The next trillion-dollar market? The world's financial giants are rushing to RWA tokenization
Originally written by Karen, Foresight News
Originally written by Karen, Foresight News
The tokenization of RWA (Real World Assets) is not only the key to the mainstream of DeFi and Web3, but also has the potential to subvert certain financial fields.
"Everything can be tokenized" is not empty talk. On the blockchain, any tangible or intangible value can be expressed on the chain, including gold, real estate, debt, bonds, artwork, carbon credits, and even ownership and content license. Due to the huge advantages of RWA tokenization, such as low cost, high efficiency, wide accessibility, high liquidity, and DeFi adoption due to split ownership, more and more financial giants have begun to test the water and layout in this field .
A recent research report released by Citi predicts that by 2030, there will be 4 trillion to 5 trillion US dollars of tokenized digital securities, and the trade finance transaction volume based on distributed ledger technology will also reach 1 trillion US dollars. This aggressive forecast is based on the following assumptions:
1. A $1.9 trillion tokenized market (1% of the estimated $187 trillion non-financial corporate and quasi-sovereign bond market);
2. It is estimated that there will be a tokenization market of US$1.5 trillion in the US$20 trillion real estate fund market (accounting for 7.5%);
3. It is estimated that there will be a $0.7 trillion tokenized market in the $7 trillion private equity and venture capital fund market (accounting for 10%);
4. A $1 trillion tokenization market (2%) out of an estimated $42 trillion securities financing and mortgage activity market.
5. It is estimated that there will be a $1 trillion tokenization market in the $12 trillion trade finance market.The Hong Kong Monetary Authority also mentioned in the Digital Hong Kong Dollar Pilot Program announced this month that 16 selected companies from the financial, payment and technology sectors will conduct the first round of trials this year to conduct in-depth research on the potential use cases of the Digital Hong Kong Dollar in six areas. Including comprehensive payment, programmable payment, offline payment, tokenized deposit, third-generation Internet (Web3) transaction settlement and tokenized asset settlement. In fact, in February this year, the HKSAR government announcedsuccessfully sold
800 million Hong Kong dollars in tokenized green bonds. This is the world's first tokenized green bond issued by a government.
In this article, the author will summarize and sort out the exploration and layout of financial giants in RWA tokenization. Among them, financial institutions such as JP Morgan Chase, Goldman Sachs, DBS Bank, UBS, Santander Bank, Société Générale, and Hamilton Lane have entered the actual measurement/combat stage from the research and exploration stage. Temasek, HSBC, BlackRock, etc. and other institutions are still in the stage of exploration and preparation.
In recent years, several major banks in China have also adopted blockchain technology in the fields of supply chain finance, trade financing, and payment, and released related platforms such as blockchain trade finance platforms, asset securitization platforms, and Internet e-commerce financing systems. , and more are used for digital transformation and improving the efficiency of financial services.
Overall, although asset tokenization is still far from reaching mass adoption, as some giants that dominate the financial market gradually shift from research, exploration, and experimentation to the promotion stage, the momentum of RWA tokenization adoption has changed. obvious changes.
JPMorgan Chase: Tokenization is the killer app of traditional finance
As a multinational investment bank and financial services company headquartered in New York, JP Morgan is also actively testing and deploying in the RWA field.
In April of this year, Tyrone Lobban was interviewed by CoinDeskthe interviewthe interview
Shi said the firm remained steadfast in its plans to tokenize traditional financial assets, largely unscathed by the crypto bear market and regulatory uncertainty. The bank processed nearly $700 billion in short-term loan transactions using its Onyx Digital Assets platform. Clients using the Onyx-based repo service include Goldman Sachs, BNP Paribas and DBS, with fifteen other banks and broker-dealers currently seeking to sign up. As the platform develops, Onyx will focus on assets that have traditionally been difficult to finance, such as money market funds, and use them as collateral, and is expected to issue a wider range of blockchain-based assets, including private equity funds.
Launched by JP Morgan in November 2020, Onyx Digital Assets is a blockchain-based enterprise-grade platform designed to tokenize traditional assets and unlock liquidity. Onyx Digital Assets' Tokenized Collateral Network (TCN) leverages blockchain to enable the transfer of tokenized ownership interests in money market fund (MMF) shares, allowing asset managers and institutional investors to pledge or transfer MMF shares as collateral Taste.
In May 2022, according to Bloombergto reportto report
, JPMorgan Chase is exploring the use of blockchain for collateral settlement, the first such transaction occurred on May 20, when two JPMorgan Chase subsidiaries put tokenized BlackRock money market fund shares as collateral The transfer settlement is carried out on its private chain. JPMorgan plans to expand tokenized collateral to include equities, fixed income and other asset types in the coming months.
In October 2022, JPMorgan Chase will implement tokenized U.S. dollar deposits through JPM Coin, and plans to enable blockchain-based euro deposits soon. JPM Coin is a U.S. dollar-pegged stablecoin that runs on the Quorum blockchain and allows JPMorgan Chase clients to transfer U.S. dollars deposited with JPMorgan.
In November 2022, the Monetary Authority of Singapore (MAS) launched digital asset pilots and decentralized financial (DeFi) services, the first industry pilot under its Project Guardian to explore potential decentralized financial (DeFi) applications in the wholesale funding market of companies have completed their first live transaction and are testing asset tokenization and DeFi for wider use cases in finance. Under the first industry pilot, DBS, JPMorgan and SBI Digital Asset Holdings traded foreign exchange and government bonds against liquidity pools that included tokenized assets.
Goldman Sachs: Enter RWA through the tokenization platform GS DAP
In April 2022, Mathew McDermott, Global Head of Digital Assets at Goldman Sachs, at the Encryption and Digital Assets Summitexpressexpress
, Goldman Sachs is researching NFTs, especially the “tokenization of physical assets,” as investment banks dive deeper into the cryptocurrency space.
According to a report published in June 2022, the GS Digital Assets division is using blockchain technology and smart contracts as the basic technology to provide customers with digital issuance of debts, stocks, funds and derivatives, and its subsequent end-to-end End-to-end lifecycle digitization, including transactions, settlements, custody and asset services on distributed ledgers on public and private blockchains, including the establishment of a strategic GS DAP digital tokenization and lifecycle platform.
In November 2022, the European Investment Bank (EIB) announced that it has launched a digital native bond project denominated in euros in cooperation with Goldman Sachs Bank Europe, Santander and Société Générale. Venus, the €100 million two-year bond issued, recorded and settled using private blockchain technology, represents the first offering on Goldman Sachs’ tokenization platform GS DAP.
In January of this year, GS DAP, a digital asset platform launched by Goldman Sachs, was officially launched. The platform is developed based on Digital Asset's Daml smart contract language and the privacy blockchain Canton. Digital assets ensure that data is only shared with qualified stakeholders through its privacy protocol. shared while supporting the scalability required to connect assets globally.
In February of this year, the Hong Kong Special Administrative Region Government announced the successful issuance of a HK$800 million Government Green Bond Program (GGBP) using the Goldman Sachs tokenization platform GS DAP.
Citigroup (Citigroup) released "Money, Tokens and Games" in March this yearReportReport
The paper noted that the potential of tokenizing assets via blockchain, while transformative, has yet to reach the point of mass adoption and is approaching a growth inflection point. Promising to be measured in billions of users and trillions of dollars in value.
Citigroup believes that if the theory of tokenization holds true, the 21st century may see the creation of regulated, global, token-based multi-asset networks. Back in 2020, Citi analysts bluntly stated that with the creation of new liquid secondary markets, banks could explore opportunities such as loans backed by tokenized real estate assets.
In April 2023, Citi India for its client Cummins India LimitedFinishFinish
completed its first blockchain letter of credit (LC) transaction. Contour is a global digital trade finance network powered by blockchain technology that enables multiple parties (banks, corporates and logistics partners) to collaborate seamlessly and securely in real-time on a single platform. Citi is a founding member bank of Contour.
DBS Bank: Participating in the Digital Asset Pilot and DeFi Services of the Monetary Authority of Singapore
Singapore's DBS Bank (DBS Bank) is one of the first financial companies to enter the field of digital assets. In the early stage, it mainly involved services such as digital asset transactions, security token issuance (STO) and custody. Although STO also belongs to the tokenization of real assets, its purpose is to raise funds and is subject to more restrictions. For example, it may only be issued on a private chain and subject to strict regulatory restrictions.
In August 2020, DBS Group announced the launch of DDEx (DBS Digital Exchange), a digital exchange for qualified investors, financial institutions and family offices, providing tokenization, trading and custody services for institutional and qualified investors.
In June 2021, DBS Bank launched its first security token offering (STO) by issuing digital bonds, issuing 11.35 million US dollars in digital bonds.
In November 2022, DBS said it had completed transactions in fixed income products through JPMorgan Chase's Onyx, becoming the first Asian bank to use the network.
In November 2022, the Monetary Authority of Singapore (MAS) will launch digital asset pilots and DeFi services. Under its first industry pilot under Project Guardian, DBS Bank, JPMorgan Chase and SBI Digital Asset Holdings will target services including tokenized assets. Liquidity pools traded forex and government bonds.
Temasek: Preparing for tokenized assets
January 2021, Singapore Exchange (SGX) and TemasekAnnounceAnnounce
In May 2022, Pradyumna Agrawal, Managing Director of Temasek Blockchain Investmentexpressexpress
, does not hold Bitcoin, but is preparing for a tokenized asset.
HSBC: Exploring Asset Tokenization Use Cases
November 2022, HSBCAnnounceAnnounce
HSBC Orion, a DLT-based bond tokenization platform, is planned to be launched, a solution capable of tokenizing digital bonds and currencies for settlement, enabling atomic settlement or delivery versus payment (DvP). However, the digital bond scheme does not involve cryptocurrencies, but instead uses permissioned blockchain infrastructure.
In the first quarter of 2023, the European Investment Bank (EIB), in partnership with BNP Paribas, HSBC and RBC Capital Markets, issued a sterling-denominated digital bond on a private blockchain. U.S. dollars) floating rate bonds are registered on a private blockchain.In 2023, HSBC in aRecruitment information
Hiring for a Product Director for its Global Private Banking and Wealth practice, which will focus on asset tokenization use cases.Launched by the Hong Kong Monetary Authority in May this yearCyber Hong Kong Dollar Pilot Scheme
HSBC is among the 16 selected companies from the finance, payments and technology sectors to participate in the first round of trials.
Fidelity: Aggressive layout of Crypto, or a wait-and-see attitude towards the tokenization of real assets
As one of the world's leading asset management companies, Fidelity began to conduct research and exploration in the encryption field in 2014, and its layout is relatively radical. The Fidelity Digital Assets subsidiary launched in 2018 helps institutions Adopt digital assets, provide digital asset custody, trading, and asset management services, and launch Fidelity Crypto, an encrypted investment product for retail customers, in 2022. It is worth mentioning that Fidelity also planned to allow investors to open bitcoin accounts in their 401(k) last year, but it was later blocked by regulatory and other issues.
However, Fidelity’s layout and progress in real asset tokenization is not obvious, and it seems to be in the wait-and-see stage. However, with the development of real asset tokenization, Fidelity may further expand this field in the future.
Singapore Exchange: Explore Tokenized Asset Settlement with Monetary Authority of SingaporeIn November 2018, the Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX)to develop
Deliver-versus-pay (DvP) functionality for settlement of tokenized assets across different blockchain platforms.
January 2021, Singapore Exchange and TemasekAnnounceAnnounce
Formation of Joint Venture (JV) Marketnode, new venture focused on capital markets workflow through smart contracts, ledger and tokenization technologies.
BlackRock: Tokenization of stocks and bonds is being explored
BlackRock, the leader in the asset management industry, is also relatively active in the Crypto field, for example, through blockchain ETFs, spot bitcoin private trusts, providing $17 million in loans to bitcoin mining company Core Scientific, and through Coinbase Prime for its institutional clients Enter the Crypto market by providing various aspects such as encrypted transactions and custody services.
In terms of tokenization of real assets, although BlackRock has made it clear that it is exploring in this field, there is currently no obvious substantial progress.In March 2023, BlackRock CEO Larry Fink addressed BlackRock shareholdersannual letter
“BlackRock will continue to explore the digital asset ecosystem, especially those areas most relevant to our clients, such as permissioned blockchains and the tokenization of stocks and bonds,” Zhong said.
Bank of New York Mellon: Tokenization Has the Ability to Revolutionize the Financial Landscape
September 2022, Bank of New York Mellon official websitereleaserelease
In May of this year, the Bank of New York Mellonexpressexpress
, the bank is currently advancing initiatives involving distributed ledger technology, tokenization, and digital cash, including providing custody and clearing services for digital assets, and enabling new use cases such as securities tokenization.
UBS: Substantial progress has been made in tokenizing assets
As a multinational investment bank and wealth management company headquartered in Zurich, Switzerland, UBS has made substantial progress in tokenizing assets.
In October 2019, finews.com reported that UBS was looking to tokenize the assets of its securities division, including debt, structured products and physical gold.In May 2021, UBSalready
November 2022, UBSAnnounceAnnounce
Listed the first blockchain-based digital bond, the three-year bond is worth approximately US$370 million and has a coupon rate of 2.33%. The bond will be issued on SIX Digital Exchange's blockchain-based platform and traded on SDX and SIX Swiss Exchange.In December 2022, UBS London Branch will provide high-net-worth individuals and family offices in Hong Kong and Singapore on Ethereumissued
$50 million in tokenized debt securities.
September 2019, Santander BankAnnounceAnnounce
Issued the first end-to-end blockchain bond on Ethereum ($20m value).In March 2022, the Spanish multinational bank Santander and the Argentine agricultural product tokenization platform Agrotokeoncooperate
In October 2022, Santander Brazil will starttesttest
Tokenization system for used cars and real estate transfers.In January 2023, the European Commission and the Association of German Banks jointly launched a report on the importance of tokenization.initiative
, more than 20 well-known partners from the private, industrial, financial and digital industries participated, including Santander Bank.
Deutsche Bank Singapore Securities Services and Hashstacs (STACS), May 2021AnnounceAnnounce
February 2023, Deutsche Bank on the Memento blockchainroll outroll out
Tokenized funds.
Société Générale: Participating in RWA Tokenized DeFi
Société Générale has also maintained a positive attitude in the digital asset field, and is one of the few financial companies participating in DeFi.
In April 2019, Société Générale SFH, a subsidiary of Société Générale, issued 100 million euros of guaranteed bonds on Ethereum.
In May 2020, Societe Generale SFH issued a €40 million covered bond as a security token registered directly on the public blockchain.
In April 2021, Societe Generale launched structured products on the Tezos public blockchain.
In August 2022, MakerDAO agreed to lend up to $30 million to SG Forge, a digital asset company affiliated with Societe Generale. In January of this year, SG Forge withdrew its first $7 million in DAI stablecoins as part of a loan.
In April 2023, SG-Forge, a subsidiary of Societe Generale, launched EUR CoinVertible, a stable currency linked to the euro, for institutional customers. The EURCV stablecoin is only available to institutional investors who join Societe Generale through its KYC and AML procedures.
Hamilton Lane: Providing tokenized access through tokenized funds and building partnerships
Hamilton Lane, a U.S.-based private market investment management firm, works with blockchain-based financial services companies to lower investment barriers and provide tokenized access opportunities for clients.In March 2022, Hamilton Lane and the digital stock exchange ADDXcooperate
, providing tokenized access to the Hamilton Lane Global Private Assets Fund.In October 2022, Hamilton Lane and digital asset securities company SecuritizeEstablish
Partnership to expand investor access to Hamilton Lane funds through tokenization.In October 2022, Hamilton Lane and blockchain financial services company Figure are preparing tocooperate
Hamilton Lane, January 2023openopen
A tokenized fund whose investment minimum has been lowered from $5 million to $20,000 and deployed on Polygon.
State Street: Creating a range of tokenization solutions
State Street is one of the leading providers of financial services to institutional investors, with $37.6 trillion in assets under custody and $3.6 trillion in assets under management as of March 31, 2023.
August 2022, State Streetexpressexpress
State Street alsoinvestinvest
Founded Securrency, a blockchain-based financial and regulatory technology company, and created a range of tokenization solutions, including:
1. Proof of concept for tokenizing fund shares with asset management companies;
2. Automate the life cycle of over-the-counter foreign exchange non-deliverable forwards;
3. Digital transaction processing on State Street Alpha, providing aggregated data, analytics and real-time insights.
China's domestic banking layout
In August 2017, the Agricultural Bank of Chinaonlineonline
A blockchain-based Internet e-commerce financing system for agriculture.In 2018, China Construction Bank tested the "blockchain + finance" and completed the construction of the BCTrade blockchain trade finance platform, and then in 2019release
In June 2018, Bank of Communications officiallyonlineonline
In December 2019, Bank of China's domesticFinishFinish
In 2019, the first tranche of 20 billion yuan of special financial bonds for small and micro enterprise loans was issued and priced, and the funds raised were specially used for the issuance of small and micro enterprise loans. In this issuance, Bank of China simultaneously used the self-developed blockchain bond issuance system. The system uses the blockchain network as the underlying platform to support the on-chain interaction and deposit of key information and documents during the bond issuance process.In August 2020, the China Banking Association organized a joint five major banksBuild together
In January 2021, the "ICBC Seal Chain" blockchain platform independently developed by the Industrial and Commercial Bank of Chinapasspass
Five credible blockchain technology evaluations by the Ministry of Industry and Information Technology.In March 2021, Shanghai Pudong Development Bank, as the joint lead underwriter, and the Central Clearing Company used blockchain technology to support DBS Bank (China) Co., Ltd. for the first time.issued
In June 2021, China Merchants Bankonlinefirst level title
Summarize
Summarize
Although there is still a big gap between the current DeFi and Web3 market and the traditional financial market, RWA tokenization is expected to introduce the next trillion-dollar market for Web3.
