By Brayden Lindrea
Investment bank Citi is betting on the blockchain-based tokenization of real-world assets to become the next “killer use case” in crypto, with the firm forecasting the market to reach between $4 trillion to $5 trillion by 2030.
That would mark an 80-fold increase from the current value of real-world assets locked on blockchains, Citi explained in its “Money, Tokens and Games” March report.
“We forecast $4 trillion to $5 trillion of tokenized digital securities and $1 trillion of distributed ledger technology (DLT)-based trade finance volumes by 2030,” the firm’s analysts said.
Of the up to $5 trillion tokenized, the bank estimates $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 $0.5-1 trillion from securities.
Blockchain-based tokenization total addressable market by asset class. Source:
Private equity markets will likely see faster adoption rates because of their favorable liquidity, transparency and fractionalization properties, the bank explained.
KKR, Apollo and Hamilton Lane are three private equity firms that have already set up tokenized versions of their funds on platforms like Securitize, Provenance Blockchain and ADDX.
If Citi’s bullish estimates are reached by 2030, tokenized assets would still only represent a small share of the total addressable markets. Source:
Citi said that blockchain tokenization will supersede legacy financial infrastructure because it is technologically superior and it provides more investment opportunities in private markets.
“Traditional financial assets are not broken, but sub-optimal as they are limited by traditional systems and processes,” it said. “Certain financial assets — such as fixed income, private equity, and other alternatives — have been relatively constrained while other markets — such as public equities — are more efficient.”