In a recent report, management consulting firm McKinsey claimed tokenizing assets could have huge benefits for the financial services industry and underlined its use cases.
Global management consulting firm McKinsey has written a detailed piece on the state of asset tokenization in finance. The firm noted various benefits of tokenizing assets in the financial services industry. Highlighting the importance of blockchains, it said asset tokenization had reached a tipping point after years of research.
McKinsey stated its biggest benefit was already in use since applications transacted trillions of dollars worth of assets on-chain. Other benefits included better transparency, programmability, and composability, it said. It also cited the CEO of BlackRock, who claimed that all financial assets will be seen as tokenized assets in the future.
The report also listed the various advantages of asset tokenization for financial services firms. Some of these were operational efficiencies, new revenue opportunities, and more liquidity. On the other hand, the firm accepted that broad crypto adoption was still not near. It underlined some challenges in the way of wider crypto adoption.
Meanwhile, McKinsey claimed adoption will increase in a few ways. The first would be through use cases with proven returns on investments. The firm noted that the tougher use cases will subsequently follow them.
Further, the company predicted, “Based on our analysis, we expect that total tokenized market capitalization could reach around $2 trillion by 2030 (excluding cryptocurrencies like Bitcoin and stablecoins like Tether), driven by adoption in mutual funds, bonds and exchange-traded notes (ETN), loans and securitization, and alternative funds.”
It said cash and deposits will be the first assets to go through tokenization. The next ones on the list will likely be bonds, ETNs, mutual funds, ETFs, and loans and securitization. McKinsey’s report further explains the likely use cases of the tokenization of each asset class.
Enjoyed reading this piece? Then head to Millionero’s blog for more articles and news reports on crypto!