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Real World Assets and Stablecoins: An Overview

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2025-07-17 | 20m

Real World Assets (RWAs), in the context of the blockchain sector, refer to tangible and intangible assets such as real estate, art, music, and commodities brought to the blockchain through tokenization. Tokenization is the process of creating a digital version of a physical real-world asset through a trustless smart contract. Developers generally create smart contracts that issue a token representing an RWA alongside an off-chain guarantee that the issued token is always redeemable for the underlying asset.

RWAs have been considered the holy grail amongst crypto investors and product builders. The size of global real estate, carbon credits, gold, art, and music markets, to name a few potentially tokenizable RWAs, is enormous, dwarfing the crypto market itself. This article provides an in-depth introduction to the concepts of RWA and stablecoins, along with their various applications.

Stablecoins: A Popular RWA

One specific Real World Asset has gained traction and is already incredibly popular. Stablecoins are a form of cryptocurrency and digitized real-world asset designed to offer price stability. They are typically pegged to a stable asset, such as fiat currencies like the US dollar or commodities like gold. It has been reported that the transaction volume of stablecoins has now exceeded Mastercard’s and is catching up with Visa.

Many describe stablecoins as crypto’s “killer app”, a relevant and desirable application that proves the core value of a larger technology. It is one of the emerging reasons why the broader financial market has begun to stand up and pay attention to the digital asset sector.

Real-World Asset (RWA) tokenization is revolutionizing the financial sector by enabling the digitization of tangible assets such as real estate, commodities, and fixed income securities. This innovation is closely tied to stablecoins, which act as a reliable bridge between traditional finance and blockchain ecosystems. DeFi Technologies, in collaboration with Fire Labs, is spearheading this transformation by launching a regulated, bank-issued stablecoin designed to support RWA tokenization and other crypto-native financial solutions.

Risks and Regulatory Concerns Surrounding USD Stablecoins

While this use case is powerful, it has its problems. If a USD stablecoin were to get large enough and collapse as USD Terra (UST) did, the wider consequences for the global financial sector could be brutal.

It should be noted that UST was an algorithmic stablecoin, not a 1-for-1 backed one like popular incumbent USD stablecoins USDT and USDC. 1-for-1 stablecoins have to be backed by equal cash reserves, whereas algorithmic stablecoins like UST are propped by a volatile secondary digital asset that can swap between undercollaterizing and overcollaterizing the stablecoin it supports. This means its model was much riskier than most USD stablecoins available today.

Banks in the United States are protected and regulated by entities like the FDIC and the US government, meaning they have safety and reassurance in the event of a black swan event. FDIC which protects consumer bank accounts up to $100,000 per account.

The accessible, global, unbureaucratic nature of USD stablecoins is a major advantage that has helped the token model grow, but it also has drawbacks. The USD stablecoin market does not have the parachute of the US government; instead, it is supported by private companies.

A more pragmatic rationale for why the USD stablecoin sector may fail or be contained is that it will become regulated like US banks or even more harshly. US Senators like Democrat Elizabeth Warren take a dim view of USD stablecoins:

“Stablecoins also pose risks to our national security. Stablecoins are now the most common cryptocurrency associated with crypto scams and crypto transactions to and from sanctioned entities, overtaking Bitcoin. Groups dealing in illicit transactions have an incentive to use stablecoins because they face difficulties accessing the U.S. dollar through traditional means, but still want to benefit from its stability.” — Elizabeth Warren, US Senator from Massachusetts and Vice Chair of the Senate Democratic Caucus.

U.S. Regulatory Developments: The GENIUS Act

The regulatory landscape for stablecoins is evolving rapidly, with the U.S. Senate Banking Committee introducing the GENIUS Act. This proposed legislation aims to establish a federal framework for fiat-backed stablecoins, focusing on:

Market Stability: Ensuring stablecoins maintain their peg to fiat currencies.
Transparency: Mandating clear reporting and auditing standards for issuers.
Consumer Protection: Safeguarding users from risks associated with unregulated stablecoins.

The GENIUS Act represents a pivotal step toward legitimizing stablecoins as a cornerstone of the digital economy, paving the way for broader adoption of RWA tokenization.

Stabecoins Legislation Around The World

Hong Kong Paves Own Stablecoin Pathway

Beyond DC, stablecoins and CBDC were the talk of the town in Hong Kong, the UK, the EU, Bolivia, Dubai, and South Korea. In May, Hong Kong’s Legislative Council passed a Stablecoin Bill, allowing the issuance of HKD-backed stablecoins. This will allow the three projects currently in the HK Monetary Authority Sandbox to progress to production.

We expect to see an unlock of further issuance interest on or via the Hong Kong market.

UK Arrives at the Stablecoin Party

In the UK, the legislative and regulatory processes are staggered. As HM Treasury is finalising its Statutory Instrument, the FCA opened consultations on intermediary activities, stablecoin issuance, custody, and prudential requirements.

What stands out here is that stablecoins will be recognized as investment instruments, causing legal complexities to payment use cases. This is the exact opposite of the EU stance, where e-money tokens are classified as funds, causing regulatory complexity to their use in capital markets.

As a policy choice, this may be a “damned if you do, damned if you don’t” scenario. Still, the industry was, in our view, right to focus on this foreseeable friction in its communication to HMT in May.

Payments Rules (Dis)alignment in the EU

Let’s illustrate the same point from the other side of the English Channel. The Council of the EU is in the final moments of adopting its position on the reviewed Payments Services Directive (PSD3/PSR) – the so-called General Approach. The incumbent Polish Presidency will hold no more meetings on this file.

Under PSD, the transfer of stablecoins is a payment activity. We understand that the latest compromise text excludes transfers for settlement purposes from the scope of the payment rules – a significant outcome, and the result of much public and private industry efforts.

It also expected that a simplified authorisation process for EU’s crypto-asset service providers, which do need a PSD license alongside their MiCA authorizations. The regulatory gears are turning— at a European pace.

A Race of Global Regulatory Strategy

New rules create new markets. We expect to see a global proliferation of stablecoin issuance, likely followed by market consolidation in 3-5 years.

Which asset – a stablecoin, a tokenized deposit, or a CBDC – will dominate the tokenized payment rails of the future is a long-standing discussion. Despite theoretical advantages in capital efficiency (deposits) or state backing (CBDCs), both lag stablecoins in time-to-market.

The questions today are: which issuer, what safeguarding and operating model, and which currency peg? While the demand for USD dominates, sovereignty concerns and regulatory clarity are motivating local-currency issuances in Asia and Europe.

Unlike bank deposits, stablecoins are fungible and globally mobile, hinging the issuance race on global regulatory strategy. Therefore, it is incredibly interesting to trace the divergences between the major stablecoin regimes on the treatment of both USD-backed and foreign-issued stablecoins. All developments in May – in the US, in Hong Kong, in the UK, and by Dubai’s VARA – introduce a different read on these requirements.

Regulation Held Equal, Security Takes the Lead

At a regional level, where regulatory risk is the same for all market participants, institutions cite competitive pressures as a top driver – this is most true in the EU, where regulation is most mature. And as adoption grows, security moves from differentiator to prerequisite.

Security earns trust. Policy grants permission. The global stablecoin race depends on both.

Market Growth and Adoption of RWA Tokenization

The RWA tokenization market is experiencing exponential growth, with the stablecoin sector’s market capitalization reaching $225 billion in early 2025. Key drivers of this growth include:

Institutional Interest: Financial institutions are exploring tokenized assets to improve operational efficiency and unlock new revenue streams.
Technological Advancements: Blockchain technology is enabling secure, transparent, and scalable solutions for asset tokenization.
Global Initiatives: Regulatory bodies and industry leaders are collaborating to create standardized frameworks for tokenized assets.

Despite its promising trajectory, the market faces challenges such as retail adoption and technical scalability.

RWA Opportunities Beyond Stablecoins

Stablecoins, however, are just one layer of the RWA iceberg, and the sector’s potential and scope are all-encompassing.

One of the most powerful capabilities of RWAs is lowering the barriers to entry for investing in high-value assets like art, real estate, and private credit. Tokenization allows these assets to be broken down into smaller, investable chunks that are more accessible to different investor demographics. Further, it removes barriers like geographical borders and data privacy.

Tokenizing RWA’s also makes these underlying assets more liquid, given that they can be fractionalized. Tokens are easier to trade on secondary marketplaces compared to physical, legally complex assets like real estate. Tokenization also boosts the utility of real-world assets by allowing them to become collateral for DeFi protocols.

RWAs are also considered a key pathway for the institutional adoption of cryptocurrencies. Some of the most popular assets to tokenize are high-value assets that often sit on the balance sheets of major institutions like banks and family offices. These institutions are exploring asset tokenization because of the efficiency benefits like transparency and transaction speed.

Additional Categories of RWAs

The five most popular and relevant RWA categories are:

Stablecoins
Private Credit
Tokenized Treasuries and Securities
Regenerative Finance
Art and Collectibles

Role of Public Blockchains in RWA Tokenization

Public blockchains are playing a critical role in advancing RWA tokenization by offering:

Transparency: Recording all transactions on an immutable ledger.
Scalability: Supporting high transaction volumes without compromising efficiency.
Accessibility: Allowing broader participation from retail and institutional investors.

Shinhan Investment & Securities, in collaboration with the Solana Foundation, is leveraging public blockchains to innovate capital markets. Their initiatives include integrating stablecoin-based payment systems and enhancing scalability in RWA and Security Token Offering (STO) projects.

Institutional Partnerships and Collaborations

The success of RWA tokenization depends on strong institutional partnerships and collaborations. Key players in the financial and blockchain sectors are working together to:

Develop Infrastructure: Build the technological backbone for tokenized assets.
Promote Adoption: Educate stakeholders about the benefits and use cases of tokenized assets.
Ensure Compliance: Align with regulatory requirements to foster trust and legitimacy.

These partnerships are driving innovation and setting the stage for widespread adoption of RWA tokenization.

Use Cases for Tokenized Assets

Tokenized assets offer diverse use cases, including:

Payments: Facilitating faster and more cost-effective cross-border transactions.
Securities Settlement: Streamlining the clearing and settlement process for financial instruments.
Investment Opportunities: Providing access to fractional ownership of high-value assets.

As the market matures, additional use cases are expected to emerge, further solidifying the role of tokenized assets in the global economy.

Conclusion

The emergence of Real World Assets (RWAs) with blockchain technology marks a pivotal evolution in the financial and asset management industries. One form of RWA, the Stablecoin, is already recognized as crypto’s latest “killer app,” but it showcases just one layer of what tokenization can achieve in making real-world value accessible on decentralized networks.

As the popularity of USD stablecoins continues to grow unabated, this growth is fuelling the broader RWA sector, encompassing assets like non-USD Stablecoins, Gold, Treasuries private credit, and more. These tokenized assets offer significant benefits, from enhanced liquidity to democratized access for investors of all sizes.

However, as promising as this space is, significant hurdles remain. Regulatory challenges, technological limitations, and liquidity concerns must be addressed for the sector to reach its full potential. Platforms like Stabull, which seek to diversify and strengthen the stablecoin ecosystem, are taking the first steps toward overcoming these barriers by broadening the fiat currency stablecoin market with a single platform to swap between large and small stablecoins, streamlining cross-border transactions in the process.

Ultimately, RWAs offer immense potential to reshape how people and companies invest, trade, and manage their assets. Their success will likely depend on a combination of regulatory clarity, improved infrastructure, and continued innovation in the sector. As tokenization approaches an inflection point, its impact could extend far beyond stablecoins, revolutionizing global finance through broader institutional adoption and deeper integration with decentralized finance (DeFi) systems. They can unlock new lawyers of value by raising the efficiency and transparency of financial markets.

CoinCatch Team

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Disclaimer:

Digital asset prices carry high market risk and price volatility. You should carefully consider your investment experience, financial situation, investment objectives, and risk tolerance. CoinCatch is not responsible for any losses that may occur. This article should not be considered financial advice.

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