The Bridge Between Blockchain and Traditional Finance: What Tokenisation Has Achieved, and What It Still Needs

Tokenisation is moving beyond experimentation. In Malaysia, that shift became tangible this year with its first tokenised sukuk priced at a nominal value of RM100 million. The pilot brought together banks and institutional investors to test how distributed ledger technology could operate within an established capital-market framework.

Real-world assets, or RWAs, are digital representations of existing financial or physical assets such as government securities, commodities, equities, funds and credit. Using blockchain technology, tokenisation creates a digital record of an instrument that already exists. The underlying asset, such as real estate or solar farms, and the legal and commercial arrangements around it, continue to exist off-chain.

Blockchain is being tested here as infrastructure for assets and markets that investors already understand. That is a narrower claim than the one usually made for it, and a more durable one. The useful question is no longer whether RWAs can be tokenised, but where tokenisation is gaining traction and what still needs to be in place for adoption to scale.

Looking Beyond the Headline Growth

According to CoinGecko’s 2026 RWA Report, the market capitalisation of tokenised RWAs increased from US$5.42 billion at the start of 2025 to US$19.32 billion as at 31 March 2026, an increase of 256%. Stablecoins, which CoinGecko tracks separately, stood at US$301.65 billion.

Growth has been concentrated. The breakdown below shows where it sits.

Source: CoinGecko Research, 2026 RWA Report, data as at 31 March 2026. Private credit data sourced by CoinGecko from DefiLlama. Stablecoins and private credit are tracked separately from the US$19.32 billion tokenised RWA total and are not additive to it.

Treasuries and commodities together made up a significant proportion of growth in market value in tokenised RWAs, with gold-backed products driving most of the commodities figure.

That concentration is instructive of growing institutional acceptance. Government debt and gold reached scale first, and both have established pricing, familiar financial characteristics and deep existing markets. That is a more mundane explanation than novelty, and a more useful one.

The institutions moving first reflect the same pattern. BlackRock, Franklin Templeton and JP Morgan have each brought money market and Treasury products on-chain, applying the technology to instruments they already issue and manage. Tokenisation is gaining traction where the underlying economics are already clear, which points to a distinction that matters: its near-term value lies less in creating new asset classes than in improving how established ones are issued, distributed, transferred or settled.

What the Technology Changes, and What It Does Not

Tokenisation is often associated with greater access, transparency, efficiency and liquidity. Each is possible. None is automatic.

Fractionalisation divides an asset into smaller investment units, lowering minimum ticket sizes and broadening participation. But actual investor access still depends on securities laws, investor eligibility, distribution channels and the jurisdiction in which the product is offered. Blockchain creates an auditable record of on-chain transactions, but it cannot prove on its own that an underlying asset exists, is valued correctly or is free from competing claims. Those assurances depend on legal structure, custody, independent verification and governance.

Liquidity provides the clearest example. A token makes an asset technically easier to transfer, but finding a buyer is a separate problem. CoinGecko found that although tokenised equities have grown rapidly, monthly trading volumes remain a small fraction of real-world stock market volumes. A more tradable wrapper does not automatically make an illiquid market liquid.

The technology can change the rails. The economics of the underlying market still matter. 

From Experimentation to Institutional Infrastructure

None of this diminishes the potential of RWAs, but it does set out what institutional adoption requires. To move beyond individual pilots, tokenised assets need technology that interacts with regulated custody, enforceable ownership rights, credible valuation and disclosure, cybersecurity, investor protection and existing financial infrastructure.

Different token structures also confer different rights. CoinGecko’s review of major tokenised equity issuers found three approaches in use. Some products are structured notes backed by securities held through regulated intermediaries. Others use segregated custody arrangements. In a few cases, the token itself is the legally registered share. The difference determines what an investor owns, who stands behind that claim and which legal and regulatory protections apply.

Malaysia is Beginning to Test the Bridge

Malaysia is an interesting setting for this transition because experimentation is taking place at different layers. At one end are early-stage builders working on applications such as energy infrastructure and data verification. At the institutional end sits the tokenised sukuk pilot undertaken by Khazanah Nasional in collaboration with the Securities Commission (SC).

The pilot is relevant because it works inside the existing financial system rather than around it. The joint media release describes it as a test of institutional readiness, executed under the SC’s pilot programme so that emerging technologies remain consistent with market integrity and investor protection. It gives the market a template that lowers technical and regulatory barriers for future issuers and is aligned with the direction set under the Capital Market Masterplan 2026-2030.

Malaysia’s wider policy environment is also evolving. The upcoming National Blockchain Policy, led by the Ministry of Digital, will provide clearer national direction for blockchain and Web3, covering governance, infrastructure, talent, funding and research and development.

Taken together, these point to a more useful national question than whether Malaysia should participate in blockchain. It is whether Malaysia can build the technical, regulatory, commercial and investment capabilities around it strongly enough to capture meaningful value.

What This Means for Venture Capital

For venture capital, the opportunity around RWA extends beyond the tokenised assets themselves. As financial infrastructure becomes programmable, companies are emerging around the layers that make it work, from verification and custody through to compliance, settlement and interoperability.

These businesses illustrate why frontier categories demand a wider set of investment capabilities. Software evaluation is only part of it. A tokenised credit business requires an understanding of the credit being originated. A custody business must be assessed through both technology and regulatory lenses.

There is also a question of where economic value ultimately accrues. Over the fifteen months covered by its report, CoinGecko found that six of the seven leading RWA project tokens it tracks, excluding stablecoin issuer tokens, recorded significant negative price returns even as the sector expanded. It notes that on-chain value creation does not necessarily translate into value accruing to token holders. Market growth and investment returns are not the same thing.

Jelawang Capital commits capital to venture capital fund managers who assess opportunities and make their own investment decisions. Manager capability is therefore the variable that matters. Categories at the intersection of technology and regulated markets require expertise across technology, legal structure, regulation, counterparties and the economics of the underlying asset. The question is less about exposure to RWAs as a theme than about whether managers can assess where durable value is built.

Adoption is progressing fastest where the underlying asset is already trusted and understood. The harder work is building the infrastructure, governance and institutional confidence that lets tokenisation travel further.

Advancing Malaysia depends on more than being present where the next generation of financial infrastructure is built. It depends on Malaysian firms, managers and institutions capturing more of the value created along the way.

Jelawang Capital supports the development of fund managers with the capability to evaluate and back frontier categories as they mature in Malaysia’s venture ecosystem.