Based on BlackRock Chairman Larry Fink's annual letter to shareholders, Real World Assets (RWA) are being built into the pipeline of Wall Street product offerings. Do the originators of the concept have a chance to be players here? Or will RWAs be run by Big Finance? 

"It opens up the biggest land grab in history for financial institutions," Will Peck, Head of Digital Assets at Wisdom Tree, said about RWAs and tokenization more broadly during an American Banker event on Dec 2, 2025.

When the likes of Larry Fink speak about the tokenization of every financial asset, the crypto community is understandably conflicted. 

"On one hand, having the world's largest asset manager validate blockchain – albeit for their own ends – is the ultimate validation and vindication. But on the other hand, there's a fear that traditional finance is arriving not to join the revolution, but to colonize it," said Saeed Al Fahim, founder of Tharwa, a UAE-based DeFi platform focused on RWA tokenization. 

Some crypto natives refer to RWA models now as simply "wrapped TradFi", whereas physical assets like land and real estate are digitized but everything around it is centralized within the usual Big Finance ecosystem. 

"Token holders may gain liquidity, but they don't gain meaningful control or transparency," said Al Fahim. "I think that runs counter to the principles that crypto was founded on, and I don't think there's a quick fix that can remedy that."

The RWA concept began around 2020 within the small universe of the DeFi blockchain bros. Early players like MakerDAO (CRYPTO: DAO) and Centrifuge (CRYPTO: CFG) began using the concept when they started backing stablecoins and crypto currency loans backed by real estate, or Treasury bonds. It then became the go-to phrase to describe what was seen as a potential new DeFi product line.

RWA was born in the crypto universe. But it has been adopted by Wall Street giants, led by BlackRock. 

The RWA market has reached an estimated $25 billion in 2025, driven by major financial players and blockchain technology.

RWA: Regulatory Concerns and Questionable Use Cases

RWAs connect traditional markets to a blockchain. They let you invest in real-world value using digital tools. Tokenized securities generally fall into two categories, as defined by the Securities and Exchange Commission in January 2026: securities tokenized by or on behalf of the issuers of such securities; and securities tokenized by third parties unaffiliated with the issuers of such securities. Investors can access high value assets like real estate, gold, or government bonds without needing large capital. Tokenization turns them into small, tradable units, though some might say that this already exists in the ETF space.  Think State Street's SPDR Gold Trust(NYSE:GLD), for instance. Investors can buy into gold without spending over $4,500 for an ounce of it.

GLD takes a little off the price, and investors can own gold shares for around $436 as of market close on Friday. In this case, investors are swapping Wall Street risk for crypto risk. This obviously gives Wall Street an edge. No one has hacks into an ETF and empties it clean.

Earlier this month, some $285 million was hacked from Drift Protocol (CRYPTO: DRIFT) It was the largest DeFi hack of 2026 so far, wiping out more than half of the exchange's total value locked.

All told, RWAs are usually described as a modernization of financial market "plumbing." That's how Fink describes it in his Annual Letter. 

The most rigorous critiques come from the traditional finance world. They argue that tokenization's core problem is not technical feasibility, but legal enforceability, governance, and systemic consequences once "always‑on" markets and programmable assets start to scale. Regulators and standard‑setters repeatedly converge on a similar warning: without clear legal status, robust governance, and interoperability, tokenization will "create as many risks as it solves," said Tao Zhang, the Bank for International Settlements Chief Representative for Asia and the Pacific, during the Financial Street Forum in Beijing in October.

They also tend to highlight that token ownership does not automatically confer legally enforceable rights in the underlying asset – especially across borders, or in bankruptcies or legal disputes. Many of the investable products out there still rely on off-chain registries, custodians, and legal wrappers. This creates a persistent "dual ledger" reality, whereas RWAs basically exist on-chain, but legal finality, and enforceable ownership, depends on traditional legal and institutional rails. 

Building the RWA Rails: What the Blockchain Builders Want

Building the rails is where some of the blockchain plays will come in.

"Tokenization of real world assets isn't really a battle between crypto and traditional finance, I don't think. It's more about who ends up controlling the rails," said Denis Petrovcic, CEO of Blocksquare, a Slovenia-based RWA infrastructure company.

"If we're being honest, institutions are not adopting this technology because they suddenly believe in the original vision of crypto. They're adopting it because they don't want to lose control over the assets they already dominate," he said. "So when someone like Larry Fink says everything will be tokenized, I don't see that as crypto winning the argument. I see it as incumbents making sure tokenization happens on their terms. In many cases today, what's being built are still wrappers around traditional structures – just running on better, blockchain infrastructure." 

That's where the tension from the crypto community comes in. The original concept of tokenization was open markets, where ownership and liquidity can move freely. But if tokenization ends up happening inside closed systems, then crypto doesn't become a new financial system. It becomes the back end for the old one.

"And I think there is another layer to this that both sides actually feel, but don't really say out loud: over-bureaucratization," said Petrovcic. "If participating in these markets becomes too complex or too expensive because of licensing, compliance, or regulatory costs, then you automatically filter out the smaller players, who are all the blockchain-based guys. You don't need to exclude them explicitly; the system will do it for you," he said.

The future of this market is unlikely to be decided by who tokenizes the most assets, but by who ensures those assets can participate in a system that is fundamentally more transparent, efficient, and more inclusive than what came before. If one assumes Wall Street doesn't want to lose market share, the start-ups and the originators of this concept may be stuck as niche players with a small sliver of the market. But that's for tomorrow. Today, many of these companies will still attract investors due to the tokenization hype.

Wish Wu, a crypto founder with a deep background in Chinese fintech coming out of the Ant Group ecosystem, said he thinks the long term value of tokenized RWAs will be determined by whether they evolve into truly on-chain assets. 

"This means they are capable of being priced, hedged and transacted in real time all on the blockchain, or whether they remain constrained by the same limitations that define traditional financial markets today," said Wu, founder of Pharos, a layer-1 blockchain focused on tokenizing RWAs for institutional clients. "The crypto community is pushing for a version of tokenization that fulfills the original promise of blockchain technology, like open access, verifiable data and programmable value," he said.

TradFi Has a Place. But the IMF Sends a Warning

BlackRock's "tokenize everything" idea might not sit well with people for a number of reasons. That's a separate topic. For now, institutional participation in this market is not inherently negative, said Al Fahim. 

Large asset managers bring distribution and credibility to high-quality assets that are difficult to source in a purely crypto-native environment. "Without Wall Street bringing their expertise and capital to the table, it's hard to see the RWA market reaching $1 trillion, never mind $10 trillion," Al Fahim said.  "What we're seeing right now is two very different systems trying to gel."

Traditional finance is moving on-chain to improve efficiency and distribution, while crypto is trying to ensure that openness and programmability aren't lost in the process. The outcome will likely be a hybrid model rather than a winner-takes-all scenario.

Meanwhile, The International Monetary Fund issued a warning on the tokenization game. They said in a report published in April that "the net effect of tokenization on financial stability is uncertain. Stress events are likely to unfold faster, leaving less time for discretionary intervention." 

Artwork created by the author using Canva.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.