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Turning assets into tokens on blockchain is $15tn market, says analyst

The tokenisation of real-world assets, including sovereign bonds, bank-issued debt, and real estate on the blockchain, is expected to emerge as a growth sector in 2024 and over the next decade, according to Jasper De Maere, Outlier Ventures research lead.

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In the latest episode of Yahoo Finance Future Focus, De Maere discussed the tokenisation of debts by financial players such as Franklin Templeton (BEN) and the concept of tokenising real estate, highlighting its potential to be recorded on the blockchain and traded in a fractionalised manner.

Tokenisation of real-world assets a growth sector

The total addressable market for real-world asset tokenisation is estimated to reach between $10tn (£7.9tn) to $15tn by the end of the decade, according to Outlier Ventures' Tokenising Real World Assets 2024 Thesis.

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"As the technology diffuses across society over the next decade, we believe that it will have a transformative impact on industries such as financial markets, manufacturing, healthcare, and infrastructure," De Maere said.

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He added that tokenising real-world assets, such as financial products, real estate, and even art, on a blockchain could provide increased accessibility and liquidity, allowing for easier and more efficient trading.

Moreover, using blockchain's unchangeable and decentralised features could make things more transparent and secure. These tokenised products can also be programmed with "smart contracts" to create new trading methods.

Tokenisation of real-world assets on blockchains
tokenising real-world assets, such as financial products, real estate, and even art, on a blockchain could provide increased accessibility and liquidity, according to Jasper De Maere of Outlier Ventures. (MCCAIG via Getty Images)

Benefits of tokenisation

"There are two big benefits of tokenising real world assets. The first is the efficiency gains. So by having more real world assets populated on the blockchain, you'll actually unlock efficiency. So the financial market itself will become more efficient," De Maere told Yahoo Finance UK.

"There are multiple ways you can increase efficiency in real estate, but one that excites me a lot is around capital formation by having your assets represented on the blockchain," he added.

De Maere said tokenisation allows for the dividing of asset ownership into fractions of any size. "Fractionalisation is where you actually split up the ownership of your asset, which could be a house, which usually belongs to one person, into multiple pieces. This could allow you to sell off specific percentages of your house to other people," he said.

Participation of large financial players

Some players in financial markets, such as banks, asset managers, and financial institutions, are currently exploring the utilisation of blockchain to tokenise real-world assets, according to De Maere.

"Big financial players, like banks and asset managers and some of the institutional players are all exploring tokenisation through pilot programmes. Franklin Templeton is tokenising debts and treasuries and putting them on the blockchain for execution efficiencies and transparency gains," De Maere said.

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"You have other asset managers like WisdomTree (WT) and Brevan Howard, who are looking to tokenise their funds. So what they are doing is creating a representation of their fund on the blockchain for easy distribution and transparency," he added.

De Maere mentioned that financial markets, in particular, are set to benefit from blockchain tokenisation, unlocking efficiency gains and streamlining the financial processes. However, he added that the tokenisation process will extend to cover multiple asset classes, including supply chain inventories and even fine art.

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