The Boston Consulting Group (BCG) has identified the tokenization of real-world assets (RWA) as a pivotal development in asset management, projecting that it could reach $600 billion in assets under management by 2030. In a report released on October 29, BCG termed RWA tokenization “the third revolution in asset management.”
In collaboration with Aptos Labs and Invesco, BCG forecasts that tokenized assets could comprise 1% of all global mutual funds and exchange-traded funds (ETFs) within the next seven years.
Growing Investor Demand
David Chan, Managing Director and Partner at BCG, highlighted a noticeable increase in investor interest in tokenized funds. The report estimates that the RWA tokenization market could expand by up to 50 times by the decade’s end, fueled by the rise of regulated on-chain currencies like stablecoins, tokenized deposits, and central bank digital currencies (CBDCs).
These innovations are expected to encourage further exploration of tokenized investments, offering a regulated and blockchain-based alternative to traditional financial products.
Focus on Bonds and Beyond
State Street Global Advisors also recently released a report emphasizing the bond market as particularly suited for blockchain adoption. Bonds have features that make them ideal for tokenization, such as recurring issuance costs and complex structures that could benefit from smart contract automation.
State Street researchers noted that blockchain technology could significantly lower the costs associated with issuing and managing bonds, suggesting that high-velocity markets like repos and swaps could particularly benefit from enhanced transaction efficiency.
While bonds lead the way, other asset classes, such as private equity, also show promise for tokenization. However, public equities may have less incentive to adopt this technology due to their already efficient systems.
Challenges and Growth in RWA Tokenization
The Financial Stability Board acknowledged the growing potential of RWA tokenization, even as adoption rates remain relatively low. Current tokenization initiatives primarily focus on government debt, equity stakes, and commodities. As of October, the value of tokenized RWAs reached $13.25 billion, a 60% increase this year, according to data from rwa.xyz.
A report by Tren Finance indicated that the RWA tokenization market is poised for a staggering 50-fold expansion by 2030. More conservative estimates from Citigroup project that between $4 trillion and $5 trillion in tokenized digital securities could be created by that same year.
In light of this potential, major financial institutions are actively pursuing opportunities in the tokenization space. Goldman Sachs, for example, is set to launch three new tokenization products later this year, driven by increasing client interest.
This shift towards RWA tokenization signals a transformative era in asset management, promising greater efficiency, lower costs, and broader access to investment opportunities.
