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https://www.wublock123.com/articles/microstrategy-death-spiral-risk-macro-outlook-h2-2026-59118

This article is based on remarks made by Bocai, co-founder and CEO of Unified Labs, on the WuBlockchain Podcast. Bocai believes that the RWA sector is currently marked by a clear divide: traditional financial institutions such as BlackRock are accelerating their entry into the market and bringing products to market, while the crypto side remains rife with disorder and Ponzi-like schemes.

In Bocai’s view, RWA is fundamentally an onchain upgrade of the traditional financial system. It is an institutional game that relies heavily on regulatory and compliance endorsement, and issuers without the necessary licenses have very little credibility. The primary purpose of bringing assets onchain is not speculation, but to overcome geographical restrictions, promote financial inclusion, and use DeFi to remove traditional financial intermediaries. This can enable more efficient and lower-cost onchain financial applications, such as collateralized lending. Bocai said that DeFi’s decentralized structure provides certainty in code execution, while the centralized nature of RWA addresses asset ownership verification and investor protection. Combining the two can significantly improve efficiency.

Discussing risk management for onchain assets, he noted that RWA products are currently often issued through offshore special purpose vehicles (SPVs). If problems arise with the underlying assets, ordinary users may face extremely high costs when pursuing cross-border claims or litigation, while local regulators may also find it difficult to intervene directly. On the regulatory front, he highlighted the legislative progress of bills such as the U.S. CLARITY Act. He expects the RWA market to experience exponential growth between 2027 and 2030 as regulatory frameworks in the United States, Japan, Singapore, and other jurisdictions are substantively implemented.

In practice, Unified Labs aims to serve as an “onchain fund manager” for RWA assets. By providing lending pools and decentralized vaults built on Morpho’s architecture, it seeks to meet demand for liquidity in derivative financial services after assets are brought onchain. Bocai advised ordinary investors to remain cautious and continue observing the market until clear federal-level legislation is enacted.

Sector Outlook: RWA Is an Institutional Game, and Combining Onchain Assets with DeFi Is the Key to Breaking Through

Bocai: I am the co-founder and CEO of Unified Labs, as well as a content creator. I am pleased to join the WuBlockchain Podcast to discuss RWA. I entered the crypto industry in 2021 and was deeply involved in founding and conducting investment research for several well-known DAOs. I also wrote numerous long-form research reports on DeFi, the EVM ecosystem, smart contract security, and oracles, which helped me build a comprehensive knowledge base.

When I went to Australia to study in 2023, I had the opportunity to participate in the Reserve Bank of Australia’s onchain CBDC pilot. We were one of the few startup teams selected at the time and explored a range of innovations in supply chain finance, including ways to address document fraud and accounts receivable financing. Because the project was highly innovative, we later worked with the Monetary Authority of Singapore and the Bank of Ghana on an international trade pilot, exploring cross-border programmable payments and trade finance. This experience gave me the opportunity to work with central bank regulators and traditional financial institutions. It taught me how to integrate onchain and offchain systems in practice, rather than simply speculating on concepts without substance.

At the time, I was closely following regulatory developments and saw major institutions, including the IMF, the BIS, the Monetary Authority of Singapore, and the Bank of England, frequently introducing tokenization policies and innovation initiatives between 2023 and 2024. This convinced me that the RWA sector would eventually experience significant growth, driven primarily by regulatory support and the removal of policy barriers.

During this period, I also co-organized an RWA incubator, which allowed me to continuously observe the business models and development of different projects. However, I found that many startups ultimately failed to survive.

I began to realize that RWA issuance is largely an institutional game, with very limited entry points for startups. However, as the regulatory and legal environment became much more open after Trump took office, particularly with the recent major progress on the CLARITY Act, I decided to enter the market myself at the end of last year and founded Unified Labs, which focuses on combining RWA with DeFi.

The opportunity I see is that although issuing RWA assets is difficult, bringing these assets onchain creates enormous demand for derivative financial services, with collateralized lending representing the largest market. As the first Chinese team in Asia to receive Morpho’s whitelist approval with a focus on RWA + DeFi, we are committed to addressing liquidity challenges for RWA assets. We build customized lending pools on Morpho for RWA issuers and provide a Vault where onchain yield users can deposit funds and earn returns generated by lending against the underlying RWA assets. By directing liquidity into these lending pools, we enable RWA assets to be used as collateral for onchain loans and expand their utility. That is what we are currently building.

Current State of the Sector: RWA Remains Deeply Divided, With Compliance and Regulation as the Foundation for Bringing Assets Onchain

Maodi: Ordinary users are still fairly uncertain about the current state of RWA. Could you explain the sector’s progress and its overall structure?

Bocai: Perceptions of the RWA sector within the industry are highly divided. In 2023, Citibank published an RWA report predicting that the market would reach trillions of dollars by 2030. That report truly ignited the sector. Everyone began discussing the idea of bringing everything onchain, and new startups emerged one after another. However, from 2024 to the present, there has been substantial progress in RWA within traditional finance, while the crypto sector has yet to produce any projects that have truly gained traction.

Maodi: What progress has been made?

Bocai: First, Citibank’s 2024 report encouraged many institutions to begin exploring the sector. People in crypto rarely pay attention to these developments, but many leading traditional financial institutions began establishing digital asset divisions, conducting internal pilots on consortium chains or within regulatory sandboxes, and gradually bringing assets onchain. When I read their research reports, I felt that traditional finance professionals understood crypto better than we did. Their work was highly professional. Institutions such as BlackRock, Franklin Templeton, OCBC, and BNY had not yet launched products at the time, but now almost all major financial institutions have entered the market and have either issued or are preparing to issue RWA assets.

Second, there has also been significant regulatory progress. After Trump took office, he personally advanced several bills and detailed rules. I frequently write about the SEC’s latest statements and guidance, and you can see regulators effectively teaching the market how to issue RWA assets by clearly defining the relevant frameworks and boundaries. Development has been extremely rapid over the past two years. Some countries may even begin lifting certain restrictions on retail access to RWA products this year or next year.

From the perspective of traditional finance, institutions are entering the market at scale, products are being launched, and new regulations are being introduced. On the crypto side, however, the market was initially filled with disorder. Various questionable RWA issuers emerged, tokenizing unusual assets such as wine and Hainan rosewood to raise money fraudulently. There were also numerous Ponzi-like schemes organizing large conferences under the RWA banner to exploit retail investors.

The teams that have successfully launched RWA products and survived generally have backgrounds in traditional finance, including Securitize and several projects founded by Chinese teams. Very few teams with purely crypto backgrounds have managed to gain traction. This reflects the deep divide between the two fields. The builders still working on RWA are generally advancing their projects quietly and rarely promote themselves publicly. That is the sector’s current state.

Maodi: In the crypto and AI industries, products or demand usually emerge first, with regulation catching up afterward. Why does the RWA sector appear to work in the opposite direction, with products only emerging after regulation is established?

Bocai: RWA development does not wait for regulation to be fully implemented. Once regulators provide a clear indication of where the rules are heading, market participants begin building. In 2024, before Trump took office and before the CLARITY Act made any breakthrough, institutions had already entered the market because they knew this was the direction of the future. Trump’s return to office served as a catalyst that accelerated the process. Once regulators clarified their position, institutions began entering the market at scale.

Why is regulation so important? Because RWA differs from most crypto sectors. In crypto, projects often issue tokens and rely on speculation to drive up prices and generate profits. RWA, by contrast, brings traditional assets onchain and upgrades the broader traditional financial system. This process does not create new assets. It uses new infrastructure to rebuild the traditional financial system in a different environment. The underlying logic is different. Assets brought onchain are difficult to treat as purely speculative instruments, and because they represent actual assets, compliance is essential.

First, these assets are held by financial institutions. To sell them onchain, their ownership must be legally recognized and verified. Without legal protection for ownership rights, what exactly are users buying? Could anyone simply issue an asset and disappear with the proceeds? That would clearly be unreasonable and would never pass an institution’s risk controls.

Second, investors must be protected. People who buy tokens for speculative purposes understand that they are accepting the associated risks. People who buy assets, however, do so to earn annualized returns, not to speculate on rising prices. In this context, legal oversight, regulation, and compliance are essential.

Redefining Value: Combining RWA with DeFi Will Replace Traditional Financial Intermediaries, Reduce Costs, and Improve Efficiency

Maodi: Does RWA genuinely offer value to blockchain users? People seeking relatively stable but low-yield assets are usually high-net-worth individuals who can already purchase them through traditional financial channels. Why would they need to access these assets onchain? Is there really demand within the crypto industry for a distribution channel offering relatively stable returns?

Bocai: If you are an onchain user seeking high returns, that is a different matter. However, when considering the significance of RWA for global investors and ordinary people, the first benefit is that it lowers barriers to access and promotes global financial inclusion.

U.S. dollar stablecoins are actually the most successful form of RWA. They have expanded the distribution of the U.S. dollar globally, allowing people in regions underserved by financial institutions to hold digital dollars onchain. These people may previously have had no access to local banking services, but now they only need a wallet to hold digital dollars and gain access to assets that were previously beyond their reach. Once they have digital dollars, they can purchase high-quality U.S. assets.

Second, why would high-net-worth professional investors who can already purchase assets through traditional channels choose to buy them onchain? The key is that onchain infrastructure can provide capabilities that traditional finance cannot.

One example is collateralized lending through DeFi. For certain assets, collateralized lending is almost unavailable in traditional finance. Take gold as an example. It is difficult to use gold directly as collateral for a loan in traditional finance. Banks and brokerages generally do not provide this service because transportation, custody, and valuation make the process extremely complicated, and there is no central clearinghouse. This type of service is generally available only to private banking clients with more than 50 million in assets.

Borrowing against traditional fund holdings is similarly difficult. Such services are generally available only for high-quality funds, the process can take one or two weeks, ownership transfers must be registered through a transfer agent, and the interest rates are often unattractive. Onchain, however, anyone in the world who owns the asset can borrow cash directly from a DeFi pool. This removes all intermediaries, provides immediate liquidity, and offers more favorable interest rates than traditional finance.

Professional investors can therefore use onchain infrastructure to generate higher returns or access DeFi innovations such as PT and YT, which are unavailable in traditional finance. RWA creates a globally accessible channel through which people can obtain high-quality assets at any time and use onchain infrastructure to enhance returns. This is the real significance of RWA for most people. It is not simply about speculating on assets for profit, which is a common misunderstanding of RWA.

Maodi: Do investors need to establish legal ownership of RWA assets and complete KYC verification? Otherwise, they may violate restrictions imposed by regulators such as the SEC or CFTC, making it impossible to integrate these assets with DeFi. But if users must satisfy these requirements, does that not simply lead back to the traditional financial system? Is this a paradox?

Bocai: I do not think it is a paradox. It is an ideological question. If you are a crypto-native fundamentalist who pursues absolute decentralization and the complete absence of regulation, then you may see it that way. From a practical perspective, however, decentralization does not mean completely eliminating every intermediary and centralized mechanism. That is unrealistic. What belongs to God belongs to God, and what belongs to Caesar belongs to Caesar. Decentralized and centralized mechanisms each address different problems.

DeFi removes intermediaries and legal enforcement processes from traditional finance and replaces them with automated code execution. However, DeFi is not completely decentralized. Many smart contracts still retain owner privileges, and some project teams have even misappropriated funds and disappeared. What is truly decentralized is the consensus around rules established through distributed nodes and code. The code executes exactly as written, providing certainty of execution.

The centralized nature of RWA, meanwhile, addresses the issue of trust. These assets are originally issued within traditional finance. Without institutional backing and legal protections, how would RWA assets differ from meme coins? Investors will only feel confident purchasing them when institutions bring the assets onchain themselves and investors’ rights are protected by law. Combining the two means using blockchain infrastructure to conduct traditional financial business.

When RWA assets use DeFi services onchain, they can completely bypass the intermediaries in the traditional financial system, resulting in greater efficiency and lower costs. This is central to our understanding of RWA. It should not simply be viewed as a paradox from the perspective of decentralization.

RWA returns to users the layers of fees and profits traditionally extracted by financial intermediaries. For traditional institutions, doing this amounts to disrupting their own businesses, but they have no alternative. If they do not adapt, they will be eliminated. They must therefore enter the market proactively and compete for influence. This is the primary motivation I currently see behind their entry into the sector.

Risk Management: RWA Product Categories, Return Expectations, and DeFi Integration Strategies

Maodi: Could repeated collateralization onchain amplify risks within the financial system? How should the RWA sector approach risk management in the future?

Bocai: I previously worked on related innovations during a central bank pilot project, where we used the ERC-3525 standard to tokenize a CDO. The 2008 financial crisis occurred because real estate derivatives contained too many layers of underlying assets. Investors had no idea what those underlying assets actually were. Once the products had been distributed throughout the market and the underlying assets failed, they triggered a chain reaction.

Blockchain can address this problem effectively because its most important feature is transparency. Suppose MBS and CDO products were structured entirely onchain. A tokenized MBS or CDO would allow investors to see which assets it contained. That information is unavailable in traditional finance, but it can be visible onchain.

If those products from 2008 had been issued on a blockchain, the crisis might not have occurred. The key issue, however, lies in the offchain component. If a product is packaged onchain, investors can trace the origin of every underlying asset. But if it is packaged offchain before being brought onchain, that information remains invisible. The real problem that needs to be addressed is offchain transparency.

Maodi: What are the main product categories in the RWA sector today? Are there any other products particularly relevant to ordinary users?

Bocai: On the asset side, the viable categories are relatively limited. They include standardized assets such as U.S. dollars, U.S. Treasuries, money market funds, fixed-income funds, private credit, and gold. Many issues involving non-standardized assets remain unresolved.

U.S. equities are a particularly interesting asset category. Many tokenized U.S. equity products have recently appeared, but their underlying assets are not actual U.S. stocks. Instead, they are derivative contracts pegged to U.S. stock prices, so they are not technically securities.

The SEC recently issued regulatory guidance for tokenized assets, establishing rules for the tokenized U.S. equity sector. The SEC examines the substance of the asset. If the underlying asset is a stock, it is regulated as a security. If it is a derivative, it is regulated under the rules applicable to derivatives.

Previously, many tokenized U.S. equity products may not have fallen within any regulatory framework. Now that the SEC has introduced new rules and major institutions such as the New York Stock Exchange and Nasdaq are entering the market, their tokenized equity products will be backed by actual stocks. This also demonstrates that RWA issuance is fundamentally an institutional game.

Maodi: What exactly does your RWA project do? Could you explain it in plain language?

Bocai: Let me briefly explain what Unified Labs does. The professional term for our role is “Risk Curator,” but in simpler terms, we can be viewed as an onchain fund manager. We operate an onchain financial business and are authorized to perform two functions on Morpho.

First, after RWA assets are brought onchain, we can create lending pools for them. This allows the assets to be used as collateral for loans and creates demand for them.

Second, we will create a Vault on Morpho that functions like an onchain savings product similar to Yu’e Bao. It is non-custodial and allows users to deposit or withdraw funds at any time. Users can deposit stablecoins and earn stable annualized returns. These returns come from lending the stablecoins to borrowers who hold RWA assets.

In simple terms, we allow asset holders to borrow money while enabling depositors to earn returns. The entire process operates through Morpho’s architecture. We have no authority to custody or misappropriate users’ assets.

Maodi: What annualized returns do relatively credible RWA products generally offer?

Bocai: It depends on the underlying assets. There are currently approximately three return ranges in the market.

The first category is relatively safe and stable. Products backed by U.S. dollar money market funds, U.S. Treasuries, or low-risk fixed-income funds may offer returns of around 3% to 5%.

The second category offers approximately 8% to 9%. The underlying assets may include relatively secure accounts receivable from supply chain finance or bridge loans for cross-border payments.

At the higher end, private credit products may offer approximately 12% to 13%. Their underlying assets may include consumer credit in Southeast Asia or private credit issued to small and medium-sized companies. Their redemption periods may be around one month.

The yield alone can only indicate the general level of risk. To determine whether a product is credible, investors must also examine the issuer and the composition of the underlying assets. For private credit, for example, investors need to know which industries the loans are being extended to.

BlackRock recently encountered liquidity issues in private credit because AI severely disrupted certain software companies, causing their cash flows to decline sharply and affecting the overall health of the portfolio. Users therefore need to examine both the issuer’s background and the composition of the underlying assets when assessing a product’s credibility.

Maodi: Through which channels can investors generally purchase these RWA yield products?

Bocai: Ordinary users generally encounter them through distribution channels such as centralized exchanges. Many retail investors do not purchase RWA assets directly, but they are very interested when the assets are packaged as yield-bearing stablecoins. It is an interesting phenomenon.

The second option is to purchase them directly through the project’s official website, although KYC is generally required.

Maodi: If users do not pass or cannot complete KYC, can they only purchase the assets through an onchain DEX?

Bocai: They generally cannot purchase them on a DEX.

Maodi: Is that because doing so would not meet regulatory requirements?

Bocai: Yes. If KYC is required, transfers must be restricted to whitelisted addresses, so there is generally no liquidity on DEXs. The current solution is for some projects to package the assets as yield-bearing stablecoins to attract retail investors.

Maodi: Do retail investors prefer these products because their access channels are limited and this is their only practical option?

Bocai: Limited access is one reason. Another is that crypto-native users are very comfortable with these products. Yield-bearing stablecoins have long existed in the industry and can be used for airdrop farming and DeFi strategies. Crypto-native users are more familiar with these types of products.

Regulatory Framework: The U.S. CLARITY Act Will Be a Key Milestone for RWA Growth in 2027

Maodi: If problems arise with the assets underlying an RWA product, how can asset holders protect their rights? Must they simply wait for regulators to intervene or pursue complicated legal proceedings that may take years before they can recover their assets?

Bocai: You have identified a major pain point in the RWA sector. Many RWA assets issued onchain today do not represent the underlying assets themselves. Instead, they represent claims against an SPV. An SPV, or special purpose vehicle, is a legal entity established for a specific purpose and is usually incorporated in the Cayman Islands or the British Virgin Islands.

For example, an SPV may be established in the BVI to hold the underlying assets, after which interests in the SPV are tokenized. What users purchase is effectively a claim against the SPV. When redeeming the tokens, users are legally requesting that the SPV redeem the assets it holds. SPVs are generally structured to provide bankruptcy remoteness. If an SPV becomes insolvent, investors can theoretically recover their assets through legal proceedings.

In practice, however, this is extremely complicated because it involves numerous cross-border legal issues. The underlying assets may be located in the United States or another country, while the entity being sued is incorporated in the BVI. Investors would therefore need to bring a case before a BVI court. The process can be extremely expensive and lengthy, potentially requiring several years and hundreds of thousands of dollars in legal fees.

Regulators may also be unable to assist because investors hold interests issued in the BVI rather than assets issued within the regulatory jurisdiction of Hong Kong or the United States. Local regulators cannot intervene directly. This is a major industry-wide pain point for which there is currently no standardized solution. The underlying reason is that comprehensive regulatory frameworks are still being developed, leaving the industry reliant on this transitional structure.

Once future legal frameworks are implemented, assets could be issued within local regulatory jurisdictions and directly represent the underlying assets themselves. If problems arise, local regulators would then be able to help investors protect their rights.

For now, investors must accept these risks and try to select reputable tokenization issuers, or Wrappers. Securitize, for example, is backed by BlackRock, while DigiFT has obtained a license after participating in Singapore’s regulatory sandbox. Issuers backed by major institutions and regulatory licenses are relatively credible. Unlicensed teams with no established background have very little credibility and present a much higher risk of misappropriating funds and disappearing.

Maodi: Are there any important timelines or legal frameworks worth monitoring? When will investors have formal channels through which to protect their rights?

Bocai: Regarding RWA regulation, I strongly recommend focusing on the U.S. CLARITY Act, or Digital Asset Market Clarity Act, which has recently made significant progress. Once the United States passes it, other countries are likely to follow quickly. The bill clearly defines whether security tokens and commodity tokens fall under the jurisdiction of the SEC or the CFTC.

In the past, regulatory boundaries in the United States were unclear, and the SEC and CFTC repeatedly competed for jurisdiction over Ether. Until this issue is resolved, institutions will be reluctant to issue securities directly because a change in administration could leave them exposed to regulatory scrutiny. Only federal legislation can provide a clear framework for RWA. Once the CLARITY Act is passed, it will become a catalyst for faster regulatory development worldwide.

The bill has now addressed a major point of contention between the banking and crypto industries, primarily concerning whether stablecoins can generate yield. The final compromise is that simply holding a stablecoin cannot entitle users to returns generated by its underlying assets. Users may earn returns only by using the stablecoin to participate in actual activities.

With this dispute now resolved, the legislative process is expected to move forward. If everything proceeds smoothly, the bill could be enacted within the next few months, with implementation likely beginning in 2027. I have also been monitoring other countries. The Monetary Authority of Singapore already provides highly detailed guidance on RWA issuance on its website. Japan is also expected to implement substantive legislation in 2027, opening its stablecoin and RWA markets. I therefore expect the RWA market to experience exponential growth between 2027 and 2030.

Maodi: Do institutions have specific preferences when choosing blockchains on which to issue RWA assets?

Bocai: Most major assets are currently issued on Ethereum or Solana, although some are also issued on Arbitrum, Avalanche, and Monad. Blockchains with strong institutional relationships tend to attract more RWA issuance. Avalanche, for example, has implemented projects through direct partnerships with major Japanese companies. Many Wall Street institutions are also likely to issue RWA assets on Monad because it has a strong institutional background. Ultimately, the choice depends on each blockchain’s underlying characteristics and institutional pedigree.

Sector Outlook: RWA Startups Face High Barriers, and the U.S. CLARITY Act Will Shape the Next Four to Five Years

Maodi: What advice or potential entry points would you suggest for ordinary users who want to participate in the RWA sector?

Bocai: RWA is fundamentally an onchain upgrade of traditional financial services. For ordinary people, investing in assets is not the only option. Entrepreneurship is another possible direction. The real opportunities lie in addressing the derivative financial needs and pain points that emerge after assets are brought onchain. Providing services to institutions during their transition to onchain finance is currently one of the few entrepreneurial opportunities available to ordinary people. However, there is now very limited room for projects focused solely on issuing tokens.

Maodi: But this type of entrepreneurship also requires specific qualifications or experience, so the barriers to entry are quite high, correct?

Bocai: Building an RWA startup generally requires a team with combined experience in traditional finance and Web3. Founders must either be able to navigate and work across both sectors or address specific pain points through technical expertise. The industry’s barriers to entry continue to rise. The days when a team could raise tens of millions with nothing more than a pitch deck are over, and private market fundraising is currently in a deep freeze.

Many sectors, including perpetual DEXs and prediction markets, have become intensely competitive, while others have ultimately failed to prove viable. RWA represents one of the few remaining growth opportunities for the industry.

Maodi: Despite the considerable market attention, RWA is still at an early stage. Is the best advice for ordinary users to remain cautious and wait for regulatory frameworks to be implemented before investing?

Bocai: There is still considerable policy uncertainty. For example, will the U.S. CLARITY Act ultimately be enacted? If it is not enacted, a change in administration could reverse all existing policies and force the industry to start over. Although stablecoin legislation has already been enacted and cannot simply be reversed, it would be relatively easy for the next administration to restrict the development of the RWA sector.

Maodi: From a pessimistic perspective, if the bill does not pass, could the sector remain unable to establish itself in the near term and require several more years of exploration?

Bocai: That is correct. Under the U.S. legal system, the SEC’s regulatory plans, rules, guidance, and even presidential executive orders are not permanent. They can be reversed by a future administration at any time. Only legislation enacted at the federal level can provide lasting certainty.

Whether the CLARITY Act is ultimately enacted will directly determine the trajectory of the entire RWA sector over the next four to five years. It is therefore critically important.

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