RWA Tokenization: The Next Big Thing in Asset Management, says Boston Consulting Group
According to a report released on October 29 by global consulting firm Boston Consulting Group (BCG), the tokenization of real-world assets (RWA) is poised to revolutionize asset management. BCG, in collaboration with Aptos Labs and Invesco, predicts that by 2030, tokenized assets could reach $600 billion in assets under management, making up 1% of all global mutual funds and exchange-traded funds (ETFs).
David Chan, Managing Director and Partner at BCG, noted the growing investor demand in the tokenized funds space. BCG’s findings suggest that the RWA tokenization market may expand up to 50 times by the end of the decade. This surge in demand is attributed to the increasing presence of regulated on-chain currencies, such as stablecoins, tokenized deposits, and central bank digital currencies (CBDCs). These currencies are expected to encourage investors to explore tokenized investment options, offering a regulated, blockchain-based approach to traditional financial products.
State Street Global Advisors, a major player in asset management, also released a report in October, emphasizing the bond market’s potential for blockchain adoption. The report highlights the characteristics of bonds that make them suitable for tokenization, including recurring issuance costs, complex structures that can benefit from automation through smart contracts, and the need for efficient collateral transfers. By adopting blockchain technology, the costs associated with issuing and managing bonds could be significantly reduced. The report also suggests that high-velocity markets like repos and swaps could greatly benefit from blockchain’s ability to streamline transactions.
While tokenization initiatives are currently low in adoption rates, the sector is growing, according to the Financial Stability Board. Government debt, equity stakes, and commodities are the most common assets being tokenized. As of October, the value of tokenized RWAs is reported to be $13.25 billion, showing a 60% increase this year. Reports from Tren Finance and Citigroup suggest that the RWA tokenization market could experience significant expansion by 2030, with estimates ranging from a 50-fold increase to tokenizing $4 trillion to $5 trillion worth of digital securities.
Recognizing the potential of tokenization, major companies like Goldman Sachs are making substantial moves in the space. Goldman Sachs plans to launch three new tokenization products later this year, driven by growing client interest.