Citi investment bank analysts predict a significant growth in the tokenized assets market, with an estimated increase of 80 times by 2030, which could result in a total market value of $4 to $5 trillion.
The findings are published in a report titled “Money, Tokens, and Games,” which indicates that distributed ledger technology (DLT) will be the driving force behind the expansion of trade finance, which could reach a market value of $1 trillion within the next seven years.
The report outlines the asset allocation for the above $5 trillion of tokenized assets, with debt accounting for $1.9 trillion, real estate at $1.5 trillion, private equity at $0.7 trillion, and securities between $0.5 and $1 trillion.
The private equity and venture capital sectors are expected to benefit the most from tokenization, with a projected market capture of 10%, while real estate will account for 7.5% of tokenized assets.
The analysts noted that while the optimistic predictions for 2030 are significant, tokenized assets would still represent only a fraction of the total target market.
The potential benefits of asset tokenization include the elimination of outdated financial infrastructure, improved investment opportunities in private markets, and increased operational efficiency.
The authors of the report believe that DLT technology will enable all stakeholders to perform actions in a common infrastructure, eliminating the need for time-consuming data reconciliation and document sending while preventing settlement failures.
However, Citi researchers also highlighted some major obstacles to the adoption of asset tokenization, including the lack of regulatory framework, issues with infrastructure creation and interoperability standards, and the skepticism of many industry participants about new technologies.
The Australian Stock Exchange’s refusal to launch a blockchain-based CHESS clearing system due to its labor-intensive nature serves as an example of the challenges faced by the industry.