Real world assets have become the growth engine of cryptos, and since the beginning of last year, the RWA market has exploded by a triple digit percentage point, currently standing over well over 2 billion.
But despite this massive issuance, we are seeing a bottleneck.
Less than 10% of these assets are actually being deployed in decentralized.
Finance now the capital's on chain, but the utility hasn't necessarily caught up.
So here to discuss this gap between issuance and utility as well as the modernization of global financial infra and the systemic risks is Martin Cam co-founder and CEO of Redstone Capital.
Great to have you on the show.
So first and foremost, let's start.
Out by looking at the macro environment here we've seen a tokenized treasuries dominate the first wave of RWA growth, but I understand you have noted that tokenization is becoming a distribution story for US equities.
So how does all of this change this dynamic between traditional banks as well as tokenized finance?
Hi everyone, great to be over here.
Thank you for the invitation.
Uh, Martin, co-founder of Redstone.
So, financial infrastructure modernization is becoming a long-term investment team.
And here's an important aspect I want to emphasize.
We're talking about, uh, tokenization decade and the biggest financial revolution in a generation.
So, July 15th, 2026, yesterday, will be one of those dates we look back for tokenization.
And it's not because of the uh World Cup and the game between England and Argentina.
I'm talking here about, uh, as a start, JP Morgan converted the Invesco QQQ trust into a tokenized asset inside DTC's production.
Environment.
More than 30 firms had executed live trades with tokenized treasuries, equities, and ETFs.
Repo securities lending, and even CCCP margin was posted on chain to CME Group.
DTCC is the same depository that proceeds about 4.7 quadrillion dollars in transactions last year.
And custody's $114 trillion in assets, so it's the same organization that run those trades on tokenized rates.
So tokenization is becoming a distribution store for US equities themselves, and tokenized stocks are the fastest growing RWA category right now, giving global retail 24/7 access to the US market.
I personally was at NICE a week ago, 2 weeks ago, when Securitize was listing over there with Sexy Ticker, which was like a, a big milestone for the industry, uh, as the equity and tokenization story converged from day one, this asset was also available on Solana and Avalanche in a tokenized format for all the investors together with.
Redstone Prize feed to be used in DeFi as we're talking about utility on chain.
As Redstone, we organized tokenized this conference in New York City two weeks ago, and back there, banks launching tokenized deposits and stablecoin initiatives rather than competing with them was one of the major themes, and it followed the big words that in my opinion, Larry Fink said that Uh, he believes we're just at the beginning of the tokenization of all asset journey, and it's going to go through, uh, Treasury bills, naturally as it is right now, private credit, but also real estate, equities, bonds, and, uh, all the other financial primitives out there.
Yes, and at this time I think it's so important to take a look at the data and what's actually happening underneath the surface here.
So as we look ahead and as we take a look at this gap between asset issuance as well as actual on-chain utility, how does this industry actually bridge it over the next year to 18 months?
Yeah, so first I believe we should remind ourselves what are the reasons for people to tokenize assets.
So there are a couple of big benefits over there.
The four major ones are instant atomic settlement, 24/7 access, lower costs for fewer intermediaries, global access and distribution, no matter like where you are, and an important one that many people forget about the fifth that is not so leveraged yet is programmability, right?
In the RWN stablecoin category, we've seen this growth that was almost uncorrelated with crypto prices for the past 18 months, and I assume and envision that it's going to continue that way, because the decoupling is the strongest evidence that this is adoption, not only speculation as we did have in a couple of previous cycles.
For example, stablecoin market cap is roughly at about $312 billion right now, close to an all-time high of $320 billion.
And yield bearing versions of stablecoins such as Maple or retina are becoming more and more popular, and importantly, stablecoins came into existence in the form of crypto trading assets, and right now they are becoming a global payment rails.
So also the function of theirs in the global economy has been shifting.
Tokenized rail asset, as you mentioned, uh, market growth has been tremendous from $6 billion.02 years ago to about $32 billion right now in almost 18 months, and we are still only scratching the surface as the global credit market alone is $150 trillion.
So once Clarity Act passes, uh, we can expect this growth to be even sharper.
Uh, as mentioned, only 10 below 10% of tokenized assets are actively deployed into defile, like for lending, borrowing, collateral, and it highlights the gap between issuance and utility, and I do believe in this next 18 months, this is going to be one of the major aspects that people are going to talk about and implement changes around.
And while I have you here, as with any technology, we do have to address cybersecurity.
So as we move beyond simple treasuries and credit as well as equities, how critical does this data orchestration layer, as well as Oracle Security actually become so that we can prevent any infra failures?
Yeah Well, we couldn't have more timely question over here.
I believe this week we had two large hacks, one of them.
Happened on Bonzoland on a blockchain called Hedera where over $9 million was drained via signature verification flaw in one of the Oracle providers.
That was July 11th, and yesterday another protocol called Ostium also experienced a hack related to signature of a flawed data feed from an Oracle.
So it just showcases that.
As we are going more institutional and professional, there's going to be less and less providers that will be able to keep up with the quality and the standard of those large players to go on chain.
Interesting statistic is that 60% of asset managers interested in tokenization name infrastructure as one of the main challenges to scale and go on chain.
The big question is also the redemption wait time.
So, uh, institutions always ask, I can buy the token, but can I exit at net asset value instantly on chain?
So whoever is going to solve those kind of like primary redemption locks are going to be the champions to bring over 10 to $100 billion on chain.
And with Redstone, we are working with infrastructure providers and financial institutions to address just that.
With a product called Redstone Saddle where essentially posted collateral in the form of a tokenized RWA, for example, private credit, $10 million can be liquidated by any whitelisted liquidity provider who is willing to close the position should there be a drawdown and a liquidation, take a tokenized asset on their balance sheet, and wait until the redemption period, earning a bonus.
So it's just solving this mismatch of duration period.
And with security in mind, we have to remember about the highest standards for optic aspects because just this year again, we did see Resolve USR, Drift, or KelpDW hacks that accumulated for over $300 million KelpDW alone.
Uh, so those, uh, takes are going to be tremendously important as more of, uh, various types of assets are being brought on chain because we started with stablecoins, and naturally first tokenizing the dollars and fiat currencies went into treasuries, uh, credit, now equities is the fastest growing, but, uh, what I can tell you from the front line is fund managers are already introducing very interesting strategies that are being brought on chain, for example, tokenizing gold lending strategies.
That give yield on gold or some democratization of private credit access via business development company that give access to listed private credit vehicles.
So each of that assets is harder to price and riskier to hold, so the orchestration layer has to compound in importance and making sure that the data that is being delivered is the most accurate and timely whenever any liquidation or similar event is happening.
And finally, before I let you go, speaking from the front lines, I do want to get your take on the regulatory landscape.
So in Europe, the MCA licensing process is actively thinning the herd, and here in the US, the Clarity Act is stalled ahead of the August 7th Senate recess.
So how is this timeline delay impacting competition when we're talking about the US, Europe, as well as Asia in terms of becoming the global tokenization hub?
That's a very interesting question.
So I personally also have been affected.
So for example, my uh Binance account doesn't allow me anymore in Poland, where I call from, uh, to make any operations on the, on the platform.
So Mika licensing progress is very strict, roughly 280 licensed caps.
CASPs only made it through from previously 1200 registered.
Firms, so even the largest centralized exchange in the world had to suspend EU services, right?
And on the other hand, in the US we do see clarity Act heading towards the Senate with a floor, floor vote within days.
I believe today is the House Financial Services Committee filed hearing in New York City.
I believe in about 15 minutes it kicks off and it's going to be a decisive one.
The whole industry is looking like what's going to happen over there, but the market actually cares less about the final outcome right now, but even more about the timeline.
So as you mentioned, every month of delay pushes token, tokenized capital formation towards Europe and Asia because of the rules are clear and also players are very interested.
In going ahead, but once clarity goes through in the US, it's going to have tremendous impact for all the infrastructure and institutional players that are ready to scale up their endeavors.
The green light would mean for major banks and institutional investors to enter the crypto market with clear legal rules to.
Hold and trade digital assets without fearing legal troubles.
It divides digital assets into simple groups like digital commodities or securities, and it will also allow trusted financial firms to offer crypto services, so basically paving the way for new funds.
And as it's that kind of category is going to expand in the US, Europe, and Asia, so essentially globally.
The key questions for financial institutions are going to be who's providing the risk intelligence to ensure markets are secure and without any issues, who's going to provide reliable market data and ensuring that execution and settlement is happening with prices that.
Traders expect and also who is going to offer solutions that is that are increasing the efficiency of the on-chain markets.
So the capital on chain in form of tokenized RWAs have to have the highest standard of efficiency so that it beats the trap by a margin.
Well, Marcin, we will have to leave it there for today, but thank you so much for weighing in on all hosts of topics here.
I appreciate your time as well as your perspective.
Thank you very much and have a great day.
