Investment bank Citi predicts that the cryptocurrency market would reach between $4 trillion and $5 trillion by 2030 — wagering that the tokenization of real-world assets on the blockchain will be the next “killer use case” in the sector.
The emergence of central bank digital currencies (CBDCs) and the tokenization of physical assets, according to Citi researchers’ latest report “Money, Tokens, and Games: Blockchain’s Next Billion Users and Trillions in Value,” will be the primary drivers behind the next wave of cryptocurrency adoption. That would represent an 80-fold rise from the existing value of real-world assets stored on blockchains.
Ronit Ghose, the bank’s future of finance lead, predicted that by the end of this decade, there will be $5 trillion in CBDCs flowing in the economy during a panel discussion at the Citi Digital Money Symposium, which took place in conjunction with the release of the report.
The bank predicts that out of the $5 trillion that might be tokenized, $1.9 trillion will come from debt, $1.5 trillion from real estate, $0.7 trillion from private equity and venture capital, and $0.5 to 1 trillion from securities.
According to Citi, blockchain tokenization eliminates the need for pricey reconciliation, minimizes settlement failures, and increases the efficiency of laborious tasks.
Even so, there are still obvious risks, particularly when it comes to user privacy and customers moving their accounts from smaller commercial banks to a CBDC. The biggest challenge may be regulatory clarity, as only a few jurisdictions provide a clear foundation for adopting traditional assets on-chain.
In addition, Citi observed that certain sector participants are still “sceptical,” particularly in light of the Australian Securities Exchange’s (ASX) recent cancellation of its failed $165 million DLT project.
There will be a lot more “growing pains,” Citi continued. Nonetheless, the bank is still convinced that as technology advances, the ecosystem will mature.
