Tokenizing Real-World Assets in 2025: Trends, Challenges, and the Path Ahead

As blockchain technology continues to integrate into mainstream finance, one of its most promising applications—real-world asset (RWA) tokenization—is gaining significant traction. This innovation is reshaping both traditional finance (TradFi) and decentralized finance (DeFi) by enhancing liquidity, broadening market accessibility, and establishing a seamless bridge between digital and conventional financial ecosystems. Tokenizing tangible assets such as real estate, commodities, and financial instruments unlocks new opportunities for investors and institutions alike.

The figures illustrate this rising momentum. By the close of 2024, the total value of tokenized RWAs (excluding stablecoins) had exceeded $15.2 billion, with increasing institutional involvement. Major financial players are stepping into the space; for instance, BlackRock is seeking regulatory clearance to tokenize stocks and bonds, while JPMorgan has introduced its in-house tokenization platform, actively exploring opportunities in the domain. Market experts predict that this early growth is just the beginning—RWA tokenization is expected to reach the trillion-dollar mark within five years.

As we step into 2025, the industry stands at a critical juncture. Regulatory advancements, improved cross-chain integration, fractional ownership models, digital identities, and liquidity solutions will likely define the evolving landscape. Understanding these developments will be crucial for investors, businesses, and regulators looking to navigate this rapidly expanding market.

Regulatory Alignment: Shaping a Structured Future

The trajectory of RWA tokenization is increasingly dependent on global regulatory frameworks. Key jurisdictions are making notable strides; the United Arab Emirates (UAE) has already introduced clear regulations regarding tokenized assets, while Singapore, Europe, and Hong Kong continue working toward comprehensive policies. As regulatory systems mature, a more globally aligned framework could emerge, fostering seamless cross-border adoption and interoperability.

However, the road to regulatory coherence presents challenges. Traditional finance institutions require a certain level of oversight and compliance, but blockchain’s inherent decentralization complicates achieving this balance. To address this concern, new approaches are taking shape. Mantra, a layer-1 blockchain designed specifically for RWAs, enables participants to build permissioned applications within a permissionless environment. This dual structure allows regulators to maintain oversight while permitting financial institutions, developers, and individual users to engage freely in DeFi.

Mantra’s compliance-oriented approach has gained institutional recognition—its recent acquisition of a Virtual Asset Service Provider (VASP) license from Dubai’s Virtual Assets Regulatory Authority (VARA) marks a major milestone. This approval positions Mantra as the first DeFi platform to obtain such a license, allowing it to offer exchange, broker-dealer, and investment services in the region, further legitimizing RWAs on a regulatory front.

The Rise of Multichain Economies: Unlocking Fluid Transactions

Liquidity remains one of tokenization’s most valuable promises. By converting once-illiquid assets into digital tokens, new markets emerge where assets become more accessible. However, friction in asset transfers between blockchains limits tokenization’s full potential—standard blockchains lack built-in interoperability.

To overcome this hurdle, the industry is embracing interoperable protocols. The blockchain interoperability market is witnessing annual growth near 30%, and this trend is expected to accelerate in 2025. A shift toward multichain ecosystems is enabling smoother transactions between various networks. With interoperable platforms facilitating more efficient token movement, blockchain adoption among institutional investors may expand significantly.

One example of such a development is Mantra Chain’s integration with the Inter-Blockchain Communication (IBC) protocol, allowing tokenized RWAs to interact across multiple blockchain networks. This connectivity increases liquidity, reduces transaction costs, and broadens the investor pool.

Fractional Ownership: Democratizing Investment Access

Historically, certain asset classes—such as luxury real estate, fine art, and collectible commodities—were mostly reserved for high-net-worth individuals and institutions. High entry costs made participation in these markets difficult for smaller investors.

Tokenization is redefining these parameters through fractional ownership. This model allows valuable assets to be divided into smaller, tradable fractions, making investments more accessible. By lowering capital entry barriers, more individuals can participate in once-restricted markets, fostering a more inclusive financial system.

Mantra Chain is actively leveraging this potential. A recent partnership with Damac, a top-tier real estate developer, aims to tokenize over $1 billion worth of real estate assets. Investors will be able to purchase fractional shares in these properties, making high-value real estate markets more accessible than ever before.

Growth of Digital Identity Solutions: Ensuring Secure Transactions

Since tokenized RWAs act as digital proof of ownership, regulatory compliance necessitates the verification of individuals participating in these markets. This places digital identity solutions at the forefront of secure and transparent transactions.

The increasing demand for Know-Your-Customer (KYC) and digital identity verification solutions (DIDs) is setting a new standard for blockchain-based markets. These mechanisms ensure that only verified participants can trade specific digital assets, aligning with global compliance requirements.

Mantra has developed an integrated digital identity module that embeds KYC checks directly into users’ wallets. This innovative system streamlines identity verification, ensuring compliance with international standards while simplifying cross-border transactions.

Liquidity Innovations with Decentralized Exchanges (DEXs)

Despite significant strides in tokenization, liquidity remains a key challenge. Markets thrive when assets can be traded efficiently, and DeFi’s reliance on Decentralized Exchanges (DEXs) makes these platforms crucial for RWAs.

Unlike centralized exchanges, which operate within specific hours and require intermediaries, DEXs provide 24/7 market access with fewer restrictions. This feature enhances liquidity by enabling uninterrupted asset trading at a global scale.

Recognizing the crucial role of liquidity for RWAs, Mantra is developing an advanced protocol for its native DEX, LEEP (Liquidity Efficient Emissions Protocol). This new system aims to enhance liquidity efficiency by incentivizing deeper markets for under-traded assets, ensuring a more balanced marketplace for all participants.

2025 and Beyond: The Road to RWA Maturity

The transition from experimental tokenization projects to real-world financial integration is well underway. In 2025, the RWA space will likely witness a transformation driven by enhanced regulatory clarity, interoperability, fractional ownership, security-oriented digital identities, and liquidity enhancements.

The coming years will test whether tokenization can truly revolutionize global finance. Crucial to this growth will be collaboration among regulators, financial institutions, and blockchain developers. If the industry manages to strike the right balance between innovation and regulation, tokenized assets could serve as the long-sought bridge between TradFi and DeFi, creating a more efficient, accessible, and interconnected financial ecosystem.