1. Custody and Asset Security Risks
When you tokenize real-world assets, the biggest question is: Is the real asset safe? We’ve seen what happens when custody breaks down. In 2022, Celsius claimed its tokenized treasury assets were secure.
However, when the company collapsed, users could not access anything because the custodian and the issuer were tied together in the same bankruptcy mess. You want platforms that use independent, regulated custodians, give clear proof of asset ownership, and separate user funds from company funds.
2. Regulatory and Compliance Risks
Regulation is a real risk in RWA tokenization. We already saw this when the China Securities Regulatory Commission told two major brokerages in Hong Kong to pause their tokenization plans. The message was clear that governments can step in anytime when they feel the market is growing faster than their rules.
This is why you want RWA platforms that follow real financial laws, hold the right licenses, share updates, and work with regulators. It helps protect your assets if rules change or a country decides to slow things down.
3. Smart Contract and Technical Risks
Even if the real asset is safe, the smart contract that represents it on-chain can still break. In 2021, BadgerDAO suffered a contract exploit that drained over $120 million from users. This wasn’t an RWA platform, but it showed how one weak contract can damage trust.
Look for platforms that use audited smart contracts, have bug bounty programs, and run risk monitoring tools. The goal is to avoid any contract that can be controlled or drained by attackers.
4. Liquidity and Redemption Risks
Some RWA tokens look great on paper but are hard to sell or redeem when markets get rough. During early RWA experiments around 2020, many tokenized real estate projects had buyers but no secondary market.
People who wanted to exit could not find anyone to buy their tokens. Focus on platforms with active secondary markets, transparent redemption rules, and assets that have clear demand outside crypto.
5. Transparency and Governance Risks
In many RWA setups, trust companies act as the legal bridge between your token and the real asset. This gives the issuer a lot of power over how the asset is held, managed, and shown on-chain. If anything breaks inside that trust layer, you may not have strong on-chain protection.
This is why you should care about who controls the asset, the data, and the rules. When an issuer controls everything, they can change terms, pause actions, or move assets without you seeing it. You want platforms that show things on-chain, use independent audits, and share who makes the decisions and how your asset is handled.
Source: https://coingape.com/best-real-world-asset-rwa-tokenization-platforms/