Value of Tokenised Assets to Surpass $10 Trillion by 2030

Digital assets look set to become an inevitable staple in institutional portfolios in the future, according to a new research report from OKX, a leading crypto exchange and Web3 technology company.

The OKX-commissioned research brief authored by Economist Impact, entitled “Digital assets as the new alternative for institutional investors: market dynamics, opportunities and challenges,” highlights institutional investors’ view that digital assets are an inevitable institutional opportunity, and a promising asset class that is set to grow substantially.

Increasingly mature blockchain technology and digital security infrastructure, ongoing efforts to achieve global regulatory clarity, and digital innovations such as tokenised real-world assets are driving institutional adoption, the report said.

“In fact, the projected value of tokenised assets is expected to surpass $10 trillion by 2030, and the market opportunity is vast,” the report said.

There is no end of action taking place around the world from leading financial players. Over $1 billion worth of US treasuries are now tokenised across public blockchains while the European Investment Bank (EIB) has successfully issued a $65.81 million digitally native bond that combined public and private blockchains.

Even the Hong Kong government issued the world’s first multicurrency digitally native bond, gathering $766.8m worth of investments, including from asset managers, banks and insurance companies in February this year. Recently, the State of Wisconsin Investment Board disclosed that it had bought $9 million of BlackRock’s bitcoin exchange-traded fund (ETF).

More Allocations

According to a 2023 survey, 69% of institutional investors anticipated increasing their allocations to digital assets and/or related products in the next two to three years. They also expect digital asset holdings to constitute 7.2% of their portfolios by 2027.

From venture capital and pension funds to crypto hedge funds, there is a growing consensus among institutional investors that digital assets, including cryptocurrencies, have an important place in asset allocation.

At present, average digital asset allocations in institutional portfolios range from 1% to 5%, depending on risk appetite. The positioning of digital assets within institutional portfolios has been focused on trading of cryptocurrencies, with bitcoin and ether representing the largest investment avenues.

But institutional investors are exhibiting greater optimism around digital assets, encouraged by the expanding availability of a wider range of investment vehicles that take them beyond just cryptocurrencies. These newer options include spot exchange-traded funds, private equity/venture capital-style investments, crypto derivatives, stablecoins and NFTs.

For example, the approval of 11 Spot Bitcoin ETFs provided a prodigious boost to overall inflows into Bitcoin, with cumulative investment by institutions reaching over $40 billion in March 2024. Spot Ether ETFs exceeded $1 billion in trading volume on their debut trading day in July 2024.

The Securities and Futures Commission (SFC) of Hong Kong’s approval of Spot Bitcoin and Ether ETFs is expected to attract up to $25 billion into the market, the report said.

Institutional investors plan to ramp up portfolio allocations to crypto through several investment strategies, with approximately 51% of investors considering spot crypto allocations, 33% considering staking of digital assets and 32% considering crypto derivatives.

OKX Chief Commercial Officer Lennix Lai said that this initiative to engage with the world’s leading institutional investors demonstrates how digital assets are rapidly being adopted in investment portfolios.

“The trend will only intensify if we see advancements in blockchain technology, enhanced regulatory clarity and uptake of innovative digital solutions like tokenized real world assets. Our collaboration with Economist Impact demonstrates OKX’s commitment to fostering a deeper understanding and adoption of digital assets among institutional investors worldwide,” Lai added.