Private Credit Growth Sparks Risk Concerns in Crypto Space
Private credit, the most active category for on-chain tokenized assets, is raising alarms about potential risks infiltrating the crypto ecosystem. Recent bankruptcies and value write-offs in the sector have cast a shadow over tokenized loans, with Morgan Stanley estimating the market could balloon to $2.6 trillion by 2029.
The rapid expansion has drawn scrutiny from regulators, including US Senator Elizabeth Warren, who called for increased oversight following the collapses of Tricolor Holdings and First Brands Group. The opaque nature of private credit valuations now threatens to destabilize DeFi projects experimenting with tokenized loans.
Tokenized private credit has exploded from $49,000 at the end of 2024 to $2.1 billion today, according to RWA.xyz. The Figure HELOC token alone carries over $14 billion in private credit exposure, though trading remains confined to its internal marketplace.
