Trade finance to play major role in $30 trillion tokenised assets market

Trade finance to play major role in $30 trillion tokenised assets market

Demand for tokenised real-world assets could reach $30.1 trillion by 2034, with trade finance assets making up a significant part of the market, predicts a paper from Standard Chartered and Synpulse.

Currently, the tokenised assets sector is mainly made up of traditional assets like US treasuries and money market funds. However, the supply side is still in its infancy, with the total value of tokenised assets (excluding stablecoins) standing at just $5 billion in early 2024.

However, the paper argues that growing industry digitisation and the specific features of real-world trade finance assets, make it an ideal category to originate tokens.

Currently, trade finance assets are underinvested due to lack of familiarity, pricing inconsistency and operational intensity. Tokenisation has the potential to address these challenges, whilst also reducing information asymmetry and offering transparency to investors.

By 2034, trade finance assets could become one of the top three tokenised assets globally, at 16% of the $30.1 trillion total, predict the authors.

Kai Fehr, global head, trade, Standard Chartered, says: "We see the next three years as a critical junction for tokenisation, with trade finance assets coming to the fore as a new asset class.

"To unlock this trillion-dollar opportunity, industry-wide collaboration among all stakeholders, from investors and financial institutions to governments and regulators is critical. Banks need to increasingly take on the role of bridging the existing traditional financial markets with a newer and more open token-enabled market infrastructure."

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