Originally published in My Crypto Advisor on September 28, 2022.
The future is tokenized. Boston Consulting Group (BCG) forecasts the tokenization of illiquid assets could reach $16.1 trillion by 2030 or a “best-case scenario” of $68 trillion. Asset tokenization could unlock a large portion of the world’s wealth currently locked in illiquid assets such as real estate, physical art, and insurance policies.
The head of Onyx Digital Assets at JPMorgan elaborated on the bank’s plans to tokenize traditional assets such as US Treasurys and money market funds to use as collateral in Decentralized Finance (DeFi) pools. Back in May 2022, JPMorgan’s private blockchain hosted the first transaction including a token representing BlackRock money market fund shares. Asset tokenization could provide 24/7 access to financial markets, reduced barrier to entry for high ticket investments, and removal of intermediaries.
The Bank of France announced multiple projects focused on the exploration of tokenization and a wholesale Central Bank Digital Currency (CBDC) for financial institutions. Projects will study the issuance and distribution of tokenized bonds on the blockchain and explore CBDC liquidity management in DeFi through an Automated Market Maker (AMM), the technology powering Decentralized Exchanges (DEXs) such as Uniswap. France is 1 of over 100 countries exploring CBDCs and 105 of the countries involved represent 95% of global GDP. Governor Villeroy de Galhau at the Bank of France reported that the European Central Bank may issue a digital euro as soon as 2026.
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