Tristero Research Warns RWA Tokenization Could Trigger ‘On-Chain Subprime Crisis’

The tokenized real-world belongings market has surged to $26.5 billion following 70% progress in 2025, but new analysis warns that speedy growth might set off an “on-chain subprime disaster” by way of what analysts name the “RWA Liquidity Paradox.“

Tristero Research released a complete examine warning that tokenization creates harmful mismatches between slow-moving bodily belongings and the hyper-fast blockchain market.

The analysis argues that wrapping illiquid belongings, equivalent to buildings, loans, and commodities, in liquid digital shells amplifies systemic danger quite than decreasing it.

Market Growth and Trillion-Dollar Projections Defies Structural Concerns

The warning comes because the sector experiences huge progress. RWA tokenization has expanded 245 instances since 2020, rising from $85 million to the present $26.5 billion market valuation.

Tristero Research Warns RWA Tokenization Could Trigger 'On-Chain Subprime Crisis' — Source: Tristero Research

Private credit score and U.S. Treasuries dominate almost 90% of tokenized worth, whereas Ethereum maintains 55% market share.

Industry projections stay bullish regardless of the warnings. Animoca Brands’ analysis suggests the sector could tap into a $400 trillion traditional finance market, whereas Skynet’s 2025 RWA Security Report forecasts growth to $16 trillion by 2030.

Tokenized U.S. Treasuries alone are projected to achieve $4.2 billion this yr.

The regulatory local weather has improved considerably with the passage of the GENIUS Act, the primary main crypto laws authorised by Congress.

The invoice offers regulatory readability for stablecoins and tokenization firms, permitting establishments and know-how corporations to function beneath established frameworks.

Major gamers have positioned themselves strategically. BlackRock issues tokenized Treasuries, Figure Technologies has billions in personal credit score on-chain, and actual property offers from New Jersey to Dubai commerce on decentralized exchanges.

The Liquidity Paradox Warning: 2008 Financial Crisis Might Repeat Itself

Tristero Research’s evaluation facilities on elementary structural flaws in present tokenization approaches.

The agency argues that tokenization doesn’t change asset traits. Office buildings, personal loans, and gold bars stay gradual and illiquid, regardless of digital wrappers that facilitate on the spot buying and selling.

The analysis in contrast this to the 2008 financial crisis, when subprime mortgages have been remodeled into advanced securities by way of Mortgage-Backed Securities and Collateralized Debt Obligations, creating obvious liquidity from illiquid foundations.

The mismatch between gradual mortgage defaults and fast-moving derivatives amplified native issues into world shocks.

RWA tokenization dangers repeating this sample at blockchain pace. The analysis cited a business property token in New Jersey the place the constructing’s authorized switch requires weeks of title checks and county filings. However, its digital illustration trades 24/7 on decentralized exchanges.

The analysis outlines potential disaster situations. In one instance, a non-public credit score protocol with $5 billion in tokenized SME loans faces real-world defaults whereas oracles replace month-to-month.

Market costs fall earlier than official valuations modify, triggering automated liquidations that create suggestions loops, crashing all the system inside minutes.

A second state of affairs includes tokenized business properties the place custodian hacks or pure disasters compromise authorized claims.

On-chain tokens collapse instantly whereas underlying belongings stay intact, creating unhealthy debt throughout DeFi protocols that used the tokens as collateral.

Additionally, the evaluation warns of “RWA-squared” derivatives, that are second-layer merchandise that bundle tokenized belongings into indices and structured merchandise.

These devices promise diversification however share correlation by way of DeFi infrastructure, that means oracle failures or protocol governance issues might crash all RWA derivatives concurrently.

Regulatory Progress and Market Expansion

The GENIUS Act’s passage created fast alternatives for compliant know-how firms.

Speaking with Cryptonews, Dave Hendricks, Vertalo’s CEO, said the laws advantages builders greater than banks, as establishments looking for pace to market will doubtless purchase quite than develop blockchain capabilities internally.

Similarly, Walter Hessert from Paxos shared with Cryptonews that the Act validates years of compliant infrastructure improvement alongside enterprises like Stripe, Mastercard, and PayPal.

The regulated digital greenback infrastructure now allows large-scale RWA tokenization with stablecoins serving as important on-chain settlement mechanisms.

As a consequence, partnership alternatives emerged between conventional monetary establishments and blockchain know-how firms.

Banks deliver shopper relationships and regulatory experience whereas tech corporations present infrastructure and compliance frameworks.

For occasion, IBM is growing tokenization frameworks for enterprise belongings and financial institution cash to handle technical and governance challenges.

However, challenges persist past regulatory readability. While talking with Cryptonews, Ryan Zega from Aptos Labs recognized integration gaps between on-chain networks and off-chain monetary programs as main obstacles.

Because of this, he prompt that “there’s a unbroken want to teach policymakers, monetary establishments, and the general public on the sensible advantages of this know-how past headlines and hypothesis. That understanding shall be key to long-term adoption.”

The submit Tristero Research Warns RWA Tokenization Could Trigger ‘On-Chain Subprime Crisis’ appeared first on Cryptonews.