Real-world asset tokenization is the process of creating a blockchain token that represents a legal claim on something that exists off-chain: a government bond, a private loan, a fraction of a commercial property, a gold bar stored in a vault. The token is not the asset — it is a representation of a claim on the asset, backed by a legal structure that connects the two.
The category has grown sharply. Total on-chain tokenized real-world assets (excluding stablecoins, which are their own category) reached approximately $24–31 billion by mid-2026, up from roughly $6 billion at the start of 2025. US Treasury products and private credit account for the vast majority. Real estate, commodities, and equities are present but smaller.
Why tokenize an asset?
The argument for tokenization is not primarily about the asset itself — a US Treasury bill is not fundamentally different as a token than as a CUSIP. It is about what changes when an asset lives on a blockchain.
Settlement speed. A traditional T-bill trade settles on T+1. A tokenized T-bill transfer settles in seconds on-chain, 24 hours a day, seven days a week, including weekends and holidays. For treasury operations that need to move collateral quickly, this changes what is practical.
Fractional access. An office building worth $50 million is not divisible in a traditional securities market — it requires a fund structure or a REIT. Tokenization allows the building to be divided into any number of units, potentially lowering minimum investment thresholds. Whether this matters depends on regulatory rules in the relevant jurisdiction, but the technical capability exists.
Composability. A tokenized T-bill can be posted as collateral in a DeFi lending protocol, used as reserve backing for a synthetic stablecoin, or transferred to a counterparty as part of a payment — within a single transaction or a programmable sequence. Traditional T-bills cannot be composed with software in the same way.
Transparency. On-chain assets have publicly verifiable balances and transfer histories. For institutional counterparties doing due diligence, on-chain collateral is auditable in real time rather than requiring periodic reporting.
The asset classes
US Treasuries and government bonds
The largest and most developed segment. Tokenized US Treasury products — BUIDL, USYC, USDY, BENJI, and others — held approximately $14.7 billion on-chain as of June 2026 (rwa.xyz). The growth is institutional: DAOs, payment companies, and DeFi protocols using tokenized T-bills as a cash management and collateral tool.
Non-US government debt is a smaller but growing segment. Several EU and emerging-market sovereign bond tokenization pilots have launched since 2024, with Singapore, Germany, and Hong Kong among early movers.
Private credit
Private credit — loans made directly to companies, outside public bond markets — is the second-largest tokenized asset class, with active on-chain private credit exceeding $18 billion by Q1 2026. The tokenization case here is stronger than for liquid public securities: private credit is inherently illiquid, making traditional secondary trading difficult. Tokenization creates a mechanism for fractional ownership and potential secondary transfer that the underlying asset lacks.
Platforms like Maple Finance and Centrifuge handle the on-chain distribution of private credit. Borrowers are typically small-to-medium businesses or crypto-native companies; yields are higher than T-bills to compensate for credit risk. The credit risk is real — private credit defaults do happen, and the on-chain structure does not eliminate underwriting failure.
Real estate
Real estate tokenization allows fractional ownership of individual properties through on-chain tokens. A $25 million office building tokenized into 2.5 million tokens at $10 each theoretically allows retail entry into commercial real estate. In practice, regulatory requirements for real estate securities in most jurisdictions have constrained retail access. Most tokenized real estate projects to date have been institutional or accredited-investor-only offerings.
The real estate segment remains small relative to its total addressable market, partly because real estate law varies enormously by jurisdiction — the legal enforceability of an on-chain token claim on a physical property is jurisdiction-specific and not always tested.
Commodities
Gold is the most tokenized commodity, with products like Paxos Gold (PAXG) and Tether Gold (XAUT) representing warehouse receipts for physical gold. Each token corresponds to a specific amount of gold held in custody. The custody risk is the same as for physical gold — it depends on the vault operator's solvency and honesty — but the transferability and divisibility improve substantially.
How tokenization works legally
The token alone does not create a legal claim. What creates the claim is the legal wrapper connecting the token to the asset. The three dominant structures are:
Fund shares: The token represents shares in a regulated fund (BUIDL, BENJI). Fund law in the relevant jurisdiction governs investor rights. This is the most legally sound structure but requires regulatory registration.
Debt instruments / notes: The token represents a note (a debt obligation) issued by a special-purpose vehicle that holds the underlying asset. USDY uses this structure. Note holders have contractual rights against the issuer, not equity rights in a fund.
Direct ownership certificates: The token represents a direct fractional ownership claim, often through a trust or legal wrapper. Used in some real estate and commodity tokenization. The legal enforceability of this structure varies by jurisdiction and has been tested less thoroughly than fund structures.
In all cases, the chain of title must be maintained off-chain. If the legal structure fails — through insolvency, regulatory action, or documentation failure — on-chain token holders may find their claims in dispute in a traditional court, not automatically resolved by the blockchain.
The risks
Legal enforceability. The fundamental question: if the issuer becomes insolvent, does the on-chain token give you an enforceable legal claim? For SEC-registered funds (BENJI), the answer is governed by US fund law. For newer structures, this question has not been tested in adversarial conditions in most jurisdictions.
Smart-contract risk. The token contract that represents the asset, and any distribution or collateral infrastructure built on top of it, is code that can contain bugs. The underlying asset (a T-bill, a property) is unaffected by a smart-contract exploit, but your token representing your claim on it could be transferred to an attacker.
Liquidity risk. Secondary markets for most tokenized assets are thin. A $2.4 billion tokenized T-bill fund (BUIDL) sounds liquid, but the secondary market for BUIDL tokens is not as liquid as the market for an equivalent amount of T-bills held in a traditional account. In a stress scenario, selling at close to par value may require going through the primary redemption process, which takes time.
Oracle risk. Some tokenized assets require external price feeds (oracles) to value the underlying asset on-chain. If the oracle is wrong — through failure or manipulation — systems that use the tokenized asset as collateral can malfunction.
Regulatory risk. The US GENIUS Act, EU MiCA, and equivalent frameworks in Asia and Latin America are still being implemented. How they classify specific tokenized asset products — as securities, as payment instruments, as something else — determines who can access them and what compliance is required. The rules are in flux.
The market context
From $6 billion at the start of 2025 to $24–31 billion by mid-2026, on-chain RWAs grew by 263–400% in roughly 18 months. The IMF described RWA tokenization in 2026 as a "structural reconfiguration" of how institutional assets are distributed and collateralized — not a marginal experiment.
The growth is concentrated in two segments (Treasuries and private credit) that have clear, immediate institutional use cases: yield management for on-chain treasuries, and liquidity improvement for inherently illiquid private loans. The retail use case for real estate and other asset classes is developing more slowly, constrained by legal and regulatory complexity that does not resolve as quickly as technology does.
For the specific leading products in the tokenized Treasury segment and how they compare, see Tokenized treasuries compared: BUIDL, USYC, USDY, BENJI. For the yield mechanics and access rules of the leading tokenized money market funds, see Tokenized money market funds.