The Year of Institutional Investment in Real World Assets

The tokenization of real world assets (RWAs) has been a use case for blockchain technology for years, and yet we haven’t seen substantial institutional interest in RWAs until now.

The value of tokenized assets across all public blockchains has already reached $118.57 billion and could reach $10 trillion by 2030. In other words, the potential upside for investing in RWAs is enormous.

Recent macroeconomic shifts and improvements in technology for secure custody, trading and settlement have made investment in tokenized treasuries, private equity and debt that much more attractive. Ultimately, it’s regulatory clarity and property rights enforcement that will make 2024 the year of RWAs.

This post is part of CoinDesk’s “Crypto 2024” predictions package. Sanchit Pande is the head of prime brokerage in Prime at BitGo.

Stablecoins are currently the most familiar tokenization projects. The most common form is a direct claim on fiat currency held by a custodian. Today theglobal marketcap for stablecoins stands at around $124 billion; according to a report by brokerage firm Alliance Bernstein, it is expected to grow to almost $3 trillion in the next five years as private firms such as PayPal begin issuing them.

Central bank digital currencies (CBDCs) are another form of tokenization. According to data from the Atlantic Council, 11 countries have already launched CBDCs, and 19 of the G20 countries are in the advanced stages of development.

See also: G20 Nations Welcome FSB’s Tougher Crypto Rules

But it’s the tokenization of stocks, bonds and other traditional investment products that’s been gaining the most traction.

In the spring of 2022, JPMorgan announced the first trade on its private Onyx network, and as we head into winter 2023, it has already processed nearly a trillion dollars in notional collateral value. Just last week, JPMorgan announced that Onyx will do a proof-of-concept under the auspices of the Singapore Monetary Authority to connect portfolios to tokenized assets offered by WisdomTree.

The London Stock Exchange Group, UBS Asset Management, ABN AMRO and Citigroup have all also launched tokenization initiatives in 2023. Hong Kong, Singapore, Japan and Thailand have all been working out regulatory regimes to support tokenization.

Analysts at Citigroup have projected that $5…