Tokenized Real-World Assets Market Skyrockets, Predicted to hit $16 Trillion by 2030
Summary:
This article discusses the significant growth witnessed in the tokenized real-world asset (RWA) market, which is projected to become a $16 trillion industry by the end of the decade. Various asset classes, including real estate, are actively being tokenized, attracting interest from 91% of institutional investors. The shift towards tokenization is attributed to regulatory clarity in certain jurisdictions and successful pilot projects. Real estate has become a popular use case for tokenization, but unique challenges linger due to diverse laws and registries across jurisdictions. The article also highlights key tokenization ventures by banking giants UBS and JPMorgan.
Despite initial skepticism, the market for tokenized real-world assets (RWA) has experienced explosive growth over the past year. Boston Consulting Group predicts that, by the end of the decade, the tokenization of global illiquid assets could burgeon into a $16 trillion industry. A host of asset categories are now being actively tokenized and attracting investments. Recent statistics suggest the total value of tokenized real-world assets surged to a record-breaking $2.75 billion in August.
According to a joint study by research and advisory firm Celent and banking powerhouse BNY Mellon, an overwhelming 91% of institutional investors are interested in investing in tokenized assets. Additionally, almost all participants agreed that tokenization has the potential to revolutionize asset management. Matthijs de Vries, co-founder of AllianceBlock, a firm pioneering a decentralized tokenized market, noted that such data hints at the powerful influence institutional-grade investments can have on the industry, leading to exponential growth in the RWA market.
The acceleration in interest towards tokenization of RWAs could be attributed to improved regulatory clarity in certain jurisdictions and thriving pilot projects. Unhealthy yields in decentralized finance (DeFi) and the subsequent innervation of numerous significant crypto projects in 2022 have encouraged investors to seek sustainable, tangible yields like those offered by tokenized RWAs.
The real estate sector, in particular, has seen substantial impact from tokenization. Currently, it represents the world's most extensive asset class with a projected value of $613 trillion in 2023. During the first three quarters of 2023, the value of on-chain real estate skyrocketed by 102%, totaling roughly $90 million.
Although real estate represents a popular use case for tokenization, the sector may face considerable challenges due to varying laws and registries across different jurisdictions. Thus, tokenization could be more effective within asset categories like rare collectibles, diamonds, luxury watches, classic cars, securities, and carbon credits.
Tokenization also has made a strong impact on traditional finance, particularly regarding instruments such as bonds, stocks, and exchange-traded funds (ETFs).
Tokenized U.S. Treasurys have recently gained momentum, with their valuation escalating to a staggering $685 million. The likability of tokenized Treasurys is on the rise, especially since interest rates on U.S. government bonds have now outpaced yields delivered by most DeFi offerings.
Earlier this month, banking giants UBS and JPMorgan made significant breakthroughs in asset tokenization. UBS announced the live pilot of a tokenized variable capital company (VCC) fund, while JPMorgan introduced its blockchain-based tokenization platform, the Tokenized Collateral Network (TCN), which converted traditional assets into digital analogs.
Other notable developments in the arena include Untangled Finance, a marketplace for tokenized RWAs, launching on the Celo network. Furthermore, in late 2022, asset manager WisdomTree disclosed nine digital, tokenized funds. As more individuals, major market players, and investors comprehend the significant technological and financial benefits offered by tokenized RWAs, it will be intriguing to observe the gradual maturation of this emerging market.
Published At
10/16/2023 1:01:00 PM
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