Regulatory Introduction
In 2023, the European Union took a decisive step toward integrating financial markets with blockchain technology. The Directive of the European Parliament and of the Council amending several key financial regulations (2006/43/EC, 2009/65/EC, 2009/138/EU, 2011/61/EU, 2013/36/EU, 2014/65/EU, (EU) 2015/2366 and (EU) 2016/2341) was transposed.
This Directive accompanies proposed European regulations concerning:
- Markets in Crypto-Assets (MiCA).
- A pilot regime for market infrastructures based on distributed ledger technology (DLT).
- Digital Operational Resilience (DORA).
Its objective is to provide legal certainty by clarifying that financial instruments may also be issued and represented through DLT.
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Shares Represented by Tokens
In Spain, the Securities Market Law explicitly states:
“Negotiable securities may be represented through book entries, certificates, or systems based on distributed ledger technology.”
This means that, from a legal standpoint, traditional financial instruments (bonds, shares, investment funds) may now be represented by blockchain tokens.
What Are Tokenized Assets (RWA)?
Tokenized real-world assets (RWA) are financial or physical assets represented on the blockchain by tokens. These tokens allow for:
- Fractionalizing an expensive asset into smaller units.
- Streamlining its purchase and sale.
- Improving transparency through the immutable blockchain ledger.
Examples include: Treasury bonds, investment funds, real estate, commodities, or even art.
Which Assets Cannot Be Fully Tokenized?
Although the technology makes it possible, not everything can be tokenized with full legal equivalence. The best example is real estate in Spain.
The transfer of real property requires a notarized public deed and registration in the Land Registry.
A token may represent economic rights (such as rental income or shares in a company owning the property) but does not, as of today, substitute for land registration or a public deed.
In other words: a token may serve as a financial representation but is not always a complete legal transfer of real property rights.
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The Current State of Tokenization
Today, tokenized RWAs are already used in various markets to:
- Facilitate their transfer.
- Divide them into fractions accessible to different investors.
- Provide transparency and traceability.
However, they face limitations:
- They are not always accepted as collateral in DeFi protocols.
- Secondary markets for these assets tend to be illiquid.
- Regulatory and legal uncertainties persist in many jurisdictions.
In practice, they are like gold bars in a digital vault: visible and recorded, but not yet fully usable within the DeFi economy.
New Providers Integrating RWA into DeFi
New providers are emerging that enable RWAs to be used as collateral in decentralized finance. Horizon, by Aave Labs, is one example of this trend: it allows tokenized assets to be deposited to unlock liquidity without selling them.
The success of these platforms depends on the collaboration of multiple actors:
- Ripple, Circle, Coinbase AM → Provide stablecoins and digital liquidity. Example: Circle enables an institution tokenizing a bond to receive stable, DeFi-usable USDC.
- Centrifuge, Securitize, Superstate → Tokenize real-world assets (bonds, funds, securities). Example: Securitize can create tokens representing a regulated investment fund.
- WisdomTree, VanEck, Hamilton Lane → Large asset managers providing credibility and recognized instruments. Example: VanEck tokenizes part of a traditional ETF, increasing institutional confidence.
- Chainlink Labs → Supplies oracles to deliver reliable on-chain data. Example: A tokenized bond uses Chainlink oracles to reflect its updated price on the blockchain.
- LlamaRisk, Sentora → Provide security and risk management. Example: Sentora audits that a rental-income token is genuinely backed by legal contracts.
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