The Tokenized Private Credit Boom Has a Hidden Catch for Investors

That promise is starting to show real traction. 

In the opening weeks of 2026 alone, the onchain, investable slice of tokenized private credit has grown by roughly 50%, according to RWA.xyz data. Across markets, tokenized real-world assets, or RWAs, are expanding quickly, even if they still sit at the edge of mainstream finance.

The growth, however, comes with an important caveat: much of what is labelled "tokenized" is not investable onchain in the way many might assume. 

That tension is most visible in private credit, where rapid expansion in onchain issuance is still outweighed by a much larger pool of loans that are tracked on blockchain rails without being distributed as investable tokens.

What tokenization really means 

The RWA market now draws a distinction between two kinds of "onchain" assets.

• Distributed refers to debt products issued as investable tokens. Eligible investors can subscribe to them and hold them onchain, typically in a wallet or custody account.
• Represented refers to credit that is recorded on a blockchain for tracking and operational purposes, but is not distributed as an investable token.

The split reflects how tokenization is being adopted in practice. Using blockchain infrastructure for tracking, servicing, and settlement is relatively straightforward for lenders and intermediaries. 

Issuing credit as a broadly investable token is harder, because it requires regulatory clarity, investor onboarding, custody arrangements, and acceptance by large pools of capital. 

The Bank for International Settlements has warned that tokenization can change how regulated markets function, and how responsibilities are allocated, creating governance and operational challenges alongside any efficiency gains.

A young market

The tokenized RWA market is still young, but growing quickly. Total distributed RWA value, meaning assets that investors can subscribe to and hold directly onchain, stands at about $20.7bn as of 13 Jan, according to RWA.xyz.

The market remains dominated by a handful of categories. 

US Treasury debt now accounts for about 42% of distributed RWA value, followed by commodities (19%), private credit (16%), institutional alternative funds (12%), and the remainder split across public equity, non-US government debt, and smaller categories.

Stablecoins, which are effectively tokenized fiat currencies, represent the largest scaled use of tokenization in markets today, with over $300bn in market capitalization. 

Stablecoins go to show that tokenization at scale already exists, but it has largely taken the form of the most liquid assets – cash and treasuries.

Private credit takes off

Private credit refers to lending outside banks and public bond markets. It has been one of the most striking areas of growth in recent years, both in traditional markets and, increasingly, in tokenized form.

Distributed tokenized private credit ended 2025 at roughly $2.1bn, up from about $6mn at the start of the year, according to RWA.xyz. By 12 Jan, it had risen a further 50% to roughly $3.2bn.

At the same time, the represented category is far larger. As of 12 Jan, represented private credit made up about 85% of the roughly $21.5bn tokenized private credit market, at about $18.3bn.

That gap matters, but it does not mean these loans are "offchain". It just means most private credit activity is being tracked onchain without being packaged as investable, transferable tokens.

In traditional markets, private credit has also grown rapidly. The size of private credit at the start of 2025 was $3tn, up from about $2tn in 2020, and could reach about $5tn by 2029, according to Morgan Stanley estimates.

Tokenization advocates argue this is exactly where blockchains could help. A recent S&P Global report said tokenization "could help to address some inherent challenges in private credit", including liquidity, efficiency and transparency.

Where tokenized RWAs live

There is also a clear division in where these assets are located. 

On a distributed basis, excluding stablecoins, Ethereum accounts for the bulk of investable RWAs, with smaller shares on BNB Chain, Solana, and others. 

On the represented side, the picture flips, with Canton accounting for 95% of value, followed by Provenance and ZSync Era, among others.

Distributed assets tend to use public blockchains as distribution rails. Represented assets cluster on permissioned networks designed for institutional workflows. While growth in distributed RWAs can add activity to public chains, it doesn’t necessarily translate into higher token prices.

Figure and Maple

Tokenized private credit is not one market, but two, and the leaders look different depending on which definition you use.

On the represented side, Figure is the standout. The company runs on the Provenance network and accounts for a large share of represented private credit, while reporting no distributed private credit exposure. In practice, this means a large loan book can be tracked onchain without investors holding investable tokens in their own wallets.

Figure’s loan pitch targets consumers, particularly through home equity lending. The firm promotes loans of up to $750,000, with approval times, it says, that can be as short as five minutes. Its marketing also highlights crypto-backed loans and downplays traditional underwriting signals, stating "no credit score needed", while setting a minimum loan size of $5,000.

What matters for reporting is not whether these products are innovative, but where the risk sits for investors, including collateral quality, liquidation mechanics, counterparty exposures, and who ultimately holds the credit. 

Sandmark noted in November that crypto markets have repeatedly built leverage on volatile collateral, and that these structures can unwind quickly when prices fall. In a tokenized private credit context, crypto-backed lending belongs in the "watch closely" category, even when presented in cleaner language. 

Mortgage-backed securities that amplified the 2008 financial crisis were also repackaged, investable products built on pools of home equity loans.

On the distributed side, Maple offers a clearer illustration of what investable onchain credit looks like. 

RWA.xyz lists Maple’s Syrup USDC and Syrup USDT among the larger distributed credit instruments, with roughly $1.4bn and $660mn in principal outstanding, respectively. 

The key difference is the wrapper. Distributed credit is designed to be held onchain as a tokenized claim, subject to eligibility checks and transfer rules.

The platform split also helps explain why represented value is so much larger than distributed. Creating investable tokens raises hard questions about who can hold them, how transfers work, what disclosures are applicable and how liquidity is managed. 

Tracking a loan book onchain can deliver operational gains without having to cross those distribution hurdles.

What to watch

Even with its rapid growth, tokenized private credit remains small relative to private credit overall. It is also structurally uneven. 

The represented market is currently the bulk of what is called "tokenized", while distributed products are the smaller, faster-growing subset that looks most like the original tokenization promise.

For 2026, the most telling metric will be whether private credit continues to migrate from represented tracking into genuinely distributed products, or whether tokenization remains primarily a back-office upgrade with a small investable surface area. 

If the investable layer continues to grow, it strengthens the case that tokenization is becoming a genuine distribution channel, rather than just a modernized record-keeping system.