Core Insights - The tokenisation of real-world assets (RWAs) has seen over $34 billion in assets move on-chain, indicating a shift towards a programmable and borderless financial future [1] - However, the reality of the RWA market reveals significant challenges, including low trading volumes and limited investor participation, which hinder the effectiveness of tokenised assets [2][4] Group 1: Liquidity Issues - Most tokenised assets, including US Treasuries and private credit, exhibit low trading volumes and long holding periods, leading to a market that appears liquid but functions as a closed loop [3][4] - The lack of liquidity results in wider spreads and discourages market-makers from participating, further complicating the exit strategies for investors [4] Group 2: Regulatory Challenges - The regulatory landscape for tokenisation is inconsistent across jurisdictions, with different definitions and requirements for digital securities, which complicates compliance and legal frameworks [5] - Each tokenisation project requires tailored legal work due to varying regulations, highlighting the geographical impact on the feasibility of tokenisation [5] Group 3: Infrastructure Limitations - The current infrastructure for custody, settlement, and valuation of tokenised assets is fragmented, with many pilots operating outside traditional banking systems [6] - The absence of trusted oracles and interoperable standards prevents tokenisation from achieving its potential for instant settlement and collateral efficiency, limiting institutional adoption [6]

Group 1: Market Growth and Projections - Decentralised finance (DeFi) transaction volume is expected to exceed $3 trillion by next year, with total value locked across blockchain networks projected to reach $500 billion by 2026 [1][2] - Fundraising for DeFi-linked projects is anticipated to rise to $40 billion next year, doubling from approximately $20 billion in 2025, driven by capital injections from token sales and venture capital [2] Group 2: Hybrid Finance and Adoption - A hybrid finance model is expected to emerge, where traditional banks utilize DeFi smart contracts for settlement and yield, with the number of hybrid projects involving major banks projected to at least double by 2026 as regulatory clarity improves [3] - Real-world asset tokenisation is forecasted to grow from $1.1 trillion currently to $2 trillion next year, indicating a convergence of traditional markets with blockchain finance [4] Group 3: Leading Sectors and Market Structure - Key sectors leading the growth in tokenisation include tokenised funds, stocks, real estate, corporate debt, and money market funds, which will bridge traditional finance and DeFi, enhancing liquidity for both institutional and retail participants [5] - By mid-2026, DeFi wallets are expected to reach 12 million, although only 25-35% are projected to be unique active users, indicating a market stabilising in a more data-driven and utility-focused manner [6]