TL;DR
- The tokenization of real financial assets could reach $88 trillion by 2035, according to estimates from the Boston Consulting Group.
- More than 50 firms, including BlackRock, Goldman Sachs, JPMorgan and Morgan Stanley, are joining a working group led by HM Treasury of the United Kingdom.
- The report projects up to £33 billion in additional annual economic output and £14 billion in annual tax revenues by 2035.
The tokenization of wholesale financial markets has moved from being a technical matter to becoming a State priority for the United Kingdom. HM Treasury launched an initiative that brings together more than 50 global financial firms, including BlackRock, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley and UBS, with the goal of developing real use cases over the next year.
The group has the backing of the City of London Corporation and will focus its attention initially on tokenized repo as the first field of concrete application.
The market for tokenized real-world assets could reach $88 trillion by 2035, according to Boston Consulting Group, a figure that dwarfs the current cryptocurrency and stablecoin market, valued at $3 trillion. The report prepared by Chris Woolard, appointed as HM Treasury’s Wholesale Digital Markets Champion and former chairman of the Financial Conduct Authority for eight years, also projects up to £33 billion in additional annual economic output and £14 billion in tax revenues for that same year.
The United Kingdom Does Not Have Its Place Secured in the Tokenization Industry
Woolard warned in his report that tokenized markets are “a network game” and that the United Kingdom’s position in that game is not guaranteed. “It is a race and the UK needs to move at the speed of the most agile players if we are to have a stake in shaping the approach for international markets,” he stated. The document is addressed to the Chancellor of the British Treasury, who will replace Rachel Reeves.
John Orchard, chairman of the OMFIF Digital Monetary Institute, highlighted as a key differentiator the British government’s commitment to issue sovereign debt in DLT format through the DIGIT program, which would generate a high-quality safe asset for building a wholesale capital market.
For his part, Kirit Bhatia, Chief Digital Assets Officer at Banking Circle, noted that one of the greatest challenges will be ensuring that tokenized assets can be settled, mobilized as collateral and made interoperable across different networks, stablecoins, tokenized deposits and existing fiat rails. The Bank of England, according to the document, will build on its synchronization pilot by 2028, a program similar to the ECB’s Pontes, which deploys in the fourth quarter of 2027.
