McKinsey & Company predicted a $2 trillion market cap for tokenized real-world assets (RWAs) by 2030. The study indicated that the conservative market cap could double to $4 trillion in a bullish scenario. Boston Consulting Group (BCG) and 21Shares predicted an even larger market cap of $16 trillion and $10 trillion, respectively.
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An alternate study also showed that the tokenized real-world assets (RWAs) market grew from $1.5 billion to $120 billion between 2018 and 2024. According to McKinsey’s report, the growth strongly implied the market’s further expansion. The report aligns with the current market situation where mutual funds, lenders, financial institutions, alternative funds, and exchange-traded notes have increasingly adopted tokenization.
Tokenized real-world assets (RWA) increase in popularity
McKinsey’s report revealed that many institutions are still in the “wait and see” mode despite the evident growth in RWA tokenization. The management consulting firm also pointed out that early movers could capture significant market shares.
The McKinsey report highlighted that a faster transition of tokenized financial assets from pilot to deployment is achievable when clear plans are established beforehand. It also revealed that financial institutions were strategically embracing blockchain technology.
“Blockchain technology is still in its early days and requires a considerable amount of integration with existing processes and standards. Most institutions recognize tokenization needs to be a large part of their business moving forward, but technical integration is where the rubber meets the road.”
-Anthony Moro, CEO of Provenance Blockchain Labs
The report further discussed the need for collaboration between market infrastructure players and financial institutions. McKinsey proposed this was necessary to create a viable value chain should the market continue to embrace tokenized RWA.
Multiple factors influence RWA tokenization
Potential Adoption Scenarios of Tokenized RWA McKinsey & Company
McKinsey’s report revealed that the tokenization of more asset classes would increase over time. However, the report clarified that the first wave of assets must lay a stable foundation for other asset classes. McKinsey added that these additional asset classes could be adopted if infrastructure advancements were prioritized.
McKinsey also suggested that Private Funds could access new capital from individuals with high net worth or small retail businesses through secondary market liquidity. As per the report, interoperable networks and smart contracts would make the at-scale management of portfolios more efficient by automating portfolio rebalancing.
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The report also revealed that operational efficiencies would be created by having automation and transparent data on a unified master ledger. McKinsey noted that J.P. Morgan and Apollo were among the first few significant institutions testing blockchain-driven portfolio management.
McKinsey’s report highlighted that for the benefits of tokenization to be fully realized, it was essential to combine the tokenization of underlying assets with the consideration of regulations that threatened to limit obtainable advantages.
Cryptopolitan reporting by Collins J. Okoth