As digital assets continue to evolve, financial institutions are eyeing significant growth prospects. Standard Chartered has cast a spotlight on the future of tokenized real-world assets, projecting a remarkable increase in their valuation. By 2028, these assets could soar from $35 billion to an impressive $2 trillion. Such optimism stems from developments in stablecoins and decentralized finance (DeFi), which are paving the way for this substantial expansion.
What’s Driving the Growth?
The bank attributes this projected growth to stablecoins, enhancing the transition of traditional financial instruments to blockchain platforms. Geoffrey Kendrick, head of digital asset research at Standard Chartered, emphasized Ethereum ‘s role as a preferred network due to its decade-long stability.
“Stablecoins have laid the groundwork for other asset classes to move on-chain at scale,”
Kendrick observed, referencing how stablecoins bolster awareness and liquidity on-chain.
Will Traditional Finance Adapt?
By 2028, substantial portions of the projected $2 trillion are expected in money market funds and listed equities, both reaching $750 billion each. The remaining sectors, including private equity and real estate, will share the rest. Kendrick believes that the influence of stablecoins has set numerous pre-conditions for the wide-scale adoption of DeFi.
“Stablecoins have created several necessary pre-conditions for broader expansion of DeFi,”
he remarked, highlighting their growing impact on the financial ecosystem.
What Role Do Banks Play?
Traditional banks are poised to witness a shift in their operational dynamics. With stablecoins enabling new financial products traditionally managed by banks, a ripple effect is anticipated. The introduction of novel products backed by liquidity continuously draws more participants into the market. This creates a cycle where liquidity nurtures innovation, bringing more market players onboard.
Tokenization’s appeal lies in its ability to streamline the conversion of tangible assets into blockchain tokens. These tokens, representing ownership of assets, foster faster transactions with global reach. As a result, an efficient mechanism for asset management emerges, which may potentially redefine traditional financial operations.
However, challenges remain. As players in the financial sphere adapt to these changes, they will need to reconsider regulatory and technological demands. The anticipated growth offers opportunities for increased efficiency and access within financial ecosystems. Financial institutions might need to balance innovation with the need for compliance and risk management.
The forecasted surge in tokenized assets suggests a dynamic shift in how assets are managed and traded. Financial institutions are encouraged to stay updated on technological advancements that support tokenization. Navigating the changing tides of digital asset ecosystems requires a deep understanding of blockchain’s potential and its implications on global finance.