The market for tokenized real-world assets has grown significantly overt the past years and is projected to accelerate even further over the next decade.

Between 2025 and 2033, the market is expected to achieve a compound annual growth rate (CAGR) of 53%, soaring from US$600 billion to US$18.9 trillion, according to a new report by digital asset infrastructure provider Ripple, and Boston Consulting Group (BCG).

This surge is being fueled by increased regulatory clarity in major markets, the maturation of technological infrastructure, and continued strategic investments activity by banks.

The potential of asset tokenization

Asset tokenization is the process of representing ownerships rights in a real-world or financial asset using digital tokens recorded on a blockchain.

By allowing digital representation of ownership, asset tokenization enables fractional ownership and allows for assets such as real estate, a work of art and a vintage car, to be divided into tokens representing smaller ownership stakes. This unlocks access to illiquid assets and allows more people to participate in investments previously limited to those with high net worth.

Tokenization can also greatly reduce the time and resources required to buy and sell assets. By using blockchain technology and smart contracts, the technology eliminates the need for many traditional intermediaries, decreasing operating costs due to disintermediation.

According to the Ripple and BCG report, tokenization can offer substantial improvements and cost savings across several sectors. In the global bond market, tokenization could help address the sector’s high issuance costs, slow settlement and heavy reliance on intermediaries, cutting operational costs by 40-60%.

In real-estate, one of the most illiquid and opaque asset classes, tokenization allows for frictional ownership and broader investor access. For a US$5 million real estate fund, tokenization could unlock up to US$500 million in new capital inflow by lowering access thresholds, expanding distribution and reducing annual admin, and compliance costs by US$100-150 million over five years through automation.

In the global repo and collateral markets, tokenization allows for on-chain collateral pledging, real-time transfers, and smart contract-based margin management. For a global bank managing US$100 billion, the technology could generate US$150-300 million in annual cost savings by reducing idle collateral, accelerating trade cycles, and enabling same-day settlement.

Growth drivers of tokenized real-world assets

Since 2023, the market for tokenized assets has recorded double-digit CAGR. This surge has been driven by a combination of structural and market forces.

On the regulatory front, a number of jurisdictions have established comprehensive legal frameworks for digital assets, expanding regulatory clarity.

Blockchain-related technology has also matured. These platforms have evolved into enterprise-grade infrastructure with integration into core banking stack and wallets, custody platforms, and token standards fit for institutional use.

Adoption of blockchain has increased among global banks and Tier 1 financial institutions. For example, Kinexys, a blockchain infrastructure by JP Morgan, has processed over US$1.5 trillion in tokenized transactions since its launch in 2019, with daily volumes reaching US$2 billion.

Finally, banks have accelerated their tokenization strategies through strategic partnerships and acquisitions. In September 2023, Deutsche Bank partnered with Swiss digital asset technology provider Taurus to establish digital asset custody and tokenization services. This collaboration followed Deutsche Bank’s participation in Taurus’ US$65 million Series B funding round earlier that year, alongside Credit Suisse, Pictet Group, and Arab Bank Switzerland.

Deutsche Bank has been expanding its digital asset capabilities for over a decade now. In 2021, the bank acquired a majority stake in Crypto Finance, a Swiss-regulated provider of trading, custody, and investment services for digital assets.

In Liechtenstein, private bank VP Bank teamed up with Metaco in April 2023 to integrate the startup’s flagship platform, Harmonize, to expand digital asset custody and tokenization services.

Finally, in the US, US Bancorp joined Ownera’s Series A investment round in March 2023. Ownera, which is based in London, delivers interoperability solutions for tokenized assets, helping institutional clients of regulated financial institutions discover, invest in and trade assets with instant transaction settlement and transfer of ownership.

A positive outlook

Looking ahead, the tokenized real-world assets market is set to continue its rapid expansion. In the early years, the report expects financial institutions to lead by tokenizing instruments like bonds and funds. From 2029 onward, tokenization by corporates in consumer goods, industrials, and tech will begin to scale.

However, progress and adoption will vary by regions based on regulatory frameworks and use cases.

Switzerland remains at the forefront with one of the earliest and most comprehensive legal frameworks for tokenized securities and distributed ledger technology (DLT) infrastructure. The Distributed Ledger Technology (DLT) Act, which came into full force on August 2021, introduced a new category of financial market infrastructure called the DLT trading facility and defines eligible instruments for trading on these facilities.

The European Union (EU) is moving forward under the Markets in Cryptoassets (MiCA) framework, which lays the groundwork for harmonized crypto regulation across the region. Key features include licensing requirements for cryptoasset service providers, guidelines on stablecoins as well as updates to the so-called “travel rule” for crypto transfers.

Across Asia-Pacific (APAC), leading jurisdictions, including Singapore, and Hong Kong, are piloting tokenized assets and products through regulatory sandboxes and industry consortia. In Singapore, the central bank has convened over 40 financial institutions, industry associations and international policymakers across seven jurisdictions under Project Guardian. The initiative focuses on carrying out industry trials on the use of asset tokenization in capital markets. To-date, more than 15 industry trials have been conducted in six currencies across multiple financial products.

In Hong Kong, the Hong Kong Monetary Authority (HKMA) launched in 2024 Project Ensemble, a wholesale central bank digital currency (wCBDC) initiative designed to support the development of the tokenization market in Hong Kong.

Project Ensemble is a key component of the HKMA’s broader portfolio of asset tokenization initiatives, which comprises e-HKD, Hong Kong’s CBDC project, as well as collaborations with the BIS Innovation Hub Hong Kong Centre. These collaborations include Project mBridge, a multi-CBDC platform to enable instant cross-border payments and settlement; Project Dynamo, which focuses on exploring how institutional investors can be encouraged to finance small and medium-sized enterprises (SMEs) through the programmability and transferability of digital trade tokens on a public blockchain; and Project Genesis, a project completed in 2021 to concept-test the issuance of tokenized green bonds in Hong Kong.

Featured image credit: edited from freepik