a high level of current income while maintaining a stable $1.00 share price.

Franklin Dampson has also facilitated the exchange between USDC and the U.S. dollar (USD) on the Benji platform. This feature also allows investors to fund their investments using USDC. The exchange service is provided by the cryptocurrency and stablecoin infrastructure platform Zero Hash. Franklin Dampson's Benji platform integrates blockchain technology and supports USDC exchange, setting an example of the integration of traditional finance and digital assets.

Looking ahead to 2025, it is expected that newcomers such as Coinbase Asset Management, Glasstower, and Ripple will join forces with established companies like BlackRock, Franklin Dampson, and UBS to collectively drive the mainstream adoption of tokenized liquidity products. These developments signal the beginning of a broader transformation, where tokenization will expand to more complex financial instruments.

4. Additional Value Brought by Tokenization

This section explores how tokenization adds value by reducing transaction and administrative costs, as well as improving liquidity, and illustrates this through a comparison with traditional investment instruments (such as Real Estate Investment Trusts, REITs) and historical analogies in the financial sector. Historically, investing in large-scale assets like real estate or private equity funds involved high costs related to underwriting, listing, compliance, and reporting. These costs are particularly significant in publicly traded REITs, but tokenization offers a more efficient alternative that can substantially reduce these burdens.

Tokenization can be likened to other significant steps in financial digitization. Before the launch of the Nasdaq in the early 1970s, the New York Stock Exchange (NYSE) relied on a manual open outcry system, where traders would gather on the trading floor and negotiate prices face-to-face. This process led to slow price discovery and a lack of transparency, often resulting in information asymmetry. Those who could access price data faster or better had a clear advantage, and prices were prone to inaccuracy.

As the world's first electronic stock market, NASDAQ has greatly enhanced price transparency. Investors can now see real-time bid-ask spreads, leading to more accurate pricing and a more liquid market. NASDAQ's electronic trading system demonstrates how increased price transparency results in a more efficient market, a principle directly relevant to today's blockchain-based tokenization benefits.

Underwriting and Listing Costs

In the traditional model, Real Estate Investment Trusts (REITs) incur substantial costs when conducting an Initial Public Offering (IPO). Underwriting fees can account for 5–7% of the funds raised, while annual listing fees on major stock exchanges like the New York Stock Exchange (NYSE) or NASDAQ range from $125,000 to $500,000, all of which can significantly impact returns.

Tokenization, on the other hand, eliminates many of these costs. By issuing digital tokens representing fractional ownership on a blockchain platform, issuers can bypass many intermediaries, including investment banks and underwriters. Furthermore, it eliminates the high costs of listing on a stock exchange. This streamlines the fundraising process, making it more direct and cost-effective, benefiting both issuers and investors.

Compliance and Reporting Costs

Publicly traded Real Estate Investment Trusts (REITs) face strict compliance and reporting requirements. This includes the need to regularly submit reports to regulatory bodies like the U.S. Securities and Exchange Commission (SEC), incurring significant legal and auditing costs. Many tokenization platforms also offer automated compliance features such as Know Your Customer (KYC) and Anti-Money Laundering (AML) checks, simplifying what was once a time-consuming and costly process.

Ownership Fragmentation and Market Access

Tokenization can break down assets into smaller, more accessible parts, making it easier for investors to trade portions of large assets like commercial real estate or private equity funds. This increased accessibility boosts liquidity as more investors can participate in markets that were previously inaccessible to them. The ability to trade fractional ownership shares in real-time on a blockchain platform ensures that investors can quickly enter and exit positions without the lengthy holding periods and illiquidity often associated with traditional assets.

Impact on Pricing Efficiency

Liquidity is closely tied to pricing efficiency. In highly liquid markets like publicly traded REITs, prices often reflect the true value of underlying assets because information spreads quickly, and buyers and sellers have many opportunities to trade, leading to accurate price discovery. Conversely, in less liquid markets like non-traded REITs, price fluctuations are more volatile.

In these markets, a smaller number of participants may lead to drastic price fluctuations. Tokenized assets can increase liquidity by trading 24/7 on a blockchain platform, enabling more consistent and accurate price discovery, similar to the transparency introduced by Nasdaq in the early 1970s.

· Reducing Information Asymmetry and Improving Liquidity

Using Nasdaq's impact on stock trading as an analogy, tokenization can reduce information asymmetry in illiquid markets. Public blockchain technology ensures all participants have equal access to transaction records and price data, reducing the advantages of insiders and creating a more level playing field.

Tokenization allows investors to trust the accuracy of asset prices as ownership, transaction history, and market data can be updated in real-time. As a result, the liquidity of these assets significantly improves, and investors no longer need to apply liquidity discounts when assessing asset prices.

· Liquidity Discount

Traditionally, illiquid assets were priced at a discount compared to liquid assets due to the risks and inconvenience of long holding periods.

Non-traded real estate investment trusts typically suffer from liquidity discounts due to a lack of market access, with investors demanding higher returns to compensate for the liquidity shortfall. Tokenization makes secondary market trading more seamless, reducing the need for these discounts. With improved liquidity, tokenized asset prices are more favorable, reflecting their true market value without being penalized for illiquidity.

· Secondary Market Trading

Tokenization also enables secondary market trading, which is usually limited or unavailable in traditional asset markets (such as real estate or private equity). This is highly beneficial for portfolio managers, allowing them to rebalance their portfolios more easily and quickly, and respond promptly to market changes.

5. Driving Tokenization Technology

Blockchain and Distributed Ledger Technology (DLT)

Blockchain, as the underlying technology for tokenization, is an immutable ledger ensuring the secure recording of transactions and asset ownership. Blockchain platforms provide a programmable environment where tokens can be created, traded, and globally transferred, reducing friction. These platforms also achieve instant settlement, reducing the delays seen in traditional financial systems (T+2 or T+3). This not only speeds up transactions but also reduces counterparty risks associated with delayed settlements.

Smart Contract

A smart contract is a key component of a blockchain system. They can automate processes that typically require manual intervention or trusted third-party handling. These programmable protocols enable the automatic execution of complex financial transactions, such as dividend payments, bond issuance, or partial ownership distribution, based on preset conditions.

In Real World Asset (RWA) tokenization, smart contracts can be configured to manage various tasks:

· Automatic Payments: Automatically execute profit sharing, interest payments, or dividend distributions to token holders based on the performance or events of real-world assets.

· Governance and Voting Rights: For tokenized stocks or real estate, smart contracts can be used to grant token holders voting rights, making corporate governance more convenient and transparent.

· Compliance and Regulatory Oversight: Smart contracts can embed Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements directly into the asset’s lifecycle, ensuring that only authorized entities can interact with tokenized assets.

Oracle

Although blockchain networks are self-contained, many tokenized assets require real-world data to function accurately. Oracles, as intermediaries between the blockchain and the external world, are crucial for bringing off-chain data into the blockchain ecosystem. Oracles facilitate the integration of real-time information (such as asset prices, weather conditions, or supply chain data) into smart contracts.

This enables tokenized assets to accurately reflect real-world conditions. For example, in the case of tokenized commodities, an oracle can provide real-time price updates for gold or oil, ensuring that the token’s value always aligns with the underlying physical asset it represents.

Cross-Chain Interoperability

As tokenization evolves, assets need to move seamlessly across different blockchain networks. Cross-chain interoperability allows tokenized assets to interact with multiple blockchains to facilitate liquidity and broaden market access. Without secure and efficient cross-chain infrastructure, tokenized assets would be confined to isolated liquidity pools, potentially hindering the broader adoption of tokenized financial instruments.

Chainlink’s Cross-Chain Interoperability Protocol (CCIP) is a popular standardized protocol used to facilitate this communication. Cross-chain solutions not only enhance the liquidity of tokenized assets but also enable institutional investors to access multiple markets without having to interact independently with each blockchain.

Token Standard

Tokenization relies on established token standards to ensure compatibility and security across different platforms. For example, Ethereum’s ERC-20 standard manages fungible tokens, while ERC-721 is used for non-fungible tokens (NFTs), typically used for unique assets like tokenized artwork or real estate. By adhering to standardized token formats, tokenized assets can be easily integrated into various decentralized applications (DApps) and exchanges, enhancing their marketability and liquidity.

Reserve Auditing

One key challenge of tokenizing real-world assets is to ensure that digital tokens are fully backed by the corresponding physical assets. The reserve auditing mechanism may involve a third-party auditor, providing institutions with a way to verify that tokenized assets (such as stablecoins or tokenized gold) are indeed backed 1:1 by off-chain held reserve assets. This enhances investor trust and confidence, reducing the risk of fraud or over-issuance.

Blockchain-based proof of reserve solutions (such as those provided by Chainlink) can autonomously verify the reserves of cryptographic assets in real-time and publish the data on-chain. This ensures transparency and mitigates risks associated with under-collateralized assets. For example, Chainlink's "Secure Asset Mintage" provides further enhancement through proof of reserve. It embeds programmatic logic to only allow token minting when verified proof of reserve is present. Secure mintage can prevent infinite minting vulnerabilities where malicious actors could create uncollateralized assets.

Privacy-Preserving Technologies

For assets related to sensitive financial data or personal identity information, privacy is a crucial consideration. Zero-knowledge proofs (ZKPs) enable a proving party to demonstrate certain information about digital assets being encrypted without fully disclosing it. For example, financial institutions can verify a user has sufficient funds to purchase tokenized assets without revealing the total balance of their account. Privacy-preserving technologies play an increasingly important role in enabling compliance such as GDPR while still allowing secure management of tokenized assets in decentralized environments.

6. Asset Tokenization Issuance Structure

Asset tokenization issuance is a process that combines traditional financial structures with blockchain technology to create digital tokens representing ownership or participation rights in physical assets. The structure of asset tokenization issuance typically follows a series of stages, including transaction structuring, digitization, primary distribution, post-tokenization management, dividend issuance, and secondary trading (Figure 7).

These stages can be described as follows:

1. Transaction Structuring

This initial stage involves the legal and financial organization of the asset, determining how it will be tokenized, and establishing the framework for the institutional issuance of tokens. Key decisions include:

· Asset Identification and Legal Structure: The issuer must identify the underlying asset, such as real estate, bonds, or private equity funds, and create an appropriate legal structure to hold it, often a Special Purpose Vehicle (SPV). The SPV acts as the entity whose ownership is tokenized. The legal structure ensures that token holders have well-defined rights, such as fractional ownership, profit sharing, or debt repayment.

· Compliance: Ensure that the token issuance complies with the legal and regulatory framework of the jurisdiction in which the token is to be issued. This includes Know Your Customer (KYC), Anti-Money Laundering (AML), securities regulations, and compliance with relevant frameworks.

2. Digitization

At this stage, the ownership records of real-world or traditional assets are digitized and placed on the blockchain. Key considerations include:

· Register of Ownership in Digital Form (ROD): The ownership of assets is digitally recorded on the blockchain. Each investor's asset share is stored as a token, ensuring a secure and immutable record of ownership.

· Smart Contracts: Programmable operations set on the blockchain defining the token's terms and automating compliance checks, dividend payments, or shareholder voting processes. These smart contracts enhance operational efficiency by eliminating the need for intermediaries in day-to-day tasks.

3. Primary Distribution

Once the tokens are created, they are issued to investors in exchange for capital. This is akin to an Initial Public Offering (IPO) conducted in tokenized security form. The distribution process includes:

· Investor Onboarding: Investors can receive tokens only after undergoing KYC and AML checks. Once approved, their information is recorded on the digital ROD.

· Token Issuance: Issuing tokens to investors. Detailed information of each token holder and their partial ownership of the asset is immutably recorded on the blockchain. Smart contracts can automate various corporate actions at this stage, such as defining shareholder rights and dividend distribution.

4. Post-Tokenization Management

This stage refers to the ongoing management of tokenized assets, where smart contracts play a crucial role.

· Corporate Action Management: Automation of tasks such as dividend allocation, shareholder voting, and implementation of ownership changes. The efficiency improved by smart contracts enables asset managers to reduce administrative costs.

· Compliance Maintenance: Continuously monitor compliance requirements to ensure all regulatory obligations, such as reporting and KYC/AML protocols, are met throughout the token lifecycle.

5. Ongoing Activities

5a. Ongoing Activities

Once the token is issued and the asset begins to generate income, dividends can be paid to token holders. Smart contracts are used to automate the dividend distribution process and ensure payment according to the rights attached to each token. This reduces the operational burden on asset managers and allows for faster and more accurate payments to investors.

5b. Secondary Trading

The final stage is the token's secondary trading. Once investors hold the token, they can trade on regulated secondary markets or peer-to-peer.

· Enhanced Liquidity: Tokens provide liquidity for traditionally illiquid assets (such as real estate or private equity). Investors can trade tokens on secondary markets, allowing for faster and more cost-effective exits than traditional asset sales.

· Compliance and Market Regulation: For secondary trading, platforms facilitating security token transactions must comply with regulatory frameworks such as securities laws. This ensures investor protection and a transparent trading process.

The lifecycle of tokenized asset issuance can be summarized as a smooth process leveraging blockchain for efficiency and liquidity enhancement. The transaction structure design will resemble traditional issuance, then digitized through placing the transaction structure on blockchain infrastructure. Token issuance and distribution automated through smart contracts. Post-tokenization management and secondary trading unlock the true value of tokenization by reducing costs and increasing liquidity.

Conclusion: Looking Ahead

The tokenization of Real World Assets (RWA) has reached a tipping point, transitioning from isolated pilot projects to broader institutional adoption. However, achieving widespread adoption will require collaborative efforts to address existing barriers and cultivate an innovation-friendly ecosystem. While 2024 marks a significant milestone for tokenization, the journey is far from over. The transition of production-grade use cases for tokenized bonds, real estate, and private credit indicates a maturing market.

Nevertheless, the path forward will require continued innovation, collaboration, and education to address remaining challenges and unlock the full potential of tokenized real-world assets. McKinsey currently estimates that the underlying value of tokenized assets will reach $20 trillion by 2030 (Figure 8).

Early adopters of tokenization will gain a competitive advantage, capturing new revenue streams, and leading the reshaping of the global financial markets. In this dynamic environment, the role of forward-looking entities at the intersection of technology, compliance, and education like Brickken is significant.

By collaborating with regulatory bodies and market participants, they are laying the groundwork for a more inclusive, efficient, and transparent financial future. The stage is set for redefining the management, trading, and access of assets through tokenization — ushering in a new era of financial innovation.

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