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💲 $2 Trillion by 2030 - Lowball or Moon Shot?

RWA World Newsletter - June 28, 2024

Author

Ray Buckton
June 28, 2024

Tokenized assets keep growing! Index Coop recently announced a new real-world asset index token, making sector exposure easier than ever! 📊

But.. it includes assets like Ethena, which is backed by Ether… which isn’t a real-world asset. Definitions (and due diligence) matter, folks! Always check what’s in your financial products. 👀

🎯🔥 Rapid Fire Takeaways:

While existing DeFi entities are sprinkling a bit of non-tokenized assets into their RWA mix, the Linux Foundation is going full send on decentralization and forming the Linux Foundation Decentralized Trust with Hyperledger. 🌐

The lines between on-chain and the physical world grow thinner by the week! 🤝

🌐 The RWA World Expands 

We’ve been all over the internet recently! 

We’re testing the new article feature on X, so give those a read for the latest Space summaries and insights. 📜

You can catch us regularly on X, digging deep into tokenization and providing you with the insights you need to stay on top: 

💻 Tokenization and Real-World Assets (RWA)

There’s no shortage of insightful opinions on asset tokenization's current state and future! Carlos Mercado of Flipside Crypto recently shared his thoughts on RWAs, stating that while stablecoins solve a real-world problem, most tokenized assets are nonsense and simply add a new layer of transactional complexity for little benefit. 💥

Colin Butler, Global Head of Institutional Capital at Polygon Labs, might agree, albeit in less forward terms. He stated that RWAs will need to grow by a factor of 100 before institutions begin to take them seriously. A milestone that’s well on the way, according to McKinsey. Their recent report estimates between $1 trillion and $4 trillion in tokenized assets by 2030. 📈

Plenty of companies are contributing towards that milestone. Arbitrum recently voted to diversify its treasury across six real-world asset protocols, including Superstate’s USTB and OpenEden’s TBILL, the latter of which recently received an investment-grade rating from Moody’s. 🏆

With the Universal Digital Payments Network (UDPN) getting into stablecoins and asset tokenization and Securitize collaborating with Investcorp on fund tokenization, we’re well on the way to reaching McKinsey’s target. 🏁

With RWA following memecoins as the second-most profitable narrative this year, NFTs are finally finding their footing as digital representations of ownership rights, according to an excellent write-up by Lane Nadeau. Like the internet was originally used for cat pictures before evolving into global critical infrastructure (the cat pics stayed), blockchain assets are also reaching a new era of maturity. 🧓

How mature? Zodia Custody continues its expansion, partnering with 21Shares for European crypto ETP custody services, while Standard Chartered revealed plans for Bitcoin and Ether spot trading. All these issuers will need coverage, and the Kansas City Fed’s recent paper on stablecoin insurance touches on the subject. The insurability of digital assets is perhaps the most undersung yet powerful sign of industry growth and adoption, helping minimize counterparty risk and widen market access. 🤝

Signs of market maturity are everywhere, including in Japan. Laser Digital’s recent survey revealed that 54% of surveyed Japanese institutions plan to invest in digital assets within the next 3 years, with diversification and low correlation as the primary drivers. 🏢

⚖️ Regulatory Developments and CBDCs

On the regulatory front, the EU continues to make big moves. The European Central Bank has started its second wave of tokenization tests, choosing Boerse Stuttgart to settle blockchain transactions against central bank currency. 🌊

Around the same time, the francophone duo Banque de France and Banque Centrale du Luxembourg announced the results of their 2022 Project Venus initiative. To say their findings were encouraging is an understatement. They report that distributed ledger technology:

  • Enables safe and efficient settlement for central banks 

  • Reduces issuances from T+5 to T0 

  • Allows for secure interoperability 

  • Seamless enables the inclusion of non-bank entities via sub-wallets 

That’s a significant heap of praise for blockchain technology and asset tokenization. With that backdrop, it’s no surprise that the BRICS continues to expand its foray into distributed ledgers. Thailand recently applied to join the club and has seen a steady increase in local currency settlements via cross-border CBDC technologies like China’s mBridge.

🎁 Wrap it Up! 

With Federal Reserve branches exploring insurance for stablecoins and projections reaching into the trillions, asset tokenization is poised to only accelerate from here. ⚡

Make sure you’re well positioned for the coming torrent of opportunity in the next great paradigm shift for global market structure. 💦

Join us throughout the week on X and LinkedIn, and make sure to keep an eye out for some exciting developments we have in the works! 😉