Tokenization is gaining traction across financial markets, but adoption patterns differ significantly across asset classes. This report examines the progress of tokenized U.S. Treasuries, private credit, equities, and commodities, assessing the structural advantages of blockchain integration, the barriers to adoption, and the market outlook.
Tokenized U.S. Treasury Securities
The U.S. Treasury market, with over $28 trillion in outstanding debt, represents the world’s largest and most systematically important financial market. Yet despite its scale and significance, the infrastructure supporting Treasury trading remains surprisingly antiquated, creating three fundamental inefficiencies:
- Settlement Delays: Treasury trades typically settle on a T+1 or T+2 basis, leaving counterparty risk exposure during this gap and tying up capital that could be deployed elsewhere.
- Excessive Intermediation: The settlement chain involves multiple brokers, clearing banks, custodians, and depositories—each extracting fees and adding operational complexity.
- Fragmented Access: Information is only available in periodic reports, and retail participation remains limited.
The Securities Industry and Financial Markets Association (SIFMA) recognized these limitations in their December 2024 study of a blockchain-based Regulated Settlement Network. Their findings confirmed that distributed ledger technology could potentially eliminate reconciliation errors, reduce counterparty risk, and lower settlement times8— capabilities that modern blockchain networks already deliver.
Tokenized Equities
- Traditional equities markets have long been highly structured, operating through centralized exchanges (NYSE, NASDAQ, etc.), broker-dealers, custodians, and clearinghouses. Key features of the traditional system include:
- Centralized Clearing: Trades must clear through a central counterparty (e.g., the DTCC in the U.S.), which introduces settlement delays.
- T+2 Settlement: Buyers and sellers typically wait two days for final ownership transfer—a lag highlighted during the 2021 GameStop frenzy, when brokerages halted buying due to heightened collateral requirements during the settlement window.
- Layered Intermediation: Shares are usually held in the name of brokers rather than as direct registered ownership, leading to potential transparency issues.
While equity markets are mature and liquid for major stocks, they are operationally constrained by business-hour trading, batch settlement, and access limitations for many global investors. Similar to tokenized treasuries, these inefficiencies create an opening for blockchain-based solutions that promise 24/7 trading, near-instant settlement, and direct ownership transfer without so many intermediaries.
Tokenized Commodities
The commodities market encompasses physical goods such as precious metals (gold, silver), energy (oil, natural gas), and agricultural products (wheat, coffee), among others. These markets operate through a mix of spot trading (for immediate delivery) and derivatives trading (futures, options, and forwards on exchanges like CME or ICE, or via OTC deals). The infrastructure is complex: while major commodity exchanges list standardized contracts, physical trade requires networks of warehouses, inspectors, shipping logistics, and trade finance banks. Key participants include producers (miners, farmers), consumers (manufacturers, utilities), trading firms, financial speculators, brokers, and clearinghouses for futures.
Unlike securities, many commodities are generally not subject to securities regulations. Owning a bar of gold or a barrel of oil is typically a commercial transaction rather than an investment contract. As a result, tokenizing a commodity—such as issuing a token representing one ounce of gold stored in a regulated vault in London—often avoids the regulatory pitfalls that complicate the tokenization of stocks or bonds. In this context, tokenized commodities function similarly to digital warehouse receipts. They benefit from regulatory frameworks that emphasize custodianship and physical asset transparency (for example, under the U.S. Commodity Exchange Act and the EU’s MiCA), rather than the complex investor protections required for securities. This regulatory distinction allows tokenized commodities to represent direct ownership of standardized, audited assets (as seen with PAX Gold’s Brink’s storage) while sidestepping issues such as corporate voting rights or the need for integration with centralized depositories like the DTCC.
Tokenized Private Credit
Private credit refers to debt financing provided by non-bank lenders—such as direct loans to mid-sized companies, real estate loans, or consumer loans—that are not issued as tradable bonds on public markets. Over the past decade, private credit has boomed into an asset class exceeding $2 trillion globally, largely driven by investment funds (private equity firms, credit funds) stepping in where banks retreated after 2008. These loans are typically illiquid; once a fund makes the loan, it holds it to maturity since there isn’t an established exchange where a fraction of a private loan can be easily sold (aside from bespoke secondary sales, which are slow and require buyer due diligence).
Traditional private credit faces several challenges:
- Illiquidity: Being a hold-to-maturity investment, if a lender wants to exit early, there isn’t a deep market of buyers readily quoting prices. Sales are often executed at a discount and require borrower or agent approval, taking weeks to months. Investors demand an “illiquidity premium”—a higher yield to compensate for being locked in.
- High Minimums / Limited Access: Private loans generally require large minimum investments, meaning that many funds only accept commitments of $5–10 million or more.
- Lack of Transparency and Price Discovery: Without a public market, loan valuations are updated infrequently (often quarterly), relying on subjective models or broker quotes, making it hard to determine a loan’s fair value until an event (like a default or acquisition) occurs.
For DeFi private credit, an offchain originator provides loans to real-world borrowers and then issues tokens that represent claims on those loan assets or their income streams. Unlike treasury products, these loans are individually structured, allowing any user to create a bespoke financial instrument with its own parameters and sell it. For example, a trade finance platform might originate dozens of short-term inventory loans, package them into a pool, and mint ERC‑20 tokens that confer pro-rata rights to the pool’s interest and principal payments. The token may be structured as a debt security (note) or a fund share. It is important to note that since these tokens represent investment contracts in a pool of loans, they may be considered securities—meaning private credit platforms must either register or use regulatory exemptions.
Conclusion
The tokenization of RWA stands as a transformative force, positioned to reshape global finance by leveraging blockchain technology to integrate traditional markets with decentralized ecosystems. Across the sectors analyzed in this report—Treasuries, Tokenized Stocks, Commodities, and Private Credit—tokenization is addressing inefficiencies, broadening access, and creating new opportunities for investors, borrowers, and market participants.