How Ethereum Became the Backbone of RWA Tokenization—And What's Next

The shift toward blockchain-based real-world asset (RWA) trading is no longer theoretical. With the sector ballooning to nearly $19 billion in market cap—excluding stablecoins—major financial institutions are actively moving onchain. Ethereum has emerged as the clear leader, hosting over 80% of all tokenized RWA value, fundamentally reshaping how global capital moves.

The Traditional Finance Problem That RWA Solves

For decades, the financial system has operated within fixed constraints: markets close at the end of each trading day, weekends impose blackouts, and settlement requires days to complete. A stock transaction initiated on Friday doesn’t settle until Tuesday. Real estate trades take weeks to finalize. Intermediaries extract fees at every step. Geographic barriers limit who can access premium asset classes.

RWA tokenization breaks these chains. By converting physical assets—real estate, bonds, treasuries, commodities—into digital tokens on blockchain networks, the financial world unlocks something previously impossible: truly global, round-the-clock markets where assets trade instantly, settlements complete in minutes, and ownership can be fractional.

According to Keith Grossman, president of crypto payments platform MoonPay, this transformation mirrors the digitization of media. “Just as digital distribution forced newspapers and music to evolve rather than disappear, tokenization will force traditional finance to adapt,” Grossman explained. “This isn’t hypothetical anymore. The institutions are already moving.”

Who’s Building the Future of Tokenized Finance?

The institutional adoption is real and accelerating:

BlackRock now offers tokenized funds to investors. Franklin Templeton operates tokenized money market funds directly on public blockchains. JPMorgan Chase, Bank of America, and Citi are piloting onchain settlement infrastructure. The Depository Trust and Clearing Corporation (DTCC)—which processed roughly $3.7 quadrillion in settlements during 2024—received SEC approval to launch tokenized financial instruments, with US Treasuries and stock indexes arriving in H2 2026.

These aren’t experimental sidelines; they’re core infrastructure plays. The DTCC’s move signals that the plumbing of global finance is being rewired for blockchain rails.

Why Ethereum Dominates the RWA Landscape

Of all blockchain networks, Ethereum has captured the overwhelming majority of tokenized RWA value. This dominance stems from several factors: established liquidity pools, developer expertise, institutional familiarity, and robust smart contract ecosystems. As Layer 2 scaling solutions mature—reducing gas fees and network congestion—Ethereum’s advantage deepens further.

The network’s ability to handle high-value institutional assets while maintaining security and decentralization makes it the default choice for serious RWA platforms.

The Mechanics: How 24/7 Markets Transform Capital

The benefits of RWA tokenization extend beyond novelty. Consider the mechanics:

Instant Trading: A $10 million commercial property can be tokenized and divided into fractional shares. An investor buys tokens representing partial ownership without intermediaries. The transaction settles in minutes, not weeks.

Cost Reduction: Traditional real estate transactions involve lawyers, brokers, title companies, and escrow services. Tokenization strips away most intermediaries, cutting costs by 30-50% in some estimates.

Settlement Speed: Traditional markets operate on T+2 settlement (trade date plus two days). Blockchain settlements are near-instantaneous, eliminating counterparty risk and freeing capital faster.

Market Accessibility: A $5,000 investor can now own fractional stakes in previously inaccessible assets—commercial real estate funds, government bonds, rare art. Deloitte analysts suggest this could unlock trillions in previously locked capital, especially in emerging markets where traditional banking infrastructure is sparse.

24/7 Trading Windows: Unlike stock exchanges that close at 4 PM or forex markets that pause on weekends, tokenized assets trade around the clock on decentralized exchanges. Global capital flows continuously.

Regulatory Tailwinds: The Approval Cascade

In September, the SEC and CFTC jointly issued a statement on creating a 24/7 capital markets regulatory framework. This wasn’t a tentative endorsement—it was a formal signal that regulators view blockchain-integrated finance as inevitable and want to enable it responsibly.

The DTCC’s SEC-approved tokenization pilot reinforces this shift. Rather than blocking innovation, regulators are building guardrails: anti-money laundering compliance, securities law adherence, and transparent governance remain requirements. But the trajectory is clear—regulatory bodies are removing barriers, not erecting them.

The Risks Worth Acknowledging

Tokenized RWA isn’t risk-free. Smart contract vulnerabilities could expose assets to hacks. Regulatory definitions remain fluid—what qualifies as a “security” under tokenization varies by jurisdiction. Market volatility in crypto correlates sometimes with traditional asset classes. Investors entering this space need audited platforms, proper due diligence, and compliance alignment.

But these are manageable risks, not insurmountable barriers. As the infrastructure matures and institutions strengthen governance, these friction points diminish.

What Comes Next?

Grossman and industry observers agree: the institutions that thrive will be those that embrace tokenization early, not those that resist it. Like media companies that survived the digital shift by adapting, traditional finance will persist in “a different form,” one integrated with blockchain.

The rollout timeline matters. DTCC tokenized assets hit markets in H2 2026. Layer 2 improvements will drop Ethereum transaction costs further. Regulatory frameworks will solidify. Each milestone removes friction for institutional capital.

The $19 billion RWA market today will look quaint in five years. As more asset classes tokenize—corporate bonds, commercial mortgages, infrastructure funds—and as adoption spreads globally, the sector could expand by orders of magnitude.

For participants watching from the sidelines, the message is direct: the transition to tokenized finance isn’t speculative. It’s institutional reality. The question isn’t whether it happens, but whether you’re positioned to benefit when it does.