Tokenized Treasuries: RWA.io Interview With Benzinga
Original interview was published at Benzinga Crypto
Here’s a transcript of the full interview:
Several tokenized treasury protocols are offering yields above on-chain stablecoin lending. Do you see that as sustainable, or a short-term spread?
From our perspective at RWA.io, the higher yields offered by tokenized treasury protocols compared to on-chain stablecoin lending are a reflection of several factors, and we see this as a sustainable trend, not merely a short-term spread. The primary driver is the underlying asset itself, U.S. Treasuries. These are considered among the safest assets globally, backed by the full faith and credit of the U.S. government. The yields on these traditional financial instruments are determined by macroeconomic factors, such as interest rates set by central banks and market demand for safe-haven assets. When interest rates rise, as they have in recent periods, the yields on Treasuries naturally increase. This is a fundamental difference from on-chain stablecoin lending, which often derives its yield from DeFi protocols that involve various levels of smart contract risk, liquidity risk and counterparty risk within the crypto ecosystem itself.
The yield generated from these tokenized products comes directly from the interest payments of the underlying Treasuries, which are then passed on to the token holders. This yield is not dependent on the often-volatile and sometimes unsustainable mechanisms seen in some crypto-native lending protocols, such as inflationary token emissions or highly leveraged positions. The sustainability of these yields is tied directly to the health of the traditional financial markets and the U.S. government’s ability to service its debt, which is a far more robust and predictable foundation than many purely crypto-native yield-generating strategies.
While the spread between tokenized treasuries and on-chain stablecoin lending might fluctuate based on market conditions and the specific risks associated with different DeFi protocols, the fundamental yield generation mechanism of tokenized treasuries is inherently more sustainable due to its direct link to established, low-risk financial instruments. As the RWA sector matures and gains broader institutional adoption, we expect this distinction to become even clearer, solidifying tokenized treasuries as a reliable source of yield in the digital asset landscape.
As tokenized U.S. Treasuries gain traction, do you believe we’ll see non-USD denominated RWAs emerge at scale anytime soon?
Yes, we absolutely believe that non-USD denominated RWAs will emerge at scale in the near future, following the traction gained by tokenized U.S. Treasuries. The current focus on U.S. Treasuries is a natural starting point due to the depth, liquidity, and perceived safety of the U.S. bond market, making them an ideal initial use case for demonstrating the benefits of RWA tokenization. We are already seeing significant interest and pilot programs globally exploring the tokenization of various asset classes denominated in other currencies.
How are rising interest rates and tighter credit markets shaping demand for on-chain RWA products, especially among institutional investors?
Rising interest rates make tokenized U.S. Treasuries more attractive to institutional investors seeking higher, stable yields. Simultaneously, tighter credit markets push institutions toward on-chain RWAs for new sources of liquidity and more efficient capital deployment.
BlackRock and Franklin Templeton have made moves into tokenized funds. Do you think public blockchains are ready for such scale and compliance?
The question of whether public blockchains are ready for such scale and compliance is complex, but our view is that they are rapidly approaching that readiness, with ongoing developments addressing key concerns. For example, scalability is being addressed with Layer 2 solutions and more critical issue of compliance is being solved through permissioned layers, on-chain identity tools and collaboration between regulators and financial firms.
What’s your view on the fragmentation of RWA standards across chains? Is this slowing down adoption by traditional finance players?
The variety of standards across different chains is indeed slowing down adoption by creating complexity, fragmenting liquidity and increasing costs for institutions. However, this is a temporary phase. The industry is actively working on interoperability protocols and common frameworks, which should accelerate as large institutions demand standardization.
With MakerDAO and protocols like Ondo leading in RWA exposure, do you think DeFi is too concentrated in U.S. government debt?
This is a valid observation. From our perspective, this concentration is a natural and understandable early stage of the RWA tokenization market, rather than a long-term concern about over-concentration. U.S. Treasuries provided the safety and liquidity needed to build confidence in the RWA market. The market will naturally diversify into other assets like real estate and private credit as the technology and legal frameworks mature.
Several regulators are still grappling with how to classify tokenized RWAs. How do you see the regulatory overhang resolving itself globally?
Currently, the challenge stems from fitting novel digital assets into existing legal and regulatory frameworks, which were not designed with blockchain technology in mind. This often leads to uncertainty regarding whether a tokenized RWA is a security, a commodity, a property, or something else entirely, with different jurisdictions taking varied approaches.
The resolution of the regulatory overhang will not be a single event but a gradual process of clarification, adaptation and collaboration. As regulators gain a deeper understanding of the technology and its implications, and as the industry continues to mature and adopt best practices, we anticipate a more predictable and supportive regulatory environment for tokenized RWAs globally.
Tokenizing real estate and private credit has long been discussed but rarely scaled. What fundamental barriers still remain?
The primary barriers are not technological but legal and operational. Key challenges include the lack of legal clarity for on-chain ownership, the difficulty of valuing illiquid assets, and the complexity of integrating off-chain asset management (like property maintenance or loan servicing) with on-chain tokens.
What’s your take on the creditworthiness and counterparty risk frameworks being used for RWAs on-chain today? Are they robust enough?
Current on-chain risk frameworks are improving but are not yet as robust as those in traditional finance. While they offer transparency, they still depend heavily on off-chain processes for credit assessment and face challenges with legal enforceability and the reliability of data from oracles.
How do you see the role of crypto-native DAOs evolving in the RWA market — allocators, underwriters, or simply users?
DAOs are evolving from being simple users of RWA products to becoming major capital allocators. In the future, they are positioned to take on more advanced roles, such as underwriting and originating new RWA-backed assets, using their treasuries and community-driven governance to assess opportunities.
Answers by Marko Vidrih, Co-founder and COO at RWA.io
