How To Tokenize Real-World Assets (RWA) On Bitcoin In 2025

Tokenizing real-world assets (RWAs) on Bitcoin transforms physical or financial items — like real estate, commodities, bonds, or equities — into digital tokens secured by Bitcoin’s blockchain.

RWA tokenization is currently one of the fastest-growing market segments in crypto. As of May 2025, the total value of RWA on blockchain networks stood at $21.6billion. Ethereum holds the largest market share for tokenization, hosting 56% of projects.

However, the tokenization trend on Bitcoin is also picking up traction. This guide explains, step by step, how RWA tokenization works on Bitcoin in 2025. You’ll learn about Bitcoin-native protocols, sidechains and Layer-2 bridges, implementation phases, in-depth examples, and key compliance considerations.

Bitcoin-native protocols

Bitcoin-native protocols refer to solutions that operate directly on the Bitcoin blockchain (Layer-1) or leverage minimal extensions like Taproot, without relying on external blockchains or sidechains. They embed asset data into Bitcoin transactions or use Bitcoin’s scripting and SegWit witness fields to anchor asset state on-chain.

By using these protocols, issuers benefit from Bitcoin’s core security model, decentralization, and immutability while creating digital representations of real-world assets.

Ordinals and BRC-20

• Ordinals assign each satoshi a unique number and allow ‘inscriptions’ (data attachments) in SegWit witness fields. This lets you inscribe metadata — like an asset’s legal description — onto specific sats without changing Bitcoin’s protocol.
• BRC-20 uses JSON-formatted inscriptions to mint and track fungible tokens via Ordinals. While experimental, BRC-20 shows how Bitcoin can host tokens similar to Ethereum’s ERC-20 standard.

Runes Protocol

• Runes is a proposed compact token standard by Casey Rodarmor. It minimizes on-chain data per transfer compared to BRC-20 by encoding token moves in streamlined inscriptions.
• Runes remain under community review but promise efficient high-volume asset transfers, such as stablecoins or security tokens.

Taproot Assets (Taro)

• Developed by Lightning Labs, Taproot Assets uses Taproot outputs and Merkle commitments for on-chain asset issuance. After a token’s genesis on Bitcoin, transfers occur off-chain via Lightning Network channels, carrying cryptographic proofs.
• Benefits:
  • Security: Initial issuance settled on Bitcoin.
  • Scalability: Instant, low-fee transfers over Lightning.
• Demo: A Bitcoin-anchored USD stablecoin successfully settled via Lightning testnet using Taproot Assets APIs.

RGB protocol

• RGB performs client-side validation of asset state, anchoring only compact commitments on Bitcoin. Full token logic and history live off-chain, preserving privacy and scalability.
• Real-world interest: Tether’s team has expressed plans to reissue USDT on Bitcoin via RGB, leveraging Bitcoin’s security with RGB’s efficient off-chain model The Block.

Sidechains and Layer-2 bridges

Sidechains and Layer-2 networks offer Ethereum-style smart contracts or specialized features, then anchor their security to Bitcoin.

Stacks

• Proof of Transfer connects Stacks to Bitcoin: miners spend BTC to secure Stacks blocks, which anchor to Bitcoin’s chain.
• Clarity smart contracts support fungible tokens (SIP-010) and NFTs (SIP-009).
• CityCoins (MiamiCoin, NYCCoin) let anyone mine or buy tokens by committing STX; 30% of committed STX flows to a city’s treasury, funding civic projects

Rootstock (RSK)

• Merge-mined sidechain: Bitcoin miners can secure RSK blocks. BTC moves into RSK as RBTC via a two-way peg.
• Solidity smart contracts issue ERC-20/RRC-20 tokens.

For example, Money on Chain’s Dollar on Chain (DoC) is an RSK-based, BTC-collateralized stablecoin pegged 1:1 to USD. DoC launched on RSK mainnet in December 2019 and uses over-collateralization and governance tokens to maintain its peg.

Also, Sovryn’s Sovryn Dollar (DLLR) aggregates multiple BTC-backed stablecoins on RSK to create a USD-pegged token.

Liquid Network

Liquid Network is a federated sidechain by Blockstream, optimized for fast, confidential transfers and native asset issuance. Liquid Assets let issuers create tokens by specifying genesis outputs in a Liquid transaction.

For instance, Blockstream Mining Note (BMN) securitizes Bitcoin mining revenue shares as an EU-compliant security token tradable among accredited investors.

Also, El Salvador’s Volcano Bond, a $1billion government bond, plans to issue security tokens on Liquid, paying 6.5% coupons plus mining profits.

Examples of Bitcoin RWA tokenization in action

To illustrate the above concepts, here are some real and ongoing examples (as of 2025) of projects and platforms bringing real-world assets onto Bitcoin or Bitcoin-linked networks.

Tether (USDT) on Bitcoin via Omni

Tether’s USDT, a token pegged to the US Dollar, was originally launched on the Omni Layer on Bitcoin in 2014. This made it one of the first large-scale RWAs on Bitcoin – each USDT represented $1 held in reserve by Tether’s custodians.

While USDT later migrated primarily to Ethereum and other chains for speed, Omni USDT still exists. Tether’s team has looked at modern Bitcoin protocols (like RGB) to reintroduce Bitcoin-based stablecoins on a larger scale.

Blockstream Mining Note (BMN) – Security Token on Liquid

Blockstream issued BMN tokens on the Liquid sidechain, each token granting exposure to a certain amount of Bitcoin mining hashpower/rewards. Investors purchase BMNs, which are tokenized securities, and effectively hold a piece of a Bitcoin mining operation.

The token can be traded on secondary markets (within approved participants) and at maturity, investors receive Bitcoin payouts. This showcases using Bitcoin tech (Liquid) to offer a regulated financial product.

CityCoins (MiamiCoin and NYCCoin on stacks)

In 2021, the CityCoins projects launched tokens on the Stacks blockchain for the cities of Miami and New York. MiamiCoin (MIA) and NYCCoin (NYC) allowed people to mine tokens by committing STX (the Stacks token). A portion of the mining rewards (in STX) was reserved for the city’s treasury if the city opted to claim it. Miami’s mayor at the time voiced support and indeed Miami accrued a significant treasury from MiamiCoin.

While not a traditional asset, CityCoins were innovative community-driven tokens tied to real municipalities. Their value proposition was that holding or using the tokens could eventually confer benefits in the city.

CityCoins demonstrated how local governments might one day leverage Bitcoin-anchored tokens for fundraising or civic engagement.

Real estate tokenization pilots

A few companies have experimented with Bitcoin-based tokenization of real estate. For instance, a startup could issue tokens on Liquid or RSK representing shares in a property LLC.

One example: In 2022, a Latin American fintech used RSK to tokenize a portfolio of properties, allowing investors to buy small fractions of the portfolio’s equity via tokens.

Another case is using RGB: an Italian project was reportedly exploring using RGB to tokenize luxury cars and real estate, with the RGB smart contracts handling ownership transfers when sales happen. While these projects are early and smaller in scale compared to Ethereum’s real estate tokens, they demonstrate proof-of-concept that Bitcoin tech can handle property tokens.

Art and collectibles via Ordinals

The Ordinals boom in 2023 saw artists inscribe everything from digital art pieces to music files on Bitcoin. While many of these are purely digital collectibles, some were linked to physical art or items.

For example, an artist might create a painting and then inscribe a high-resolution image onto Bitcoin, selling the inscription as a token with the right to claim the physical painting.

A few such experiments were done where the Bitcoin inscription was essentially used as the certificate of authenticity for a physical item. The buyer of the inscription could redeem it to get the physical piece.

This approach to RWA bridges the physical and digital – the Bitcoin token is a proxy for a real-world object.

How to implement RWA tokenization on Bitcoin

Whether on Bitcoin L1, a sidechain, or Lightning, tokenizing an RWA follows four core steps.

1. Define and issue
   • Draft asset metadata: name, symbol, supply, legal ID (e.g., ISIN).
   • Choose a protocol and standard (e.g., BRC-20, SIP-010, ERC-20, Liquid issuance).
   • Embed a genesis record: an inscription, contract deployment, or issuance transaction.
2. Distribution
   • Distribute to initial holders via Bitcoin transactions (Ordinals) or contract mint calls (Stacks/RSK).
   • For sidechains, lock BTC collateral and mint tokens accordingly.
3. Trading and transfers
   • On-chain: Token data moves in transactions (Ordinals, Omni).
   • Off-chain: Lightning (Taproot Assets) or client-side proofs (RGB) enable instant swaps.
   • Atomic swaps and DLCs allow trust-minimized exchanges between tokens and BTC.
4. Redemption and settlement
   • Holders ‘burn’ or lock tokens to trigger off-chain asset delivery.
   • Use legal agreements and oracles (e.g., signed proofs in DLCs) to automate payouts or redemptions.

Legal and compliance considerations 

Tokenizing real-world assets on Bitcoin requires a strong legal and regulatory framework. Issuers must comply with securities laws, register offerings or qualify for exemptions, and conduct thorough KYC/AML checks to verify investor identities and prevent illicit transactions.

Underlying assets — whether fiat reserves, commodities, or bonds — must be held by licensed custodians with appropriate insurance policies. Legally, off-chain contracts and corporate structures such as LLCs or trusts define the relationship between token ownership and real-world rights, since blockchains alone cannot enforce legal claims.

Additionally, token trades may trigger capital gains tax and other reporting obligations, so projects often choose favorable jurisdictions and implement geo-fencing measures to ensure compliance with local regulations.

Finally, governance mechanisms such as upgradeable contracts or admin controls must balance immutability with the ability to address unforeseen issues or regulatory changes.

Conclusion

By 2025, Bitcoin’s ecosystem offers a diverse toolkit for RWA tokenization — from Bitcoin-native protocols (Ordinals, Runes, Taproot Assets, RGB) to anchored sidechains (Stacks, RSK, Liquid). Real-world deployments — like Tether’s RGB USDT, Blockstream’s BMN, El Salvador’s Volcano Bond, CityCoins, and Sovryn’s DLLR — demonstrate how assets gain transparency, liquidity, and global reach while remaining anchored to Bitcoin’s security.

For beginners, the path to tokenizing an RWA involves defining metadata, issuing tokens, enabling transfers, and orchestrating redemptions through off-chain agreements. As technology and regulation converge, Bitcoin stands ready as an effective base layer for credible, compliant, and accessible asset tokenization.

1. 01.

   What is tokenization of real-world assets?

   

   Tokenization is the process of creating a digital token on a blockchain that represents ownership or economic rights in a physical or financial asset — such as real estate, commodities, bonds, or art. Each token encodes metadata (like asset identifiers, legal rights, and supply limits) and links to an off-chain legal framework or custodian.

2. 02.

   Why is RWA tokenization mostly on Ethereum, not Bitcoin?

   

   Ethereum was designed from day one to support Turing-complete smart contracts and standardized token interfaces (ERC-20, ERC-721). Those features make it straightforward for developers to issue, manage, and interact with tokens entirely on-chain. Bitcoin’s original UTXO model and limited scripting did not natively support complex contracts or token standards, so until recently most projects chose Ethereum for its mature tooling, broad developer ecosystem, and lower barrier to deploying programmable assets.

3. 03.

   Is the Bitcoin network good for tokenization?

   

   Yes — with caveats. Bitcoin offers unmatched security, decentralization, and immutability, making it an attractive base layer for high-value tokens. However, its native scripting limits on-chain logic, so most Bitcoin-based tokenization uses overlay protocols or sidechains (Ordinals/BRC-20, Taproot Assets, RGB, Liquid, Stacks, RSK) to provide smart-contract-like features. As these layers mature, Bitcoin becomes increasingly viable for compliant, secure RWA tokens — especially where maximum settlement trust is paramount.