A senior Kucoin govt says institutional adoption is the important thing driver behind the fast development of the tokenized real-world asset (RWA) market. The manager believes the not too long ago handed GENIUS Act may double the RWA market cap to $50 billion by year-end.
Institutional Adoption: The Major Catalyst
In accordance with Tika Lum, head of worldwide enterprise growth for VIP and institutional purchasers at Kucoin, institutional adoption is essentially the most vital issue driving the expansion of the tokenized real-world asset (RWA) market. He explains that whereas the RWA idea shouldn’t be new, the current surge in dialogue is straight linked to establishments appearing as catalysts for growth.
Lum argues that establishments deliver substantial capital, experience, and credibility, which in flip speed up two different key drivers: the growth of asset lessons and improved blockchain effectivity. He asserts that when main gamers like UBS or Blackrock enter the market, it validates the sector and creates a virtuous cycle of development.
To assist this evaluation, Lum cites Kucoin’s firsthand expertise, highlighting a partnership with UBS Asset Administration by which the change acknowledged UBS’s tokenized product, uMINT, as buying and selling collateral. This initiative, he says, positions Kucoin as a pioneer in bringing real-world belongings into real-world functions.
Laws to Supercharge Development
Lum additionally believes the not too long ago handed GENIUS Act is “a game-changer for stablecoins and by extension, RWAs.” Beneath the laws, a federal framework for stablecoin issuance will likely be established to find out eligibility and regulate who can or can’t challenge them. The framework additionally goals to align state and federal laws to cut back fragmentation.
“Since stablecoins are the spine of RWA liquidity—enabling seamless on-ramping, collateralization, and yield era—we anticipate a major influence on market growth and adoption,” Lum explains.
He provides that the GENIUS Act, which minimizes regulatory dangers whereas encouraging innovation in low-cost transactions, may speed up RWA market development from its present market capitalization of $24 billion to $50 billion by year-end. To arrange for this, Kucoin is constructing institutional-grade infrastructure and embracing regulatory modifications, Lum says.
Lum additionally views the European Union’s Markets in Crypto-Belongings (MiCA) regulation—set to be absolutely applied by 2025—alongside Singapore’s CRS 2.0 enhancements and Hong Kong’s SFC pointers on tokenized funds as vital regulatory developments that can additional drive institutional adoption of RWAs.
Kucoin’s Strategic Partnerships
Even earlier than the passage of the GENIUS Act, Kucoin had already taken steps to draw institutional purchasers to the tokenized RWA market. In November 2024, the change partnered with DigiFT, permitting institutional token holders on the DigiFT platform to make use of their UBS uMINT tokens as off-exchange collateral on Kucoin.
The collaboration permits each corporations to handle rising demand for high-grade onchain earnings belongings whereas making certain regulatory compliance. Detailing the advantages for Kucoin customers, Lum states:
“For native crypto merchants, this implies enhanced liquidity—uMINT can earn yields whereas serving as collateral, lowering alternative prices; larger accessibility to institutional merchandise with out leaving the crypto ecosystem; and diversified portfolios with real-world yields, all whereas having fun with KuCoin’s safe, user-friendly buying and selling surroundings.”
In the meantime, Lum argues that Kucoin’s acceptance of uMINT as buying and selling collateral lowers boundaries for establishments to make use of tokenized belongings in real-time buying and selling, demonstrating the “viability of RWAs for yield era and liquidity administration.” Since saying assist for UBS uMINT, the change has acquired optimistic suggestions and collaboration requests from massive conventional asset administration companies.
Addressing Systemic Dangers and Mitigation
Whereas tokenized RWAs have considerably boosted the cryptocurrency trade’s development by injecting stability and institutional capital, in addition they introduce potential systemic dangers that the trade and regulators should work collectively to mitigate. Lum identifies the underlying lack of liquidity as one such threat.
“For immature RWA use instances, liquidity mismatches may happen—the place tokenized belongings face redemption pressures that outpace underlying asset liquidity—doubtlessly resulting in market freezes or fireplace gross sales,” Lum warns.
He additionally cautions that the interconnectedness between digital belongings and conventional finance may amplify contagion. Different issues embody regulatory arbitrage resulting in unchecked fraud or cash laundering, and focus dangers if dominant platforms fail.
To mitigate these dangers, Lum says the digital asset trade should prioritize sturdy good contract audits, diversified oracles, and onchain stress testing. Regulators, in flip, ought to implement harmonized international requirements, together with enhanced know-your-customer (KYC) and anti-money laundering (AML) protocols, in addition to capital reserve necessities for issuers.
Trying forward, Lum initiatives that the market capitalization of the tokenized RWA sector will attain trillions of {dollars} inside a couple of years. Whereas establishments are anticipated to dominate, he sees regulatory readability as the important thing to attracting extra retail customers.
“Regulatory readability will unlock rising markets, and improvements like yield-bearing stablecoins will entice retail customers,” Lum says.
