Trust, not technology: what really hinders RWA adoption in the financial sector

The financial sector faces a decisive question: what truly blocks the broad integration of Real World Assets (RWA) with blockchain technology? Contrary to common assumptions, the answer lies not in technological limitations but in issues of trust. Nano Labs CEO Jack Kong clearly pointed out that traditional financial institutions are not primarily seeking solutions based on public networks, but are instead grappling with a deep conflict between data security and access to innovative solutions.

Why banks remain cautious: beyond traditional technology

Financial institutions do not reject blockchain due to a lack of technological capabilities. The real problem lies in three key areas: privacy protection, regulatory compliance, and confidence when accessing liquidity offered by the DeFi ecosystem. These concerns make public blockchains less attractive to them. The traditional financial sector is not ready for the full transparency that the decentralized world brings. Instead, institutions are seeking alternative paths that allow them to securely manage sensitive assets without completely giving up control and privacy.

Hybrid approach: where technology and security meet

The most promising solution is adopting a hybrid model. Institutions first build private blockchains dedicated to managing sensitive assets, then strategically integrate with the public blockchain ecosystem using advanced encryption technologies. Zero-Knowledge Proofs (ZKP) and Fully Homomorphic Encryption (FHE) are key tools here, enabling transaction verification without revealing confidential data. This hybrid model allows financial institutions to harness the potential of blockchain while maintaining the control and security that are their priorities.

RWA market: River and the beginning of real competition

The recent 2300% surge in the value of the River project signals clear market momentum, although this growth is primarily driven by liquidity games funded by speculative capital. However, this movement indicates a much more significant reality: the true competition for RWA infrastructure is just beginning. Financial institutions, tech companies, and blockchain platforms are starting a race for control over standards and solutions for Real World Assets. The entity that establishes the dominant architecture for trust and technology will be crucial for the future integration of traditional finance with the blockchain ecosystem. Trust, supported by robust technology, will become a differentiating factor in this competition.