Citi Bank the American multinational investment bank, has predicted that the tokenization of real-world assets on blockchain technology could become the next “killer use case” in the cryptocurrency market, with the market reaching between $4 trillion to $5 trillion by 2030.
This is an 80-fold increase from the current value of real-world assets locked on blockchains. Citi’s “Money, Tokens and Games” report suggests that the private equity and venture capital funds will become the most tokenized asset class, with real estate following in second place.
Citi estimates that private equity and venture capital funds will capture 10% of their total addressable market, while real estate will capture 7.5%.
The bank also believes that private equity markets will have faster adoption rates due to their favorable liquidity, transparency, and fractionalization properties.
The report further stated that blockchain tokenization will supersede legacy financial infrastructure because it is technologically superior and it provides more investment opportunities in private markets.
Blockchain tokenization negates the need for expensive reconciliation, prevents settlement failures, and makes tedious operations more efficient.
Citi believes that blockchain technology provides an entirely new tech stack that enables all stakeholders to do all activities on the same shared infrastructure as one golden source of data.
However, there are drawbacks to blockchain tokenization, such as a lack of legal and regulatory framework, challenges with building the infrastructure, and obtaining a widely followed set of interoperability standards.
Citi also acknowledged that some industry players remain skeptical, particularly in light of the Australian Securities Exchange (ASX) recently scrapping its failed $165 million DLT project in November.
Despite these growing pains, Citi is confident that the ecosystem will mature as the technology develops.
The bank envisions an end state where there is a digitally native financial asset infrastructure, globally accessible, operating 24x7x365, and optimized with smart contract and DLT-enabled automation capabilities, enabling use cases impractical with traditional infrastructure.
Citi bank predictions
In Summary, Citi predicts that the tokenization of real-world assets on blockchain technology could become the next “killer use case” in the cryptocurrency market, with the market reaching between $4 trillion to $5 trillion by 2030. The bank also believes that private equity and venture capital funds will become the most tokenized asset class, capturing 10% of their total addressable market. Despite the growing pains associated with blockchain tokenization, Citi remains confident that the ecosystem will mature as the technology develops, creating a digitally native financial asset infrastructure that is globally accessible and optimized with smart contract and DLT-enabled automation capabilities.