Written by: Prathik Desai
Compiled by: Block unicorn
In the 20th century, Augusta National Golf Club faced criticism for its apparent elitism. As the host of the Masters Tournament, the club has only 300 members, and the membership process is extremely strict, even prohibiting prospective members from applying directly. Membership must be obtained by invitation. Another way is to have someone nominate you and then patiently wait.
Critics call it the ultimate 'gentlemen's club,' and it indeed was before 2012. Worse, for decades, the club prohibited African Americans from becoming members. Sports journalists questioned why one of golf's most prestigious events would be held at a venue that excludes 99.9% of humanity. The public opinion was extremely negative: a small group of wealthy white men controlled opportunities that millions longed to experience.
The club prides itself on having some notable members, including four-time Masters champion Arnold Palmer, business titans Warren Buffett and Bill Gates, and Dwight D. Eisenhower, the 34th President of the United States.
Clearly, this is not the most democratic way to operate a club.
But why does Augusta National Golf Club pursue the democratization of a world-class golf course? Open access rarely creates high-end brands. The club pursues excellence. With only 300 members and almost no outside players, the course remains pristine all year round. Every detail is managed with great precision.
For example, it is able to undertake the rigorous maintenance required by the legendary Augusta National Golf Club brand. Think about it: hand-trimming fairways with scissors, coloring pine needles, and moving entire sections of trees to achieve the perfect television angle. Fewer stakeholders mean higher precision. When access is controlled, quality can reach perfection.
The same logic explains one of the most misunderstood trends in today's cryptocurrency space: why real-world asset (RWA) tokens—digital representations of everything from government bonds to real estate—are predominantly held by a small number of wallets.
But the exclusivity here is not based on gender or race.
BlackRock's tokenized money market fund BUIDL (BlackRock Dollar Institutional Digital Liquidity Fund) is an asset of about $2.4 billion, but as of July 31, 2025, there are only 81 holders.
Similarly, Ondo Finance's U.S. Treasury fund OUSG (Ondo Short-Term U.S. Government Bond Fund) shows only 75 holders on-chain. Major stablecoins like USDT/USDC are held by millions of addresses (approximately 175 million stablecoin holders across networks).
At first glance, these digital dollar assets resemble all the problems that blockchain was supposed to solve: centralization, gatekeeper mechanisms, exclusivity. If you can copy and paste a wallet address, why can't you buy these yield-generating tokens like any other crypto asset?
The answer lies in the same operational logic that allows Augusta National Golf Club to maintain its exclusive operating rights. The design of these tokens is centralized.
Regulated reality
The history of financial exclusivity is often about maintaining privilege through exclusion. But in these cases, exclusivity serves a different purpose: to keep the system compliant, efficient, and sustainable.
Most RWA tokens represent securities or funds and cannot be freely offered to the public without registration. Instead, issuers restrict tokens to accredited or compliant investors using private or limited offerings regulated by the U.S. Securities and Exchange Commission (SEC), such as Regulation D in the U.S. or Reg S overseas.
The BUIDL (BlackRock) offered by Securitize is only available to U.S. accredited purchasers (a subset of accredited investors, with a minimum investment of about $5 million).
Similarly, Ondo's OUSG (tokenized Treasury fund) requires investors to be both accredited investors and qualified purchasers.
These are not arbitrary barriers. They are the verification requirements imposed by the SEC under Regulation D 506(c), which determine who can legally own certain types of financial instruments.
When we observe tokens designed for different regulatory frameworks, the contrasts become more pronounced. Ondo's USDY is only available to non-U.S. investors (sold overseas under Reg S). By circumventing U.S. restrictions, it achieves broader distribution, allowing non-U.S. individuals who complete KYC to purchase USDY. The number of USDY holders is 15,000, which, while not large, far exceeds the 75 holders of OUSG.
The same company, the same tokenized asset, just a different regulatory framework. The result is distribution differences of up to 200 times.
This is where the comparison between Augusta National Golf Club and RWA becomes precise. To achieve the above objectives, RWA token platforms integrate compliance into the token code or surrounding infrastructure. Unlike freely tradable ERC-20 tokens, these tokens typically have transfer restrictions at the smart contract level.
Most security tokens adopt a whitelist/blacklist model (via standards like ERC-1404 or ERC-3643), where only pre-approved wallet addresses can receive or send tokens. If an address is not on the issuer's whitelist, the token's smart contract will block any transfers to that address.
It's like a guest list executed by code. You can't just show up at the door with a wallet address and demand entry. Someone must verify your identity, check your accredited investor status, and add you to the approved list. Only then will the smart contract allow you to receive tokens.
Backed Finance's tokens come in two forms—an unrestricted version and a wrapped 'compliant' token. Wrapped tokens 'only allow whitelisted addresses to interact with the token,' and Backed automatically adds users to the whitelist after they go through KYC.
Efficiency arguments
From the outside, this system appears exclusive. From the inside, it seems efficient. Why? From the issuer's perspective, given their business model and constraints, a centralized holder base is often a rational or even intentional choice.
Each additional token holder represents a potential compliance risk and additional costs, whether on-chain or off-chain. Despite these upfront compliance costs, on-chain rails bring long-term operational efficiencies, particularly in automatically updating net asset values (NAV), instantaneous settlement compared to traditional market T+2, and programmability (such as automatic interest distribution).
By implementing tokenization and deploying distributed ledger technology (DLT), asset managers can reduce operational costs by 23%, equivalent to 0.13% of assets under management (AUM), according to Calastone's white paper.
It predicts that tokenization can help improve the profit and loss statements of the average fund, increasing profits by $3.1 million to $7.9 million, including an increase in revenue of $1.4 million to $4.2 million through more competitive total expense ratios (TER).
The entire asset management industry can achieve a total savings of $135.3 billion in UCITS, UK, and US (40 Act) funds.
By limiting distribution to known and vetted participants, issuers find it easier to ensure that each holder meets the requirements (accredited investor status, jurisdiction checks, etc.) and reduce the risk of tokens accidentally falling into the hands of bad actors.
Mathematically, it also makes sense. By targeting a small number of large investors rather than a large number of small investors, issuers can save on onboarding costs, investor relations, and ongoing compliance monitoring. For a $500 million fund, reaching capacity with five investors each putting in $100 million is more commercially viable than with 50,000 investors each putting in $10,000. The management of the former is also much simpler. While on-chain transfers settle automatically, the compliance layer involving KYC, accredited certification, and whitelists remains off-chain and scales linearly with the number of investors.
Many RWA token projects are explicitly aimed at institutional or corporate investors rather than retail. Their value proposition typically revolves around providing crypto-native yield channels for fund managers, fintech platforms, or crypto funds with large cash balances.
When Franklin Templeton launched its tokenized money market fund, they did not intend to replace your bank checking account. They wanted to provide a way for CFOs of Fortune 500 companies to earn returns on their idle corporate cash reserves.
Exceptions for stablecoins
At the same time, the comparison with stablecoins is not entirely fair because stablecoins address regulatory challenges in different ways. USDC and USDT are not securities themselves, designed as digital representations of the dollar rather than investment contracts. This classification is achieved through careful legal structuring and regulatory engagement, allowing them to circulate freely without investor restrictions.
But even stablecoins require significant infrastructure investment and regulatory clarity to achieve their current distribution scale. Circle spent years building compliance systems, working with regulators, and establishing banking relationships. The 'permissionless' experience users enjoy today is built on a highly permissioned foundation.
RWA tokens face different challenges: they represent actual securities with real investment returns and are therefore subject to securities laws. Before tokenized securities have a clearer regulatory framework (the recently passed GENIUS Act begins to address this), issuers must operate within existing constraints.
Future outlook
The current concentration of RWA tokens is, after all, the closest representation of how traditional finance operates. Consider traditional private equity funds or bond issuances restricted to qualified institutional buyers, where participants are usually limited to a small number of investors.
The difference lies in transparency. In traditional finance, you don't know how many investors hold a particular fund or bond—this information is private. Only large holders need to make regulatory disclosures. On-chain, every wallet address is visible, making centralization apparent.
Moreover, exclusivity is not a characteristic of on-chain tokenized assets. It has always been this way. The value of RWA tokenization lies in making these funds easier for issuers to manage.
Figure's digital asset registration technology (DART) reduces loan due diligence costs from $500 per loan to $15, while shortening settlement times from weeks to days. Goldman Sachs and Jefferies can now purchase loan pools as easily as trading tokens. Meanwhile, tokenized government bonds like BUIDL suddenly become programmable, allowing you to trade Bitcoin derivatives on Deribit using these ordinary government bonds as collateral.
Ultimately, the noble goal of democratizing access can be achieved through regulatory frameworks. Exclusivity is a temporary regulatory friction. Programmability is a permanent infrastructure upgrade that makes traditional assets more flexible and tradable.
Returning to Augusta National Golf Club, their controlled membership model makes the golf tournament a perfect synonym. The limited number of members means that every detail can be managed precisely. Exclusivity creates conditions for excellence, but paradoxically, it also makes it more cost-effective. To provide the same level of precision and hospitality for a broader, more inclusive audience, costs would multiply.
A controlled holder base also creates conveniences for fund issuers to ensure compliance, efficiency, and sustainability.
But the barriers on-chain are gradually lowering. With the evolution of regulatory frameworks, the emergence of packaged products, and the maturation of infrastructure, more people will gain access to these benefits. In some cases, this access may be achieved through intermediaries and products designed for broader distribution (e.g., the unrestricted version of Backed Finance) rather than through direct ownership of the underlying tokens.
The story is still in its early stages, but understanding why things look the way they do today is key to understanding the upcoming transformations.
