Tokenized Assets Expected to Reach $2 Trillion Market Size by 2030, McKinsey Predicts
Ruholamin Haqshanas
Last updated:
June 24, 2024 04:40 EDT
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2 min read
According to analysts at McKinsey & Company, the market size of tokenized financial assets is projected to reach approximately $2 trillion by 2030. In a recent report, the analysts expressed optimism for significant growth in the coming years, although they remain slightly less bullish than before.
While tokenization has seen slow initial adoption, the analysts noted the visible momentum behind it. However, they emphasized that widespread adoption is still a distant reality, as modernizing existing financial infrastructure poses challenges, especially in heavily regulated industries like financial services.
The analysts identified several asset classes that are expected to experience meaningful adoption first, including cash and deposits, bonds and exchange-traded notes (ETNs), mutual funds, exchange-traded funds (ETFs), loans, and securitization. They projected a tokenized market capitalization of $100 billion for these asset classes by 2030.
It’s important to note that the analysts’ estimate does not include stablecoins, tokenized deposits, and central bank digital currencies (CBDCs) in their assessment.
The analysts highlighted the “cold start problem” faced by tokenization, where the perceived value of tokenized assets is crucial for user adoption. Limited liquidity and concerns about losing market share often discourage tokenized issuances, resulting in parallel issuances on legacy systems.
To overcome these challenges, tokenization needs compelling use cases that offer clear advantages over traditional finance systems. The tokenization of bonds was mentioned as an example, with numerous tokenized bond issuances announced. However, the benefits over traditional issuance remain marginal, and secondary trading is still limited.
To drive greater adoption, the analysts emphasized the importance of increased mobility, faster settlement, and enhanced liquidity for tokenized assets. They also highlighted the advantage of early movers who embrace tokenization, as they have the opportunity to gain a larger market share and shape the industry standards.
Driving Growth in RWA: Toucan and KlimaDAO
Certain protocols have played a significant role in driving the growth of tokenized assets. Digital carbon market platforms like Toucan and KlimaDAO, as well as the real estate tokenization protocol Propy, have experienced substantial user growth.
Tokenized treasuries have also seen remarkable expansion, with the RWA.xyz platform reporting a record $1.29 billion locked in tokenized U.S. treasuries and bonds. This represents an 80% surge since the beginning of 2024, with contributions from protocols such as Securitize and Ondo.
Both public and private blockchains are witnessing the inclusion of various assets. Examples include Franklin Templeton’s U.S. Government Money Fund expanding from Stellar to Polygon, Backed Finance launching a tokenized short-term U.S. treasury bond exchange-traded fund (ETF), and UBS Asset Management deploying a tokenized money market fund (MMF) on the Ethereum blockchain.
