INX Founder Urges Harmonization of RWA Standards

The real-world assets (RWAs) tokenization sector is predicted to become a multi-trillion-dollar market, but achieving this growth will likely require a unified global regulatory framework

Real-world assets (RWAs) tokenization is predicted to become a multi-trillion-dollar market, but achieving this growth will likely require a unified global regulatory framework, according to Shy Datika, founder and CEO of INX.

Datika, a veteran of both traditional and digital finance, argues that such a framework would not only provide clarity but also ensure that industry players are not hampered by the complexity and cost of navigating diverse regulations.

However, in written responses shared with Bitcoin.com News, Datika concedes that achieving this ideal framework might not be possible due to the varying legal, economic, and regulatory priorities of different jurisdictions. This reality, he says, makes it incumbent on RWA tokenization players to learn to operate within a “fragmented regulatory landscape, adapting to a patchwork of regional requirements.” While far from ideal, he insists that this allows for “localized adaptation to address specific market needs and regulatory concerns.”

When asked how regulators can help foster an ecosystem that mitigates risks without hindering innovation, Datika advocates for establishing a body similar to the Global Financial Regulation (GFR). Such an institution, he said, would help “harmonize standards and practices across different jurisdictions.” Datika also recommends greater collaboration and information sharing between regulatory bodies if establishing a global body proves impossible.

Datika also provided his perspective on the rate of RWA adoption and his projections for the next five years in his answers to a wider range of questions on the same subject. Below are the INX founder’s answers to the questions sent.

Bitcoin.com News (BCN): According to research from Boston Consulting Group, the Real-World Asset (RWA) tokenization sector could reach $16 trillion, equivalent to almost 10% of the global GDP, by 2030. How do you view the current state of the RWA sector? Dividing the RWA development into very early, early, middle, and final stages, what stage would you classify the current RWA era?

Shy Datika (SD): We see that RWA has hatched from its egg, and the chick is starting to walk. It’s now in the growth stages. The RWA sector is in the early stages of its development phase. While there are significant advancements and promising pilots, widespread adoption and regulatory frameworks are still evolving. The growth trajectory could exceed current projections. CoinDesk initially estimated the sector could reach $1 trillion by 2030 back in 2021, but by 2023, this projection has escalated to $16 trillion.

This upward trend suggests the RWA market could grow significantly faster than initially anticipated. Much like Bitcoin a decade ago, which started at $0.10 and was initially underestimated, RWAs are at a similar juncture—low in price and high in potential but still relatively unknown. As the sector matures and gains broader acceptance, it could drive substantial growth, potentially surpassing even the most recent projections by 2030.

BCN: Although RWAs now seem to be part of present-day Web3 investment discussions, it would appear many investors have yet to comprehend the idea behind them and how they can capitalize on this emerging technology. As a financial sector veteran, could you briefly explain to our readers in simple terms the basics of RWAs, what they represent, and how they can extract value from the sector?

SD: Real-world assets (RWAs) are physical assets like real estate, art, stocks, commodities etc that are represented digitally on a blockchain. For example, if you invest $100,000 in a $100 million multifamily project in New York, you own 1% of that project and receive 1% of the rental income. If this investment is tokenized, you hold a digital token that represents your share.

This token can be traded on platforms for other asset tokens—such as those representing hotels, sports teams, traditional stocks or even commodities like gold or diamonds. Essentially, RWAs turn real-world assets into digital tokens, which can be traded 24/7 in fractional amounts.

By tokenizing assets, you avoid traditional intermediaries like banks and brokers, enabling a more direct and flexible investment process. You can exchange your tokens globally, anytime, and for various assets, increasing liquidity and access to diverse investments. This system opens up new opportunities for investors to capitalize on the growing RWA sector.

BCN: Every new tech arrives with the objective of mainstream adoption. The situation is not different for RWAs, with so many new products flooding into the marketplace and seeking adoption. How would you characterize the overall adoption rate of real-world assets (RWAs) compared to other technological innovations introduced in previous eras?

SD: Technological advancements have surged over the last century, and our approach to new innovations has evolved significantly. For instance, Bitcoin, introduced in 2009, has grown from a niche interest to a globally recognized asset