Solana climbs back into tokenization spotlight as R3 brings big banks to its rails

Software development firm R3 has agreed to a deal with Solana Foundation to let its customers use the Solana network. The move could see Solana become a major tokenization hub.

The UK-based firm announced the deal today, noting that collaboration will allow regulated financial institutions to bring their tokenized real-world assets to the network. R3 develops private blockchain networks for traditional financial institutions.

According to the announcement, the partnership with Solana Foundation will merge TradFi and DeFi by bringing regulated financial products to the public blockchain when the RWA sector is attracting massive interest.

It stated:

“This brings the institutional TradFi and DeFi worlds into true convergence, marrying the unparalleled reach of R3 into the TradFi ecosystem with the scale, liquidity, and innovation of internet capital markets.”

Interestingly, R3 announced that it chose Solana because of its performance, fees, and vibrant ecosystem, making it the ideal network for regulated digital finance. Solana Foundation president Lily Liu will join the R3 Board of Directors as part of the deal. The foundation also invested an undisclosed amount into the firm.

Speaking on the deal, Liu described it as proof that public blockchains are ready for institutional adoption while adding that the future of capital markets will be on public infrastructure.

The partnership could boost Solana’s activity

The deal represents a massive milestone for Solana and could help boost the network activity and its image. Despite its emerging RWA tokenization market, the network’s memecoin sector remains the most prominent.

This has impacted the network negatively, with the decline in memecoin interest leading to a plunge in its activity. The result has been struggles for the SOL token, which is down 8% this year despite gaining more than 4% today amidst the general market rally that saw Bitcoin hit a new all-time high at almost $112,000.

However, that could change with R3 being one of the leaders in the RWA tokenization sector. The firm has tokenized $10 billion in on-chain assets while developing permission digital ledger technologies (DLT) for customers such as Bank of America, HSBC, the Italian Central Bank, the Monetary Authority of Singapore, and  Euroclear.

With this deal, R3’s Corda private network will be connected to the Solana blockchain to improve the transaction process. Any of the firm’s customers could choose to move to Solana or stay with the permissioned Corda ecosystem.

If all goes as planned, Solana could challenge Ethereum’s dominance in the RWA tokenization sector. Ethereum is currently the dominant network with over $7 billion in total value of assets, while Solana is seventh with just $338.1 million. Two Ethereum Layer-2 networks, ZkSync Era and Polygon, even rank higher.

Tokenization continues to gain momentum

Meanwhile, R3 efforts to boost RWA accessibility on Solana continued a trend of recent tokenization efforts in the crypto sector. Several companies have announced tokenization efforts in the last few days.

These include the crypto exchange Kraken, which disclosed plans to trade tokenized US stocks off to non-US customers through Backed. Interestingly, Kraken also picked Solana as the blockchain network for its tokenized stocks after the exchange started offering stocks and exchange-traded funds (ETFs) in some US states.

Online brokerage firm Robinhood also submitted a proposal for a tokenization framework to the US Securities and Exchange Commission (SEC). In the 42-page document, the firm wanted to create an RWA Exchange and identified Solana and Base as networks for the product.

Unsurprisingly, there are reports that the firm is also planning to build a blockchain for tokenized US securities in Europe and will likely work with Arbitrum or Solana on the project.

However, it is not just fintech platforms bullish on tokenization; even traditional firms, including BlackRock and Franklin Templeton, are experimenting and believe it is the next phase for capital markets. The SEC is also considering how to regulate the sector, which, according to Standard Chartered, could be worth over $30 trillion by 2030.

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