Tokenization adoption is set to happen in waves, with assets such as mutual funds, bonds, and loans leading the charge, according to a report by global consulting firm McKinsey. While many institutions are still taking a “wait and see” approach, early movers have the opportunity to capture a significant share of the market. The market for tokenized assets may reach $4 trillion by 2030, though the actual number could be as low as $1 trillion as financial institutions embrace blockchain technology at a slower pace than previously anticipated.
The emergence of tokenization as a key use case for blockchains has garnered attention from global asset managers and banks like BlackRock and Citigroup, who are looking to tokenize traditional assets such as U.S. Treasuries and commodities for operational efficiencies and broader access. While reports from Boston Consulting Group and digital asset manager 21Shares predicted the market to be much larger, McKinsey’s estimate is more conservative. The firm notes that the adoption of tokenization is still in its early stages, with many projects transitioning from pilot to deployment on a larger scale.
In its base case scenario, McKinsey estimates that the tokenized asset market will reach nearly $2 trillion by 2030, excluding tokenized deposits, stablecoins, and central bank digital currencies from the calculation. Mutual funds, bonds, and other financial instruments are expected to lead the way in tokenization efforts, while real estate, commodities, and equities may see slower adoption due to various challenges. Despite the potential hurdles, many institutions recognize the importance of tokenization for the future of their businesses, though technical integration remains a key challenge.
The bullish scenario of a $4 trillion tokenized asset market by 2030 would require more favorable regulations, industry collaboration, and a smooth adoption process without any major systemic events hindering progress. The authors of the report emphasize the need for infrastructure players to pivot towards robust scaled solutions to reimagine the future of financial services. Overall, the authors believe that widespread adoption of tokenization is still a ways off, but early movers who can navigate the challenges will have the opportunity to secure a significant market share in the evolving landscape.
As blockchain technology continues to evolve, the integration of tokenization with existing processes and standards remains a key challenge for institutions looking to embrace this new technology. Despite the potential benefits of tokenization, concerns over feasibility, compliance requirements, and incentives for industry players to pursue tokenization remain key considerations. However, with a clearer signal on the horizon for implementing tokenization, early movers have the chance to position themselves for success in the burgeoning market. Anthony Moro, CEO of Provenance Blockchain Labs, notes that while blockchain technology is still in its early days, most institutions recognize the importance of tokenization for their future business strategies.
