Bitwise's Yannick Socolov Warns RWA Tokenization Cannot Replace Traditional Credit Underwriting

Tokenizing real-world assets (RWAs) does not remove the fundamental requirement for conventional balance-sheet and borrower due diligence, according to Yannick Socolov, Head of Alternative Investments at Bitwise.
Speaking at the LONGITUDE Singapore summit, Socolov emphasized that placing credit onchain changes the distribution layer rather than the underlying credit risk profile:
- Fundamental Credit Risk: Onchain debt structures remain exposed to standard counterparty default, cash-flow impairment, and collateral recovery risks, requiring rigorous off-chain underwriting regardless of the blockchain ledger used.
- Compounding Risk Layers: Institutional allocators must now assess dual-layered vulnerabilities—evaluating traditional creditworthiness alongside smart contract vulnerabilities, oracle pricing reliability, and protocol liquidity architecture.
- Institutional Scaling Hurdles: While tokenization enhances settlement speed, fractionalization, and secondary composability, broader institutional adoption depends on merging proven financial auditing with verifiable onchain governance.