Bernstein: $5 Trillion Blockchain Opportunity Awaits

• Financial institutions looking to be part of the modernization of financial markets need to adopt blockchain, according to asset management company Bernstein.
• Tokenization is expected to transform financial markets in the next decade, with approximately $5tn of real financial assets to be tokenized on blockchains within the next five years.
• Tokenization benefits include lower costs, instant payments, liquidity, digital programmability, reduced counterparty risks, and global accessibility.

Asset management firm Bernstein has urged financial institutions to adopt blockchain to be part of the modernization of financial markets. Tokenization is expected to transform financial markets in the next decade, with approximately $5tn of real financial assets to be tokenized on blockchains within the next five years. Tokenization benefits include lower costs, instant payments, liquidity, digital programmability, reduced counterparty risks, and global accessibility.

Assets that will benefit most from tokenization

According to Bernstein analyst Gautam Chhugani, corporate bonds, commercial real estate, and private market funds will be the assets that will benefit most from tokenization. The analyst expects adoption rates of 1% to 5% for these assets, while government bonds, stocks, and housing will have adoption rates of 0.1% to 0.3%. Chhugani said, “We foresee a 2% penetration in currency and bank deposits, which means a $2tn opportunity in the next five years. With $3tn in stablecoin/CBDC tokens, the total amount of assets to be tokenized reaches $5tn.”

Chhugani also suggested that there is a significant opportunity for new business verticals in custody, trade finance, and corporate advisory.