Citi’s stake on asset tokenization: up to $5 trillion at stake by 2030

The bank predicts that the private equity market will become the most "tokenized" asset class as it is more liquid and fractional
Investment bank Citi is betting on blockchain-based real asset tokenization (RWA) as the next "killer use case" for the cryptocurrency market, predicting a capitalization of $4 trillion to $5 trillion by 2030.
In its March "Money, Tokens and Gaming" report, Citi explained that this represents an 80-fold increase over the current value of real assets stored in blockchain.
"We forecast between $4 trillion and $5 trillion in tokenized digital securities and $1 trillion in distributed ledger technology (DLT) trade finance volumes by 2030," the company's analysts said.
The bank estimates that of the $5 trillion in tokenized securities, $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 trillion to $1 trillion from securities.
The study suggests that private equity and venture capital funds will be the most tokenized asset class, taking up 10 percent of the total addressable market and real estate 7.5 percent.
According to the bank, private equity markets are likely to grow faster because of their properties of liquidity, transparency and fractionalization.
KKR, Apollo and Hamilton Lane are three private equity firms that have already created tokenized versions of their funds on platforms such as Securitize, Provenance Blockchain and ADDX.
Citi said blockchain-based tokenization will replace traditional financial infrastructure because it is technologically more advanced and offers more investment opportunities in private markets.
"Traditional financial assets are not obsolete, but are suboptimal because they are constrained by traditional systems and processes," he said. "Some financial assets - such as fixed income, private equity and other alternatives - have been relatively limited, while other markets - such as public equities - are more efficient."
Citi argues that tokenization on blockchain eliminates the need for costly reconciliation transactions, prevents settlement problems and makes tedious transactions more efficient.
However, the investment bank acknowledged that there are shortcomings, such as a lack of a regulatory framework, problems with building infrastructure and achieving a set of common interoperability standards.
In addition, Citi noted that some industry participants remain "skeptical," especially in light of the $165 million DLT project abandoned by the Australian Securities Exchange (ASX) in November.
Citi added that there are still many "growth issues" to be addressed. But the bank remains confident that the ecosystem will evolve as the technology develops.