RWA Market Faces Growing Concerns Over Investor Protection

The tokenized asset market is facing growing concerns over the legal separation between investors and the underlying loans or collateral in real-world asset (RWA) lending products.

AIGENSYN Chief Operating Officer Jeff Amico warned that in certain RWA vault structures, investors may not have a direct legal claim against the borrower or collateral in case of default, despite receiving yield-bearing stablecoins.

This issue is particularly acute in decentralized finance (DeFi) protocols that tokenize off-chain assets like real estate, invoices, or consumer loans. The tokenization process often involves multiple legal entities, and the rights of token holders are not always clearly defined in loan agreements or security documents.