According to Jesse Knutson, chief operating officer of cryptocurrency exchange Bitfinex, the tokenized real asset (RWA) market will continue to grow in 2026, driven by its adoption in emerging economies.

Knutson told Cointelegraph that emerging market economies are experiencing “frictions” in raising capital and attracting foreign investment

Real-world asset tokenization, the process of representing physical or customary assets on blockchain networks, solves this problem by enabling onchain capital creation and bypassing customary financial intermediaries, he said. Kunston added:

“Emerging markets also tend to ‘leapfrog’ infrastructure that is holding developed markets back by implementing digital rails, including stablecoin settlement, faster than markets with established legacy plumbing.”

Tokenization also enables asset fractionation, democratizing access to investments that may be too high-priced for the average retail investor, Knutson said.

The biggest beneficiaries of asset tokenization are companies that can offer investors constant profits but cannot obtain customary financing, he added.

Fixed income instruments, including U.S. Treasuries and money market funds, are the most popular assets to tokenize in developed economies, while tokenizing real estate and commodities are the most popular employ cases in developing economies, he said.

Knutson predicts that the total market capitalization of tokenized RWA assets will grow to several trillion dollars over the next decade, but growth depends on major issuers moving from pilot programs and sandboxes to actual commercial products.

Related: Tokenization will disrupt finance faster than digitally disrupted media: Crypto exec

Tokenizing customary financial assets online still poses several key challenges

Despite the positive outlook for the future of the RWA asset market, several challenges remain, including the legal enforceability of onchain contracts, ensuring sufficient liquidity for settlement without slippage, and creating a framework for investor protection, Knutson said.

Creating uniform interoperability standards between the various blockchain networks and platforms on which tokenized assets are issued is also a key challenge that must be overcome to achieve mass adoption, Cointelegraph said.

Different token standards and discrepancies between permissioned blockchains and permissionless crypto ecosystems create technical challenges for RWA issuers.

Issuers need to create tokenized products that can be transferred across the diverse cryptocurrency ecosystem and used as collateral in decentralized finance (DeFi) applications to fully realize the potential of onchain assets.

Warehouse: Stablecoins will see explosive growth in 2025 as the world embraces the asset class