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Is The RWA Market In Trouble? Latest JPMorgan Report Sheds Light On Severe Underperformance Despite Hype

15 hours ago
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JP Morgan questions RWA tokenisation, calling the market small and underwhelming. Is blockchain’s big finance promise fading?

The idea of real-world asset (RWA) tokenisation has been one of the blockchain industry’s most talked-about concepts for years. It is the promise that physical and financial assets, from real estate to U.S. Treasuries, can be brought on-chain and traded 24/7.

However, according to a recent report from JP Morgan, this promise may be failing.

The Reality Behind RWA Tokenisation’s Promise

According to the report, strategists at the bank argue that RWA tokenisation is underperforming despite the hype. The market is still tiny, and Wall Street investors haven’t bought in.

So far, the best-performing defi/trad-fi sector is the ETF market, not RWAs.

RWA tokenisation is about converting ownership of real-world assets into blockchain-based tokens. This could apply to assets like property, bonds, private loans or even art.

This means that anyone can invest in part of an asset, which makes big-ticket investments more accessible.

These assets also have more liquidity and can be traded at any time, without waiting for traditional market hours. Finally, the transparency that blockchain offers benefits the sector highly.

This model was supposed to make finance fairer, faster and more efficient. However, it was also seen as a major bridge between TradFi and crypto.

But as JP Morgan’s report shows, that bridge may still be under construction.

JP Morgan’s RWA Tokenisation Report

According to their recent analysis, JP Morgan pointed out several issues about the current state of the RWA market. The most disturbing of these claims is that the total market cap of all tokenised real-world assets is just $25 billion.

To put that in context, U.S. ETFs often see over $25 billion in inflows in a single week.

JP Morgan calls the RWA tokenised market “insignificant” compared to traditional financial markets. According to them, its size doesn’t justify the hype.

The report notes that almost all participation is from crypto-native firms. Banks and asset managers haven’t embraced the technology as expected. 

Finally, JP Morgan and other experts argue that ETFs offer better value, better regulation, and far more liquidity than tokenised assets. 

“Tokenisation has been a thing for a decade… If Wall Street believed in it, we wouldn’t see record ETF launches year after year,” said ETF expert Eric Balchunas.

Is the Market Really Struggling? 

Despite JP Morgan’s tone, not everyone agrees that RWA tokenisation is in trouble.

While $25 billion may sound small, the market has grown over 260% in the first half of the year. This is a major jump, especially in a market as young as this one. Crypto research from Binance and The Defiant shows that demand for tokenised U.S. Treasuries and private credit is on the rise as well.

JP Morgan itself is investing in RWA tokenisation through initiatives like Project Guardian and the Kinexys platform. Other major banks like Goldman Sachs and Citigroup are looking into blockchain-based solutions too. 

Moreover, considering how volatile the crypto market can be, tokenised RWAs offer predictable income, which is rare. 

Products like tokenised government bonds give investors steady yields, which is something most DeFi protocols don’t offer. This makes RWAs appealing to conservative investors looking for real-world value.

So, Is RWA Tokenisation Failing?

The RWA market isn’t necessarily dying. However, it is also not moving as fast or as far as many hoped. While the ETF market continues to dominate, it is still too early to say that the sector is failing.

What we’re likely seeing is a slow but steady rate of growth. Institutions are testing the waters, and regulators are still figuring things out. 

In all, the sector remains promising, especially if tokenisation can offer clear advantages in transparency, liquidity and yield.

Source: https://www.livebitcoinnews.com/is-the-rwa-market-in-trouble-latest-jpmorgan-report-sheds-light-on-severe-underperformance-despite-hype/