RWA tokens have become one of the most discussed trends in 2025. Many believe their widespread adoption could fuel the next major bull run in the crypto industry. However, despite years of discussion, RWA tokens remain undervalued. The key question is: why?
If the concept has existed since the early days of blockchain, why have so few projects succeeded in launching RWA tokens successfully?
The answer is clear: regulatory uncertainty. The legal framework remains unstable and undefined, making compliance a major challenge for new projects.
Let’s examine real cases of already implemented projects.
The first example is Ondo USDY. The company operates through Ondo USDY LLC, a U.S.-registered entity classified as a Money Services Business (MSB) under the Financial Crimes Enforcement Network (FinCEN). Its core activity is issuing the RWA token USDY, which
is backed by U.S. government bonds and bank deposits. However, despite effectively providing investment services, Ondo USDY LLC is not registered as an investment company under the Investment Company Act of 1940.The key issue here is that, because Ondo USDY
LLC is structured as an MSB rather than an investment fund, regulators like FinCEN do not actively oversee whether all investor funds are fully backed by U.S. Treasuries or deposits. This regulatory gap highlights a key difference: USDY and traditional investment
funds or ETFs, which are subject to stricter financial oversight and mandatory asset verification.
In my view, this case highlights a broader trend: regulatory gaps and legal uncertainty still allow businesses to structure projects in a way that avoids direct regulatory oversight. Companies may present themselves as money transmitters or other financial
entities rather than fully regulated investment funds, as seen in this case.
Let’s examine another case— PAXG gold tokens. The issuer, Paxos Trust Company LLC, is a regulated entity under the New York Department of Financial Services (NYDFS) and operates as a chartered limited-purpose trust company. Each PAXG token is backed 1:1
by a fine troy ounce of gold, securely stored in LBMA-accredited vaults in London. In simple terms, when you buy a PAXG token, you gain direct ownership of physical gold, with the added benefit of fractional ownership, making gold investment more accessible.
In my view, this structure makes PAXG a significantly safer asset compared to ONDO USDY. The difference lies in approach and strategy—Paxos does not seek to avoid regulation but instead adapts its model to fit within the existing legal framework.
Key differences between the projects:
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PAXG must maintain 100% gold reserves for every issued token, subject to mandatory third-party audits.
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NYDFS oversight ensures strict compliance, capital adequacy, and financial solvency protections. If Paxos violates regulatory standards, NYDFS can take immediate enforcement actions.
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ONDO USDY, in contrast, is only registered as an MSB under FinCEN, which does not regulate financial solvency or asset backing.
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Ondo USDY has no mandatory audits, while PAXG undergoes regular audits to verify 1:1 gold backing.
PAXG operates under a fully regulated model, while ONDO USDY operates in a regulatory gray zone.
To conclude, launching an RWA token requires a clear understanding of the risks associated with the chosen legal structure. The first step is defining your strategy: do you want to fully adapt to the existing regulatory framework, or do
you intend to exploit legal gaps? This is a crucial decision—not just from a business standpoint, but also from an ethical perspective.
The fundamental takeaway is that RWA tokenization remains a high-risk endeavor due to ongoing regulatory uncertainty and inconsistent legal interpretations. Predicting every potential regulatory challenge is nearly impossible, as the sector continues to
evolve, making it difficult for authorities to establish clear and consistent oversight.
Before moving forward, ask yourself: Do you want to take the expensive, complex path of adapting to the legal framework, or are you willing to navigate the gray areas to gain a competitive edge? The choice will define not just your business model, but also
your long-term sustainability in the market.
