Over the years, cryptocurrencies have thrived on speculative capital flows and the explosive popularity of tokens and decentralized finance (DeFi) applications.

This continues to apply to emerging sectors such as perpetual decentralized exchanges and prediction markets. However, as Wall Street dives deeper into tokenized real assets (RWA), not all existing systems in the industry support the financial products that institutions want to bring online.

Author of the newly finalized ERC-7943 (urWA) said the fragmented infrastructure powering most DeFi was not designed for regulated financial assets, which often require identity frameworks and interoperability standards.

“If you want to bring regulated assets onto the network, you can’t really escape the regulations,” Dario Lo Buglio, co-founder and head of blockchain at tokenization platform Brickken, told Cointelegraph.

“You can still play the pirate game on DeFi without regulated assets.”

DeFi veterans have been concerned about freezing features in tokens, but those same controls are attractive to institutions. Source: ethereum.org

Existing standards do not cover every RWA employ case

Another symbolic standard, ERC-3643 — also known as T-REX or Token for Regulated Exchanges — is one of the dominant platforms used for tokenized securities on Ethereum.

The standard already includes many of the compliance-oriented features that institutions require, such as identity-based permissions and mechanisms that allow issuers to intervene in certain circumstances.

The framework was designed primarily around securities and does not necessarily translate to the broader range of tokenized assets entering blockchain markets today, Lo Buglio said. As a result, interoperability is becoming increasingly challenging as more institutions experiment with bringing customary financial products online.

“As tokenization becomes easier, the more difficult problem is ensuring that these assets work across compliance systems, custodians, exchanges, wallets and institutional platforms,” Markus Levin, co-founder of XYO, told Cointelegraph.

Levin said standards like uRWA could assist standardize how tokenized assets carry information related to identity, permissions, compliance requirements and transfer rules across Ethereum-based systems.

“If done well, it makes it much easier to transfer, verify and integrate regulated assets without each institution having to build its own isolated infrastructure,” he said.

RWA tokenized values ​​have grown from about $6.4 billion in early 2025 to about $34 billion as of Thursday, according to RWA.xyz data. Standard charter estimates this will grow to $2 trillion by the end of 2028, while Boston Consulting Group projects $18.9 trillion by 2033.

According to measurements that classify stablecoins as RWAs, the total market capitalization is approaching $340 billion. Source: RWA.xyz

Related: Wall Street’s Tokenization Boom Has a Liquidity Problem: Axis CEO

Levin added that institutions largely prioritize assets with predictable cash flows, real income and established legal structures.

“The market tokenizes what benefits most from faster settlement, programmable collateral and lower operational friction,” he said.

Privacy as another institutional requirement

Privacy remains another major obstacle for institutions experimenting with onchain finance, especially for companies that do not want to disclose wallet activity or transaction flows on public blockchains.

“We don’t want BlackRock to list its entire portfolio online in a way that’s transparent to everyone, but it still wants to transact online,” he said.

BlackRock’s institutional liquidity fund is worth approximately $2.5 billion. Source: RWA.xyz

Related: DeFi hacks undermine institutional confidence as risks outweigh profitability

Lo Buglio argued that many existing tokenization frameworks were originally designed around public Ethereum-based systems and do not always translate easily to privacy-oriented blockchains, where transaction models and data structures are often different from customary EVM environments.

The Canton Network, which was launched with support from companies including Goldman Sachs, Microsoft and Cboe Global Markets, was designed for privacy-preserving financial coordination between institutions.

Unlike public blockchains, where transaction activity is widely observable across the entire network, Canton allows data to remain observable only to the appropriate participants while synchronizing settlements across institutions.

Its architecture irritated some developers who argue that the network lacks key features associated with public blockchains, including a globally shared state.

The debate reflects a growing divide between DeFi crypto infrastructure and the types of blockchain systems that many gigantic financial firms seem more willing to employ for regulated assets.

AI agents can push RWAs outside of TradFi

Much of the current conversation around tokenized RWA assets focuses on banks and institutional systems. However, some developers believe that the infrastructure currently being built for risk-weighted assets could eventually expand to machine-driven financial systems.

“As AI agents begin to move capital autonomously, they will need assets that exist on-chain in a form that they can read and act on,” Taran Dhillon, head of digital assets at tokenization firm Kula, told Cointelegraph.

According to Dhillon, many productive risk-weighted assets remain largely disconnected from automated financial systems because they lack standardized digital infrastructure.

“Currently challenging standards must apply across jurisdictions and asset classes, not just within existing corridors of established financial markets,” he said.

Lo Buglio similarly argued that ERC-7943 was designed less as a single dominant implementation and more as a platform for moving tokenized assets across increasingly interconnected blockchain environments.

On Wednesday, ERC-7943 entered the “final” stage of the Ethereum improvement proposal process, which means developers can implement contracts based on the standard without expecting further specification changes. The next phase will likely focus on adoption on tokenized asset platforms.

The emergence of another tokenization standard may not immediately solve the lack of standardization problem it is intended to address.

Lo Buglio admitted that ERC-7943 was intentionally designed to be a more elastic and less “biased” framework than some earlier standards.

Huge financial institutions and blockchain developers continue to experiment with proprietary infrastructure and custom compliance systems.

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