Tokenization: a revolution in the making or just déjà vu?

The tokenization had missed its adoption successful 6 years earlier, estimates McKinsey. His back in grace could this time experience a another outcome due to fundamentals stronger and structural changes.

Success doesn’t always come on the first try. As the firm McKinsey in an analysis of the tokenization. Interest in this subject had emerged years before. And if his adoption seemed a foregone conclusion, it never materialized.

Could this be the right time for tokenization? McKinsey points out that conditions have changed, despite a impression of déjà-vu. Yet the last 12 months have been “highly tumultuous” for the digital asset industry and Web3 players. Projects are not at a standstill, however, notes the American firm.

Projects despite crypto turmoil

In financial services, the focus is on the re-emergence of a ‘blockchain, not crypto’ discourse. Banks, asset managers and other institutions are intrigued by the technological potential of tokenization.”

JPMorgan’s CEO, for example, has always insisted on the advantages of blockchain and questioned the value of Bitcoin. On the asset management giant’s side, BlackRockthe considerable potential of tokenization.

For McKinsey analysts, in fact, the fundamentals are stronger and structural changes have emerged since the first unrealized episode of tokenization. 4000 to 5000 billion dollars of tokenized digital securities could be issued by 2030observers suggest.

“Although these figures are, of course, only projections examples in production on an emerging scale “comments McKinsey. An illustration with American fintech Broadridgewhich “today facilitates over $1 trillion worth of tokenized repurchase agreements per month on its Distributed Ledger Repo platform”.

Benefits still often theoretical

For all that, “these statements and projects give many veterans of digital assets a clear impression of déjà-vu “the authors point out. The first tokenization dates back to 2017. Is it the right one this time? No rush.

The challenges remain, but growing institutional interest and stronger business fundamentals in some asset classes offer the possibility of a different outcome this time around, especially for players who follow a well-structured approach,” considers McKinsey.

Tokenization presents benefits for various stakeholders, notably in terms of democratizing access to certain assets or improving operational costs.

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Some obstacles, but an inflection point taking shape

However, “some of these advantages remain theoretical in nature, given the lack of scale in tokenized assets and use cases “.

In fact, “few assets have been tokenized to date”, with one “notable exception” being the cashtokenized through stablecoins backed by tokenized reserves and bank deposits.

Various obstacleson the other hand, have limited the adoption of tokenization in other areas.

Adoption of tokenization is hampered by the limitations of the available infrastructure”, McKinsey quotes. Other obstacles include limited short-term use cases and high implementation costs.

Despite the difficulties, tokenization may have reached an inflection point for certain use cases and asset classes. The trends observed over the past few months are consistent with a possible acceleration in adoption”, the authors nevertheless conclude.

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