US Treasuries support half of the RWA landscape. Can institutional entry break the Compliance dilemma?

In the third quarter of 2025, the total scale of on-chain RWA has reached 30 billion to 33 billion USD, a big pump of 224% compared to less than 10 billion USD in 2024.

This number not only refreshes the industry record but also astonishes the market: from experimental tokenization to a real asset systematization, RWA has completed in just two years the journey that took the crypto industry the past ten years. However, behind the carnival, a contradiction is becoming increasingly clear – as institutional funds flood in with compliance checklists and US Treasuries become the on-chain "risk-free benchmark", can this rapidly expanding market resolve the fatal risks of ambiguous legal ownership and liquidity mismatch?

U.S. Treasuries Support Half of the Economy: From Liquidity Anchor to Institutional Entry Ticket

In a $30 billion market, $7 billion to $8 billion of Tokenized Treasuries is undoubtedly the most dazzling star. This portion of assets, with an average daily on-chain trading volume exceeding $1 billion, has rightfully become the "king of liquidity" and is viewed by institutions as the "entry ticket" to the RWA market. "Now when we allocate RWA, the first thing we look at is the proportion of U.S. Treasuries," said a manager from a leading crypto fund. "It is like the yield curve of on-chain government bonds, and all credit assets must anchor their pricing to it."

The "anchoring effect" behind this is the continued high interest rate environment. After the Federal Reserve maintains a benchmark interest rate of over 5% in 2024, traditional financial institutions begin to shift idle funds towards on-chain U.S. Treasury products—the Franklin Templeton OnChain U.S. Government Money Market Fund is a typical case, with tokenized shares issued on Ethereum exceeding $1.5 billion, becoming the first on-chain money market fund approved by the SEC. Meanwhile, Ondo Finance's OUSG product more directly combines U.S. Treasury yields with DeFi protocols, allowing users to stake tokens to borrow stablecoins, with annualized returns stabilizing between 4.8% and 5.2%, attracting over $2 billion in funds.

But the "risk-free" label of U.S. Treasury bonds is facing challenges. A partner at a law firm revealed: "We recently received three inquiries, all regarding the dispute over whether 'token holders really own the rights to U.S. Treasuries.'" The core of the issue is that most Tokenized Treasuries currently adopt the "SPV (Special Purpose Vehicle) + Custody" model, where the tokens only represent a claim to shares of the SPV, rather than directly holding the bonds. Once the custodian defaults or faces judicial freezing, investors may find themselves in the awkward situation of having "tokens without assets."

The Bidirectional Rush Between Institutions and DeFi: Growth Engine or Risk Amplifier?

The explosion of RWA is by no means a coincidence. In addition to the allure of U.S. Treasury bonds, the entry of institutions and the maturity of infrastructure constitute two other major engines. Data shows that between 2024 and 2025, traditional asset management giants like Franklin Templeton, BlackRock, and State Street will successively launch RWA products, bringing in a total of over $12 billion in incremental funds. More critically, they have driven the maturity of infrastructures such as KYC Token, Whitelist, and Chainlink Oracle — now, a qualified investor can complete the entire process from identity verification to purchasing private credit tokens on-chain, reducing the time required from the previous 3 days to 15 minutes.

The demand for DeFi protocols has further amplified this trend. Lending platforms like Aave and Compound have incorporated RWA into their collateral pools, allowing users to collateralize and borrow USDC using tokenized corporate bonds, with a collateralization ratio of up to 70%; DEXs like Curve have specifically set up RWA trading pairs, and liquidity mining rewards attract market makers to settle in. This model of "traditional assets + DeFi Lego" has transformed RWA from static tokens into composable financial building blocks. "Our users now use US Treasury bond tokens as 'risk-free base assets', then allocate 20% to high-yield private credit, achieving an annualized return of over 8%," revealed a product manager from a DeFi aggregator.

But beneath the prosperity, the risk of liquidity mismatch is accumulating. The most typical case is a certain cross-border payment RWA project: its underlying assets are trade receivables with a maturity of 180 days, yet it allows users to redeem on-chain at any time. In June 2025, when panic emotions emerged in the market, the daily redemption amount surged to 300 million USD, far exceeding the project's cash reserve of 120 million USD, ultimately forcing a suspension of redemptions and triggering liquidation, leading to a 40% drop in token prices. "It's like a crypto version of a bank run – the time difference between on-chain immediacy and offline cash flow is the Achilles' heel of all current RWA products," commented a risk analyst.

Multi-chain Parallelism and Compliance Competition: Who Will Become the Next "RWA Main Stage"?

The differentiation of the chain ecosystem is reshaping the landscape of RWA. Ethereum, with the security of smart contracts and a foundation of institutional trust, occupies about 65% of institutional funds, especially with large assets like US Treasuries and corporate bonds almost entirely choosing to issue on Ethereum. However, the retail market is "fleeing" high gas fees—small commodity tokens (such as gold and agricultural products) on Polygon have grown by 300% in scale within a year. Solana, with its low latency advantage, has become the preferred choice for cross-border payment RWA, while Stellar has reduced the cost of tokenized remittances from a traditional 7% to 1.2% through partnerships with Southeast Asian banks.

Behind this "multi-chain parallel" approach is a covert battle for compliance. In August 2025, the EU's Markets in Crypto-Assets Regulation (MiCA) will officially come into effect, requiring all RWA issuers to register as Crypto Asset Service Providers (CASP) and implement strict KYC/AML screening for investors. The US SEC is more focused on whether tokens qualify as securities and has sued three unregistered private credit token issuers. "Currently, the compliance costs for issuing RWA account for over 30% of the total budget, which is even higher than technology development," sighed the founder of a certain issuer, "but this is a necessary path— the clearer the regulations, the more willing institutions are to enter the market."

Faced with such a market, how should practitioners break the deadlock? The Dune × RWA report provides a clear strategic framework: the product side needs to design a dual settlement mechanism of "on-chain + off-chain", for example, placing 50% of the redemption reserve in a smart contract and 50% held by a bank; on the investment side, it is recommended to use U.S. Treasury bonds as the "risk benchmark", and credit assets should undergo stress testing (such as simulating a 30% redemption shock); on the compliance side, a "KYC whitelist + trust priority" structure can be adopted to ensure that token holders have priority in compensation in legal disputes. Ordinary investors can monitor TVL changes, concentration of large holders (currently the top 10 addresses hold 42% of U.S. Treasury bond tokens), and redemption frequency through the Dune Dashboard to avoid risks in advance.

Conclusion

RWA is undergoing a critical transition from "barbaric growth" to "systematic development." The anchoring effect of U.S. Treasury bonds, the injection of institutional funds, and the division of labor in a multi-chain ecosystem have given this market an initial scale; however, the ambiguity of legal ownership and the fragility of liquidity management still hang like the sword of Damocles overhead. As an industry veteran said, "RWA in 2025 resembles DeFi in 2017—full of opportunities, yet fraught with traps."

In the coming year, the real key to victory may lie in the "balance of law and liquidity": whoever can be the first to solve the legal confirmation issue of "Token = ownership", and design a mechanism that satisfies instant redemption without triggering a run, will gain the upper hand in the $300 billion asset digitization wave. For analysts and newcomers, the task now is not only to chase growth data, but to see through the essence of assets behind the numbers—after all, on-chain, any token that is detached from real value is ultimately just a string of code.