Real-world assets evolve finance by tokenizing everything, says Kinto co-founder

Trendy buzzwords and crypto go hand in hand, especially given the cyclical nature of crypto market cycles. What is popular in one financial quarter could be a totally obsolete concept by the arrival of the next. 

Some great examples might be music non-fungible tokens (NFTs), Bitcoin Ordinals or blockchain-based gaming. The list goes on and on, and it is clear that establishing staying power through a sticky product-to-market fit is just as challenging in crypto as in any sector focused on building emerging technologies.

One buzzword of this market cycle is real-world assets (RWAs), but the concept of taking tangible assets and tokenizing them has been around for years, with the practice prevalent within decentralized finance since 2022. There are even those who believe that everything will be tokenized in the future and that RWAs will revolutionize finance as we know it.

Ramon Recuero, co-founder and CEO of Kinto, is one of those people. On Episode 41 of The Agenda podcast, hosts Ray Salmond and Jonathan DeYoung chat with Recuero about the rapid growth of the RWA industry and his views on how traditional finance will eventually fully integrate blockchain into their daily operations.

Blockchains turn everything into an efficient market

According to Recuero, tokenized real-world assets serve as an increasingly necessary bridge between sellers and buyers, allowing asset holders to unlock liquidity that otherwise would be difficult to access.

He gave the example of a baseball card collector with a prized, highly valuable card they want to sell. “It’s going to be really hard for you to find liquidity. It’s going to be really hard for you to find buyers,” Recuero said. “And then you need to trust them. You need to hire an escrow service or use some of these software-as-a-service platforms that take a hefty fee, 5% to 10%.”

Blockchain technology offers a solution to this issue:

“Blockchain has allowed [us] to turn everything into a market, into an efficient market. So, it’s going to be able to condense liquidity quite a bit and turn all these marketplaces into a much more efficient place for both sellers and buyers.”

When asked how RWAs could represent a “multitrillion-dollar opportunity,” Recuero explained that these outcomes “are hard to extrapolate” because “exponential adoption” is unpredictable and takes time.

“These things are not linear,” he shared. “It’s not like, oh, we have $500 billion now. It took us eight years. So then, in 10 years, we'll get to $5 trillion.” He believes the total value will bounce around for several years until “one time, in a year, it will go from $650 [million] to $3, $4 trillion. Because it's how these networks with the exponential adoption work.”

You can see right now that, in the end, the asset market for this is everything. Because if you see what's the total market cap of Treasurys, $50 trillion was the total market cap of bonds, [...] gold is $10 trillion. All these assets are going to be tokenized the same way. Twenty years ago, everything was modified to switch to electronic shares from paper shares. Now, the next boring innovation is to change the medium from electronic shares to tokenized shares. So, all that value is going to move to the blockchain.”

Circling back to an earlier question about whether RWAs were just another trendy buzzword that would disappear by the end of the current bull market, Recuero argued, “It depends on the asset.” He gave the example of US Treasurys, explaining that “US Treasurys are not correlated with Bitcoin. So, that asset will do really well in bear markets. For example, getting to some combination of US Treasurys or stablecoins that give you that kind of yield makes perfect sense.”

To hear more from Recuero’s conversation with The Agenda — including his thoughts on digital property rights and the limits of tokenization — listen to the full episode on Cointelegraph’s Podcasts page, Apple Podcasts or Spotify. And don’t forget to check out Cointelegraph’s full lineup of other shows!