RWA Tokens Are Not What You Think They Are
The narrative of real-world asset tokenization in crypto is all over the news. Banks and analysts are touting it as a huge opportunity, but most explainers skip over the important details.
A real-world asset (RWA) token is not actually an ownership claim on the underlying asset, but rather a blockchain representation of a legal claim to that asset. The process of creating an RWA token involves taking an asset and placing it in a special-purpose vehicle or trust, minting tokens on a blockchain that correspond to shares or fractional ownership, and then granting token holders economic rights to the yield or price appreciation generated by the underlying asset.
The strength of this legal claim varies widely depending on how it is structured. For example, a tokenized US Treasury backed by a regulated custodian holding actual T-bills is very different from a real estate token issued by a startup with a Cayman Islands SPV and no public audit.