Cryptocurrencies have long been hailed as the future of money, promising decentralization, transparency, and global accessibility. But as the financial world evolves, a new contender is emerging to revolutionize how we perceive value: Real World Assets (RWAs). 

By tokenizing tangible assets like bonds, equities, and real estate, RWAs are not only unlocking new opportunities for blockchain but are also forging an unprecedented bridge between traditional finance and decentralized systems.

In this exclusive interview with Pritam Dutta, CEO of ZOTH, we delve into the transformative potential of RWAs in the crypto ecosystem. As the global economic landscape undergoes seismic shifts, fueled by macroeconomic factors and regulatory developments, RWAs have seen remarkable growth, drawing the attention of investors, innovators, and policymakers alike. 

Dutta offers unparalleled insights into how ZOTH is leading the charge in this burgeoning space, creating innovative solutions that merge the best of blockchain and traditional financial systems. As the financial world stands at the crossroads of tradition and innovation, this conversation explores the challenges, opportunities, and future potential of RWAs. 

What are Real World Assets?

Real-world assets come in various shapes and forms, such as property, tokenized bonds, shares, and equities. Putting them on the blockchain and creating native tokens backed by these assets is referred to as real-world assets. Essentially, these are assets that have an underlying use case rather than just being a token.

For example, a token can provide tokenized access to US Treasury bills. This is an example of a real-world asset. These tokens can be bought on the blockchain across various public networks, making them easily accessible from anywhere in the world.

With Real World Assets (RWAs) recently seeing a growth of 12.87%, what do you think has driven this surge?

One thing we all have to acknowledge is that the US is the largest market and plays a significant role in shaping global policy. The previous administration in the US was very crypto-unfriendly, particularly the SEC.

Most people anticipate that moving forward, there will be more crypto-friendly regulations. For instance, Donald Trump himself has shown interest in Bitcoin, and Elon Musk is known for supporting Dogecoin. This could lead to a more innovation-friendly environment.

This will be a critical moment for blockchain adoption, primarily because there will be greater clarity and friendlier jurisdictions. As the largest market, the US will likely drive global sentiment.

With Donald Trump's recent win, what changes or regulations do you anticipate that might impact the RWA sector?

I think most importantly, there will be sectors like yield-bearing notes or yield-bearing stablecoins and DeFi regulations that will become much clearer. There will likely be easier access to these areas. These are some of the positive developments we see in this space.

Apart from the macroeconomic factors, there are specific policy changes that Trump has promised. For instance, the concept of Bitcoin reserves is something the whole crypto sector is excited about.

I foresee only positive outcomes. Over the past few years, there has been a significant lack of clarity. One of the first changes we can expect is a shift in leadership at the SEC. At the same time, we anticipate friendlier regulations. U.S. securities laws, originally designed for securities and debt in the 1930s, have evolved, but their core structures have remained largely unchanged.

With this new government, we can expect more digital asset-friendly regulations that align with what 2024 and 2025 demand. This should create a significantly better ecosystem for digital assets.

 Have you seen specific areas within RWAs that have outpaced others in adoption or demand, and how has your company leveraged this growth?

I think the two biggest areas of growth in RWAs are fixed-income products, such as bonds and yield-bearing instruments. For example, stablecoins are actually RWAs. Their underlying yield often comes from real-world assets, unless they are synthetic stablecoins. Fixed-income products like US Treasuries, private credit, and stablecoins are three areas I’m personally very bullish about. I’ve observed substantial growth in these areas, and I believe this trend will continue.

We are a year-and-a-half-old company, and in just one year, we’ve seen increasing demand in the retail sector for our yield-bearing node stablecoin. It’s currently in testnet with over two million users who have transacted on the platform. Overall, there’s been sizable interest, and the entire RWA market is showing tremendous potential for growth from here.

We’ve maintained a sharp focus on building and scaling our ecosystem, and that’s where we’ll continue to concentrate our efforts. Partnerships and strategic innovations are key areas of interest for both investors and users. We’ve partnered with some of the largest TradFi institutions, family offices, and top blockchain networks in this space to scale our operations and strengthen our position in the market.

When discussing the crypto market and RWAs, we can’t view them in isolation from other markets. The future lies in the convergence of decentralized finance and traditional investment markets, and we see significant potential as the sector evolves.

What role do you believe RWAs will play in the future of decentralized finance and traditional investment markets?

I believe RWAs have a significant and foundational use case. They not only include tokenized real-world fixed-income products but also enable traditional fixed-income products to be collateralized through our proprietary CBT layer, which serves as a collateral layer.

For instance, if you have a billion dollars' worth of U.S. Treasury bills held in a custodial wallet, and you’ve partnered with a custodial player, you can offer it to us. In turn, we enable you to mint our yield-bearing note, which is now available across 40 chains, providing a wide range of capabilities. 

This effectively bridges traditional finance and decentralized finance, leveraging RWAs as the foundation for building more sophisticated products such as perpetuals and derivative products.

RWAs also allow for a portion of fixed-income securities to exist on-chain, creating opportunities for innovation and integration between traditional and decentralized systems.

As I mentioned earlier, this interview is intended for an audience that may not be very familiar with RWAs. Many are still navigating the transition from Web2 to Web3, which remains an ongoing process.

How do you educate or address investor concerns about the risks associated with RWAs, particularly in a volatile economic and political climate?

I believe RWAs typically carry lower risk compared to other fully volatile assets. However, I always advise individuals to do their own research. The benefit of RWAs is that they are backed by an underlying asset, which gives them intrinsic value. For example, if it's a bond, equity, or real estate, there is a tangible asset underpinning the value, upon which various speculative products can be created.

This underlying value significantly reduces the chances of the asset going to zero compared to fully digital or digitally native assets. That said, everyone should conduct their own research and make informed decisions.

Personally, as someone building in this space, I believe that 2025 will be an "RWA summer," similar to the DeFi summer of the past, with a wave of innovation. This will likely be a period where traditional finance companies increasingly leverage RWAs to bridge the gap between traditional and decentralized finance.

Some in the industry have called RWAs a potential "crypto killer." Do you think RWAs could indeed shift focus away from traditional cryptocurrencies, and if so, how?

I believe it is still too early in the evolution of this space. The crypto industry has already become a $3 trillion market, with $1.5 trillion coming from Bitcoin alone. However, I believe there is still a long way to go.

Looking ahead, I foresee the entire crypto industry within the next five years, with RWAs playing the largest role in driving this growth.

How do you envision the role of RWAs evolving over the next 5 to 10 years within the broader financial ecosystem?

Anything that can be tokenized will eventually be tokenized. I believe that RWA assets will become the fundamental building blocks of financial infrastructure. Stock markets, equity trading, bond trading—all of these will primarily transition to this framework over time.

Meanwhile, Zoth's vision is to tap into and expand the $2 trillion RWA market by creating products that address the needs of emerging economies and countries, particularly in the areas of payments, remittances, and finance. From there, the focus will be on scaling and driving further innovation.