For Real World Assets (e.g. Real Estate) to come on-chain (e.g. as NFTs), there needs to be a way of linking the physical to the digital object in a trustless way. This seems impossible. Who is tackling this and what are the solutions?

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Harder to do it in a trustless way, but possible in a trust-minimized way. 
A possible approach could be to use trusted custodians to securely hold the assets and enlist multiple auditors/oracles to monitor, verify and report on-chain the status of those assets.