A joint report from Boston Consulting Group (BCG) and Ripple suggests the market for tokenized assets, including real-world assets (RWAs), could grow to an astounding $18.9 trillion by 2033. This projection reflects a compound annual growth rate (CAGR) of 53%, falling between more cautious estimates of $12 trillion and optimistic predictions of $23.4 trillion over the next eight years.

Tokenization, which uses blockchain technology to record and transfer ownership of assets such as securities, commodities, and real estate, has emerged as a key area of growth in the financial sector. Traditional financial institutions are increasingly adopting tokenization to achieve efficiency, lower costs, and enable faster, 24/7 transactions. JPMorgan’s Kinexys platform, for example, has processed over $1.5 trillion in tokenized transactions, while BlackRock’s tokenized U.S. dollar money market fund (BUIDL), launched with Securitize, is approaching $2 billion in assets under management and has gained traction within decentralized finance (DeFi).

“Blockchain technology is ready for mass adoption, regulatory environments are evolving, and we are already seeing foundational use cases in action,” said Martijn Siebrand, Digital Assets Program Manager at ABN AMRO, in the report.

Early Successes and Emerging Sectors

The report points to tokenized government bonds, especially U.S. Treasuries, as a strong example of the early success of tokenization. By using tokenized bonds, corporate treasurers can quickly shift idle cash into short-term government securities from digital wallets, removing intermediaries and providing continuous liquidity management.

Private credit markets are also becoming a key focus for tokenization, allowing investors to access previously inaccessible, illiquid markets while offering clearer pricing and fractional ownership options. Tokenization is also expanding into carbon markets, where blockchain can enhance the transparency and traceability of emissions credits.

Key Challenges to Widespread Adoption

Despite the significant growth potential, the report highlights several hurdles that must be addressed before tokenization can achieve broader adoption. These include fragmented infrastructure, limited interoperability between platforms, inconsistent regulatory frameworks, lack of standardized smart contracts, and unclear custody rules. At present, many tokenized assets settle in isolation, and without universal delivery-versus-payment (DvP) standards, secondary market liquidity remains limited.

Regulatory uncertainty is another major barrier. While regions such as Switzerland, the EU, Singapore, and the UAE have developed comprehensive legal frameworks for tokenized securities, markets in countries like India and China are either restrictive or lack clear regulations. This regulatory fragmentation complicates cross-border operations and forces companies to adapt to regional legal frameworks.

The Path Forward for Tokenization

The report divides the tokenization process into three key phases: the first phase involves the adoption of low-risk, familiar assets like bonds and funds; the second phase sees expansion into more complex products like private credit and real estate; and the third phase involves a broader market transformation, incorporating illiquid assets like private equity and infrastructure. Most firms are currently in the first or second phase, and the scalability of tokenized assets will depend on both regulatory clarity and the development of the necessary infrastructure.

Tokenization has the potential to create significant savings in areas such as bond issuance, collateral management, and real estate fund tokenization. The report also notes that tokenization projects can now be initiated for as little as $2 million, while large-scale, end-to-end integrations—including issuance, custody, compliance, and trading—can cost up to $100 million for large institutions.

However, the report concludes with a warning: Without coordinated industry efforts, the fragmentation tokenization seeks to resolve could be replicated in a digital form. Jorgen Ouaknine, global head of innovation and digital assets at Euroclear, cautioned that without collaboration, the industry risks undermining the very goals tokenization was meant to achieve.