A recent report from the investment bank Citi points out that “tokenizing” physical assets via blockchain could become the next killer use case in crypto.
Investment bank Citi is betting on tokenization
According to the bank, the market for this tokenized version of physical assets could reach between $4 and $5 trillion by 2030. That’s a 5 with 12 zeros! That would mean the market will grow 80-fold from the current version of this market, Citi said in its recently published “Money, Tokens and Games” report.
“We forecast $4 trillion to $5 trillion in tokenized digital securities and $1 trillion in distributed ledger technology (DLT)-based trading volume by 2030,” the firm’s analysts said.
Of the up to $5 trillion in tokenized assets, according to the bank, $1.9 trillion will come in the form of debt, $1.5 trillion from real estate, $0.7 trillion from private equity and venture capital, and between $0.5 and $1 trillion from securities. The research suggests that private equity and venture capital funds will become the most tokenized asset class, with 10% of the total market tokenized according to Citi, followed by real estate at 7.5%. According to Citi, this would be due to the high degree of liquidity, transparency and opportunities for fractional ownership.
“Traditional financial assets are not broken, but suboptimal because they are constrained by traditional systems and processes,” the report said. “Certain financial assets, such as private equity and other alternatives, are relatively limited, while other markets, such as publicly traded equities, are more efficient.”
Citi says in the report. It also takes a closer look at distributed layer technology.
“What DLT and tokenization offer is a completely new tech stack that allows all stakeholders to run all activities on the same shared infrastructure as one golden source of data. No more processing errors, waiting for the faxed documents or official documents by post.”
Citi’s thesis taps into the relatively young crypto niche called RWA (real-world assets). Binance is also excited about this. In their latest industry report Binance took a deep dive into the projects that could lead crypto’s RWA sector.