A large chunk of the world’s wealth today is locked in illiquid assets, notes the report’s authors.
The total size of tokenized illiquid assets,
including real estate and natural resources could reach $16.1 trillion by 2030, according to the Boston Consulting Group (BCG).
In a newly released report from BCG and digital exchange for private markets ADDX, authors including BCG managing director Sumit Kumar and ADDX co-founder Darius Liu noted that “a large chunk of the world’s wealth today is locked in illiquid assets.”
According to the report, illiquid assets include pre-initial public offering (IPO) stocks, real estate, private debt, revenues from small and medium businesses, physical art, exotic beverages, private funds, wholesale bonds and many more.
Reasons for this asset illiquidity are attributed to factors such as limited affordability for mass investors, lack of wealth manager expertise, limited access such as when assets are restricted to elite cliques (in the case of fine art and vintage cars), regulatory hurdles and other scenarios in which users have difficulty acquiring or trading an asset.
On-chain asset tokenization could solve this problem,
a market that surpassed $2.3 billion in 2021 and is expected to reach $5.6 billion by 2026, according to the report.
The authors added that in just the last two years, global digital asset daily trading volume has soared from 30 billion euros in 2020 to 150 billion euros in 2022, noting that it “is still minuscule in comparison to the total potential of illiquid tokenizable assets in the world.”
By 2030, the authors forecast the on-chain asset tokenization opportunity to reach $16.1 trillion — made up largely of financial assets (such as insurance policies, pensions, and alternative investments), home equity, and other tokenizable assets, such as infrastructure projects, car fleets and patents.