Tokenized Financial Assets Set to Reach $2 Trillion by 2030
Analysts at consulting firm McKinsey & Company project that tokenized financial assets could grow to approximately $2 trillion by 2030, indicating a significant market expansion.
- While the adoption of tokenization started slowly, analysts foresee substantial growth in the near future.
- However, they caution that widespread adoption of tokenization remains a distant reality due to challenges in modernizing existing financial infrastructure, especially in heavily regulated industries like financial services.
- Asset classes such as cash, bonds, mutual funds, ETFs, loans, and securitization are expected to witness meaningful adoption initially.
Challenges and Opportunities in Tokenization
McKinseyβs analysts identify various challenges and opportunities in the tokenization of financial assets:
- The “cold start problem” where tokenized assets require users to perceive their value is a significant challenge.
- Limited liquidity and concerns about losing market share often discourage tokenized issuances, leading to parallel issuances on legacy systems.
- To drive adoption, tokenization must offer compelling use cases with clear advantages over traditional systems.
- Early adopters of tokenization have the opportunity to gain a larger market share and shape industry standards.
Driving Growth in Real-World Assets
Several protocols and platforms have played a crucial role in driving growth in real-world asset tokenization:
- Digital carbon market platforms like Toucan and KlimaDAO, as well as the real estate tokenization protocol Propy, have experienced significant user growth.
- Tokenized treasuries have seen remarkable expansion amid high yields in a period of elevated inflation and interest rates.
- RWA.xyz reported a record $1.29 billion locked in tokenized U.S. treasuries and bonds, marking an 80% surge since the beginning of 2024.
- Protocols such as Securitize and Ondo have contributed significantly to the growth of tokenized assets.
Integration of Assets on Public and Private Blockchains
Both public and private blockchains are witnessing the inclusion of various assets, signaling a broader adoption of tokenization:
- Examples include Franklin Templeton expanding to Polygon, Backed Finance launching a tokenized short-term U.S. treasury bond ETF, and UBS Asset Management deploying a tokenized money market fund on the Ethereum blockchain.
Hot Take: Tokenization Trends Shaping the Future of Finance
As tokenized financial assets continue to gain traction, the future of finance is being redefined by blockchain technology and decentralized protocols.
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