Key Takeaways
- • McKinsey projects total tokenized market capitalization could reach around $2 trillion by 2030, excluding cryptocurrencies like Bitcoin and stablecoins like Tether, with a bullish scenario of roughly $4 trillion and a pessimistic scenario of about $1 trillion.
- • McKinsey expects tokenization adoption to unfold in waves, led first by use cases with proven return on investment and existing scale such as cash and deposits, bonds and ETNs, mutual funds and ETFs, and loans and securitization.
- • Tokenized money market funds have attracted over $1 billion in assets under management, with managers including BlackRock, WisdomTree, Franklin Templeton, Ondo Finance, Superstate, and Maple Finance.
- • Over $10 billion of loans involving blockchains have been issued, and more than $10 billion of tokenized bonds in notional value have been issued over the last decade, compared with $140 trillion of outstanding notional globally.
- • Repo markets are the clearest current example of tokenization delivering benefits, with Broadridge Financial Solutions, Goldman Sachs, and J.P.Morgan transacting trillions of dollars of repo volume per month.
Summary
McKinsey & Company argues that tokenization, the creation of a unique digital representation of an asset on a blockchain, has moved past its pilot phase after years of experimentation. The firm says the first at-scale applications are now transacting trillions of dollars of assets on-chain per month, delivering programmability, composability, and enhanced transparency, while acknowledging that false starts and integration challenges remain. Larry Fink, chairman and CEO of BlackRock, said in January 2024 that the next step would be the tokenization of financial assets, "every stock, every bond" on one general ledger.
McKinsey expects adoption to occur in waves rather than all at once. The first wave will be driven by use cases with proven return on investment and existing scale, followed by asset classes with smaller markets, less apparent benefits, or tougher technical challenges. Adoption rates will vary according to expected benefits, feasibility, time to impact, and market participants' risk appetite. McKinsey estimates total tokenized market capitalization could reach about $2 trillion by 2030, excluding cryptocurrencies and stablecoins, with a bullish case of around $4 trillion. The firm notes it is less optimistic than previously published estimates as the middle of the decade approaches.
Front-runner asset classes include cash and deposits, bonds and ETNs, mutual funds and ETFs, and loans and securitization. Tokenized money market funds have drawn over $1 billion in AUM, and McKinsey views them as early signs of traction for other fund types. In lending, Figure Technologies is described as one of the largest nonbank HELOC lenders in the United States, and Web3 natives including Centrifuge and Maple Finance, together with Figure, have facilitated over $10 billion in blockchain-involved loan issuance.
In bonds, more than $10 billion in tokenized bonds in total notional value have been issued over the last decade, with issuers including Siemens, the City of Lugano, and the World Bank. McKinsey says an end-to-end tokenized bond life cycle could deliver operational efficiency improvements of at least 40 percent. Repos show benefits today, with smart-contract-enabled execution automating processes such as collateral valuation and margin top-ups, primarily yielding operational and capital efficiencies.
McKinsey expects adoption to occur in waves rather than all at once. The first wave will be driven by use cases with proven return on investment and existing scale, followed by asset classes with smaller markets, less apparent benefits, or tougher technical challenges. Adoption rates will vary according to expected benefits, feasibility, time to impact, and market participants' risk appetite. McKinsey estimates total tokenized market capitalization could reach about $2 trillion by 2030, excluding cryptocurrencies and stablecoins, with a bullish case of around $4 trillion. The firm notes it is less optimistic than previously published estimates as the middle of the decade approaches.
Front-runner asset classes include cash and deposits, bonds and ETNs, mutual funds and ETFs, and loans and securitization. Tokenized money market funds have drawn over $1 billion in AUM, and McKinsey views them as early signs of traction for other fund types. In lending, Figure Technologies is described as one of the largest nonbank HELOC lenders in the United States, and Web3 natives including Centrifuge and Maple Finance, together with Figure, have facilitated over $10 billion in blockchain-involved loan issuance.
In bonds, more than $10 billion in tokenized bonds in total notional value have been issued over the last decade, with issuers including Siemens, the City of Lugano, and the World Bank. McKinsey says an end-to-end tokenized bond life cycle could deliver operational efficiency improvements of at least 40 percent. Repos show benefits today, with smart-contract-enabled execution automating processes such as collateral valuation and margin top-ups, primarily yielding operational and capital efficiencies.
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