Tokenization of real-world assets could surge to $23.4 trillion by 2033, a new report by the Boston Consulting Group says.
The report titled ‘Approaching the Tokenization Tipping Point’ revealed that tokenized RWAs will end this year as a $600 billion market. It projects that as more ventures transition from pilots to live platforms, the sector will skyrocket in value and, in an optimistic scenario, could be worth $23.4 trillion.
However, BCG pointed out that the number is more likely to be around $19 trillion, with a conservative scenario of $12.5 trillion.
Stablecoins currently account for the bulk of tokenized assets, but mainstream finance will become a more prominent force as the sector matures. Tokenized funds and bonds will become an industry staple, accounting for a growing share, before alternative investments, real estate, equities and the credit industry become among the biggest players.
BCG projects that the banking sector will account for over a third of all tokenized assets by the end of the decade. This share will surge to over 50% by 2033. According to Laurent Marochini, the CEO of Standard Chartered Luxembourg,
tokenization will record the highest growth in sectors where it offers tangible benefits.
“Tokenization is advancing at different speeds across asset classes—fastest where it delivers real efficiencies and where conditions allow for secondary markets to emerge,” he stated.
According to rwa.xyz, tokenized assets have a $246 billion market cap. However, stablecoins dominate the sector at over $226 billion, with private credit a distant second at $12.5 billion. U.S. Treasuries and commodities are the other notable asset classes.
Growth in tokenization has been consistent over the past few years, and it has been unaffected by ‘crypto’ volatility, BCG noted. It attributes this to “limited interlinkage” between tokenization and ‘crypto,’ with the former growing beyond the digital asset sector.
“With the recent growth of RWA, people outside the crypto industry routinely ask [about] tokenized assets’ potential to address historically underpenetrated segments. Global adoption is poised to grow exponentially,” commented Yue Hong Zhang, the managing director at BCG Hong Kong.
Tokenization is growing in three phases, the report added. In the first, marked by low-risk adoption, most participants have engaged in limited pilots, tokenizing regulated instruments like money market funds. BlackRock’s $2 billion BUIDL fund has been the standout in this phase.
The second phase will be characterized by institutional adoption onboarding higher-yield assets such as private credit and corporate bonds. This phase will focus on unlocking broader value, from liquidity to composability, the report says.
A system-level shift will mark the third and most defining phase as tokenization takes over the illiquid asset classes, from real estate to private equity.
Poor infrastructure, a lack of interoperability, fragmented regulations and high initial costs stand out as the key challenges to tokenization. However, there has been massive progress globally, and BCG believes that most of these challenges will be solved over the next five years.
“The conditions for broader adoption are aligning. Technology is ready, regulation is evolving, and foundational use cases are in the market,” commented Martijn Siebrand, the digital assets lead at Dutch bank ABN AMRO.
Dubai launches property tokenization
As tokenization surges globally, Dubai is positioning itself as a global leader with several high-profile RWA tokenization projects. In the latest move, the city’s real estate and digital asset regulators have announced a new partnership to enable property tokenization.
The Dubai Land Department (DLD) announced the partnership with the city’s Virtual Assets Regulatory Authority (VARA) on April 6, aimed at “enhancing Dubai’s global position as a leading hub for investment and innovation in the real estate sector.”
Under the collaboration, the two will link the city’s real estate registry with property tokenization through a bespoke governance system they claim is the first of its kind globally. The ultimate aim is to boost market liquidity and improve the efficiency of Dubai‘s property management companies.
The announcement comes just three weeks after DLD revealed it had launched a real estate tokenization program, under which it would become the first city in the Middle East to issue title deeds on the blockchain. It is estimated that by 2033, tokenized property would account for at least 7% of the city’s lucrative real estate, amounting to $16 billion.
Commenting on the latest collaboration, Helal Almarri stated that it reflects the city’s DNA of future-focused innovation. Almarri heads the Dubai World Trade Centre.
“This Collaboration Agreement seeks to champion a future-ready model that can allow for more inclusive economic participation, with legal safeguards to recognise fractionalized ownership rights,” he said.
Watch: Tim Draper talks tokenization with Kurt Wuckert Jr.
width=”560″ height=”315″ frameborder=”0″ allowfullscreen=”allowfullscreen”>
Source: https://coingeek.com/tokenization-to-hit-18-9-trillion-by-2033-report/