BFSI

Tokenization Market is Expected to Reach USD 17,699.5 million by 2031

Jun 2024

BFSI

As per the report published by Kings Research, the global Tokenization Market size was recorded at USD 3,415.9 million in 2023 and is projected to reach USD 17,699.5 million by 2031, growing at a CAGR of 22.98% from 2024 to 2031.

The notable shift toward digital transformation and asset digitization is a profound evolution reshaping industries worldwide. Organizations are increasingly recognizing the potential of leveraging digital technologies to streamline operations, enhance efficiency, and create new business opportunities. Asset digitization, in particular, involves the conversion of physical assets into digital representations, often in the form of tokens on blockchain platforms. This enables assets such as real estate, fine art, and intellectual property to be fractionalized, traded, and accessed with unprecedented ease and efficiency.

Moreover, digital transformation initiatives encompass a wide range of technologies, including blockchain, artificial intelligence, and the Internet of Things, which collectively drive innovation and disruption across sectors. As businesses continue to adopt digital transformation and asset digitization, the tokenization market is likely to expand significantly. This expansion is projected to create opportunities for tokenizing a diverse range of assets, thereby unlocking value in previously illiquid markets.

Key Insights

  • Based on the component, the solution segment held the largest market with a share of 85.48% in 2023
  • Based on deployment, the cloud-based segment is estimated to register the highest revenue of USD 12,016.2 million in 2031
  • Based on the application, the user authentication segment isprojected to experience the robust CAGR of 23.97% through the forecast period
  • Based on end-use, the retail & e-commerce segment is expected to witness a significant CAGR of 25.01% over the forecast period
  • On the basis of region, Asia-Pacific is set to experience the fastest growth over the forecast period, depicting a CAGR of 25.03%

Tokenization of Illiquid Assets such as Real Estate and Fine Art to Offer Lucrative Opportunities for Market Expansion

The tokenization of illiquid assets such as real estate and fine art presents lucrative opportunities for the progress of the tokenization market. Historically, these assets have been relatively inaccessible to retail investors due to high entry barriers, lack of liquidity, and regulatory constraints. However, tokenization enables these assets to be divided into digital tokens, allowing investors to purchase fractions of high-value assets. This fractional ownership model democratizes access to investment opportunities, thereby tapping into previously inaccessible markets and expanding the investor base.

Moreover, tokenization enhances liquidity by facilitating secondary market trading of asset-backed tokens, enabling investors to easily buy, sell, and trade their ownership stakes. Additionally, tokenization offers benefits such as increased transparency, reduced transaction costs, and enhanced market efficiency, leading to the increased demand for tokenized assets. The tokenization of illiquid assets represents a compelling opportunity for market growth, attracting capital inflows and stimulating innovation in the tokenization ecosystem.

Rising Integration of Non-Fungible Tokens (NFTs) to Augment Tokenization Market Growth

The rising integration of non-fungible tokens (NFTs) is poised to augment market growth significantly. NFTs are unique digital tokens that represent ownership or proof of authenticity of a specific asset or piece of content, such as digital art, collectibles, and virtual real estate. With the growing popularity of NFTs, fueled by high-profile sales and increased mainstream adoption, there is a burgeoning demand for tokenization solutions that support the creation, management, and exchange of NFTs.

Blockchain technology underpins the creation and verification of NFTs, providing immutable proof of ownership and provenance, which is particularly valuable in the digital asset space. Moreover, the integration of NFTs into various industries, including gaming, entertainment, and digital media, creates new revenue streams, enhances user engagement, and fosters innovation. As the NFT ecosystem continues to evolve and expand due to ongoing technological advancements and innovative applications, the market for tokenization solutions is projected to experience significant growth,. This growth is further fueled by the rising demand for NFT-related services and platforms.

Asia-Pacific to Register a Valuation of USD 4,332.8 Million by 2031

Based on region, the global tokenization market is classified into North America, Europe, Asia-Pacific, MEA, and Latin America. Asia-Pacific is set to grow at a robust CAGR of 25.03% through the forecast period, driven by the region's rapid economic growth, increasing digitalization, and growing adoption of blockchain technology. As the world's most populous region with a burgeoning middle-class population and rapidly expanding digital infrastructure, Asia-Pacific offers immense opportunities for market expansion. Governments and businesses across the region are implementing digital transformation initiatives, resulting in a strong demand for tokenization solutions to digitize assets, streamline processes, and enhance efficiency.

Moreover, Asia-Pacific is witnessing a surge in blockchain innovation, with startups, enterprises, and governments exploring diverse applications across industries such as finance, supply chain, and healthcare. Additionally, the region's dynamic fintech ecosystem and supportive regulatory environment are fostering innovation and entrepreneurship in the blockchain and tokenization space. Asia-Pacific is poised to emerge as a key region in the tokenization market, attracting investments and fostering technological advancements.

Market Leaders Undertake Collaborations and Acquisitions for Sustained Growth

The global tokenization market is fragmented with key players such as Fiserv, Inc., Visa, Entrust Corporation, American Express Company, MONET+ (Switchio), Mastercard, Thales, TrustCommerce, TokenEx, Inc., Worldpay, LLC, and others. Companies employ a variety of strategic measures such as acquisitions, mergers, partnerships, product introductions, and collaborations to expand their business globally and enhance their competitive position.

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