Citi believes that stable tokens, representing the tokenisation of real-world assets, will become the next "killer use case" in the world of crypto. The investment bank is betting on blockchain-based tokenisation to revolutionise the financial industry and predicts the market to reach between $4 trillion to $5 trillion by 2030. This represents an 80-fold increase from the current value of real-world assets locked on blockchains.
According to Citi's "Money, Tokens and Games" March report, the private equity market will become the most "tokenised" asset class because it is more liquid and can be fractionalized. The bank forecasts up to $5 trillion of tokenised digital securities by 2030, with private equity and venture capital funds becoming the most tokenised asset class, capturing 10% of its total addressable market.
Citi argues that blockchain tokenisation would supersede legacy financial infrastructure because it is technologically superior and provides more investment opportunities in private markets. The technology negates the need for expensive reconciliation, prevents settlement failures, and makes tedious operations more efficient.
Citi envisions a
"digitally native financial asset infrastructure, globally accessible, operating 24x7x365 and optimised with smart contract and DLT-enabled automation capabilities, which enable use cases impractical with traditional infrastructure."
However, the investment bank acknowledges that there are drawbacks, such as a lack of legal and regulatory framework, challenges with building the infrastructure, and obtaining a widely followed set of interoperability standards. Some industry players remain "skeptical," and there are many more "growing pains" to come, Citi added. But the bank remains confident that the ecosystem will mature as the technology develops, crossing the intermediate state to reach the envisioned end-state.
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