According to Tika Lum, head of global business development for VIP and institutional clients at Kucoin, institutional adoption is the most critical factor driving the growth of the tokenized real-world asset (RWA) market. He explains that while the RWA concept is not new, the recent surge in discussion is directly linked to institutions acting as catalysts for expansion.
Lum argues that institutions bring substantial capital, expertise, and credibility, which in turn accelerate two other key drivers: the expansion of asset classes and improved blockchain efficiency. He asserts that when major players like UBS or Blackrock enter the market, it validates the sector and creates a virtuous cycle of growth.
To support this assessment, Lum cites Kucoin’s firsthand experience, highlighting a partnership with UBS Asset Management in which the exchange recognized UBS’s tokenized product, uMINT, as trading collateral. This initiative, he says, positions Kucoin as a pioneer in bringing real-world assets into real-world applications.
Lum also believes the recently passed GENIUS Act is “a game-changer for stablecoins and by extension, RWAs.” Under the legislation, a federal framework for stablecoin issuance will be established to determine eligibility and regulate who can or cannot issue them. The framework also aims to align state and federal regulations to reduce fragmentation.
“Since stablecoins are the backbone of RWA liquidity—enabling seamless on-ramping, collateralization, and yield generation—we anticipate a significant impact on market expansion and adoption,” Lum explains.
He adds that the GENIUS Act, which minimizes regulatory risks while encouraging innovation in low-cost transactions, could accelerate RWA market growth from its current market capitalization of $24 billion to $50 billion by year-end. To prepare for this, Kucoin is building institutional-grade infrastructure and embracing regulatory changes, Lum says.
Lum also views the European Union’s Markets in Crypto-Assets (MiCA) regulation—set to be fully implemented by 2025—alongside Singapore’s CRS 2.0 enhancements and Hong Kong’s SFC guidelines on tokenized funds as critical regulatory developments that will further drive institutional adoption of RWAs.
Even before the passage of the GENIUS Act, Kucoin had already taken steps to attract institutional clients to the tokenized RWA market. In November 2024, the exchange partnered with DigiFT, allowing institutional token holders on the DigiFT platform to use their UBS uMINT tokens as off-exchange collateral on Kucoin.
The collaboration enables both companies to address growing demand for high-grade onchain income assets while ensuring regulatory compliance. Detailing the benefits for Kucoin users, Lum states:
“For native crypto traders, this means enhanced liquidity—uMINT can earn yields while serving as collateral, reducing opportunity costs; greater accessibility to institutional products without leaving the crypto ecosystem; and diversified portfolios with real-world yields, all while enjoying KuCoin’s secure, user-friendly trading environment.”
Meanwhile, Lum argues that Kucoin’s acceptance of uMINT as trading collateral lowers barriers for institutions to use tokenized assets in real-time trading, demonstrating the “viability of RWAs for yield generation and liquidity management.” Since announcing support for UBS uMINT, the exchange has received positive feedback and collaboration requests from large traditional asset management firms.
While tokenized RWAs have significantly boosted the cryptocurrency industry’s growth by injecting stability and institutional capital, they also introduce potential systemic risks that the industry and regulators must work together to mitigate. Lum identifies the underlying lack of liquidity as one such risk.
“For immature RWA use cases, liquidity mismatches could occur—where tokenized assets face redemption pressures that outpace underlying asset liquidity—potentially leading to market freezes or fire sales,” Lum warns.
He also cautions that the interconnectedness between digital assets and traditional finance could amplify contagion. Other concerns include regulatory arbitrage leading to unchecked fraud or money laundering, and concentration risks if dominant platforms fail.
To mitigate these risks, Lum says the digital asset industry must prioritize robust smart contract audits, diversified oracles, and onchain stress testing. Regulators, in turn, should enforce harmonized global standards, including enhanced know-your-customer (KYC) and anti-money laundering (AML) protocols, as well as capital reserve requirements for issuers.
Looking ahead, Lum projects that the market capitalization of the tokenized RWA sector will reach trillions of dollars within a few years. While institutions are expected to dominate, he sees regulatory clarity as the key to attracting more retail users.
“Regulatory clarity will unlock emerging markets, and innovations like yield-bearing stablecoins will attract retail users,” Lum says.
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