In a notable divergence from the broader decentralized finance (DeFi) downturn, tokenized asset deposits surged to $7.4 billion in 2025—more than tripling from the previous year—according to a new report by CoinShares. This growth highlights a shifting institutional preference for regulated, on-chain representations of traditional assets, even as the overall DeFi ecosystem contracted.
DeFi Shrinks While Tokenized Assets Thrive
CoinShares' latest digital asset report reveals that total value locked (TVL) in DeFi protocols fell significantly, reflecting a challenging year for the sector. Yet, tokenized real-world assets (RWAs)—including money market funds, private credit, and U.S. Treasuries—experienced a dramatic influx of capital, soaring from approximately $2.2 billion to $7.4 billion. Analysts attribute this growth to demand for yield-bearing, regulated instruments that leverage blockchain efficiency without exposing investors to the volatility and regulatory uncertainty often associated with DeFi.
Institutional Appetite for Regulated On-Chain Products
The report underscores a broader trend: institutions are increasingly turning to tokenization to improve liquidity, transparency, and operational efficiency in traditional finance. Major financial players, including asset managers and banks, have accelerated their tokenization pilots, with several launching products that convert government securities and other fixed-income instruments into tradeable digital tokens. By the end of 2025, the tokenized money market fund sector alone had surpassed $4 billion, a stark contrast to the overall DeFi slump.
What This Means for 2026 and Beyond
Looking ahead to 2026, experts anticipate the tokenized asset market to continue its rapid expansion, potentially crossing the $10 billion mark as more institutions enter the space. Meanwhile, DeFi may need to adapt by enhancing security, compliance, and user experience to regain momentum. CoinShares' findings suggest that the future of blockchain-based finance lies not in displacing traditional systems, but in bridging them—offering the benefits of custody, compliance, and yield within a familiar regulatory framework.
As the digital asset landscape matures, the contrast between tokenized asset growth and DeFi contraction offers a clear signal: the market is rewarding projects that prioritize institutional-grade standards over speculative experimentation. For investors and builders alike, 2026 will likely be a year of consolidation and convergence, with tokenization at the center of this transformation.
via Decrypt AI