A Bloomberg report from October 16 discussed Wall Street companies’ growing interest in tokenization. The report also outlined the reasons behind the surge and the opportunities Wall Street finds in real-world (RWA) tokenization.
According to the report, companies are also embracing blockchain technology, which is the underlying infrastructure behind tokenization. The report explained that the technology helps RWAs to be more liquid, cheaper, and faster to exchange. It also mentioned that firms are using blockchain technology to earn, including through customer transaction fees.
RWA tokenization entails turning assets such as stocks, bonds, real estate, art, and more into digital tokens. Anyone with a crypto wallet can move the tokens instantly. Tokenization also ensures that token ownership can be divided among different parties. A good example is the tokenization of Andy Warhol’s artworks, some of which cost millions of dollars.
Wall Street was previously against digital assets and blockchain technology, thinking of them as a passing fad fueled by cypherpunks. Now, however, Wall Street companies have become invested in cryptocurrencies, even offering different crypto products to their investors.
RWA tokenization industry could reach $2 trillion by 2030
The report cited a McKinsey research that predicts that the tokenization industry could reach $2 trillion by 2030. The McKinsey research excluded stablecoins and other cryptocurrencies like BTC. The increased use of bonds, mutual funds, loans, exchange-traded notes, and securitizations would drive the growth.
Another research report speculated that the tokenized industry size could reach $16 trillion by 2030. The research explained that a growth point for RWA tokenization is working with already existing assets.
AI is also one of the technologies that could fuel the growth of tokenization. The research pointed out the recent partnership between SingularityDAO and Cogito Finance to integrate RWA into their upcoming AI-driven v2 DynaVaults.
The future will also depend on the regulatory landscape, which is still uncertain in the U.S. However, other countries like Singapore are taking steps to begin regulatory clarity around RWA tokenization and beginning tokenization pilots.
BlackRock takes charge in RWA tokenization
We just passed $1 billion in tokenized treasuries onchain.
BlackRock tokenized treasurities just launched last week.
I expect $10 billion in tokenized treasuries by year end.
Every asset is a token.
Every bank is a chain. pic.twitter.com/CjfvudSD2q
— RYAN SΞAN ADAMS – rsa.eth 🦄 (@RyanSAdams) March 28, 2024
According to the report, BlackRock is among the top Wall Street companies already engaging in RWA tokenization. Earlier this year, the largest asset management firm globally announced its plan to tokenize about $10 trillion of the assets under its management.
BlackRock filed with the U.S. Securities and Exchange Commission to offer the BlackRock USD Institutional Digital Liquidity Fund Ltd., a private equity fund, to its investors.
BlackRock’s CEO Larry Fink said in December 2022 that tokenization will be the future of markets. Fink mentioned that tokenization will offer a more instantaneous and less costly means of settlement. The $10 trillion tokenization project introduced at the beginning of the year coincides with Fink’s vision of the future of securities.
The asset management firm’s plan first involves developing the proper infrastructure to handle the issuance and trading of the tokenized assets. BlackRock also hopes to forge partnerships to fuel the private equity fund. Holding pilot programs and educating its investors will help test the tokenized assets.
