Global Asset Tokenization Market to Top USD 50.37 Billion by 2026; Domestic Market Just Getting Off the Ground Faces Need for Liquidity
TECHWORLD ·
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The Bank of Korea issue note said the global asset tokenization market grew to USD 50.37 billion at the end of March this year and projected growth rates of 65% in 2023, 93% in 2024, and 169% in 2025.
It attributed the growth to rising demand for tokenization of MMF and government bonds, as well as clearer regulatory guidelines, and said the market is increasingly being absorbed into regulated financial infrastructure as institutional participation rises.
In South Korea, the legal framework for issuing and distributing tokenized securities has been established, but the market is still at an early stage, and liquidity and infrastructure were presented as necessary for it to take root.
According to the BOK Issue Note, "Current Status of Asset Tokenization at Home and Abroad and Future Policy Tasks," published by the Bank of Korea in May, the global asset tokenization market is growing rapidly. The global market was estimated at USD 50.37 billion at the end of March this year. Growth rates were cited at 65% in 2023, 93% in 2024, and 169% in 2025.
The growth of the global asset tokenization market was attributed to rising demand for tokenization of MMF and government bonds, as well as clearer regulatory guidelines. Against this backdrop, participation by institutional investors is increasing, and the global market is being rapidly absorbed into regulated financial infrastructure.
In South Korea, a legal framework for the issuance and distribution of tokenized securities has been established, but the market was presented as still being at an early stage. Accordingly, liquidity must be secured for the market to take root, and interest in building related infrastructure is also growing, the report said.
Asset tokenization refers to recording rights to financial and real-world assets on a distributed ledger and turning them into investment products. On a distributed ledger, transactions are verified and agreed upon using cryptography by multiple network participants, and storage is also distributed across multiple nodes rather than a single central server. This structure makes data tampering difficult and increases transaction reliability.
Integrating the entire transaction process on a distributed ledger can shorten settlement cycles, reduce brokerage and administrative costs, and make trading possible without time or geographic constraints. Atomic settlement using smart contracts reduces counterparty risk. It also allows high-value assets to be divided into smaller units, lowering the minimum investment size and thereby improving access to investment.
These changes can improve the issuance, distribution, and settlement methods of existing assets, and the resulting effects can enhance efficiency, flexibility, accessibility, and transparency. The issue note, written by Park Sang-hoon, a senior officer on the Nontraditional Financial Analysis Team in the Financial Stability Group at the Bank of Korea, and three others, said the related benefits go beyond a simple technological change. It added that the digital transformation of securities is driving a shift in the capital market paradigm.
The entry into the asset tokenization market centered on traditional financial markets is gathering pace. As major countries accelerate the overhaul of their regulatory frameworks, the London Stock Exchange Group (LESG) on the 1st, local time, unveiled a partnership plan with Payward, the parent company of Kraken. The plan aims to tokenize and distribute UK-listed stocks.
The two companies plan to explore whether the combination of regulated market infrastructure and digital distribution can boost the tokenized public equity market. In the process, LES is assuming that shareholder rights, safeguards, and public-market governance standards will be maintained. LES is also reviewing a UK tokenized equity structure with the aim of expanding access to capital markets.
The items under review include support measures for LSEG DSD's settlement and asset management services, contingent on regulatory approval. The businesses involved in the plan are the 24-hour exchange LSE 24, LSEG DSD, and a digital settlement center.
In the United States, as the use of blockchain and tokenization expands and moves to introduce on-chain transfer-agent registration, efforts to update related rules are advancing quickly. The SEC on the 1st proposed ways to adapt existing transfer-agent rules to a blockchain and tokenization environment, and has begun reviewing existing regulations to respond to technological change.
The proposal noted that use cases involving tokenized securities, AI, and other digital infrastructure by transfer agents are surging, and that market participants are also actively pursuing the introduction of blockchain-based on-chain transfer agents in the U.S. market. It also pointed out that current transfer-agent rules do not spell out provisions related to information security, cybersecurity, disaster recovery, or operational risk, and that there are no committee rules specifying transfer-agent obligations related to the removal of restrictive legend language on securities.
Meanwhile, the domestic market is still at an early stage. Liquidity and infrastructure were presented as the key challenges for the domestic market to take root.
The domestic asset tokenization market is showing changes in line with demand, but it is still in an early stage. It is currently at the level of fractional investment in unconventional assets through a regulatory sandbox, with assets including real estate and music copyrights, and distributed ledger technology is being applied to fractional investment.
Recent revisions to the Electronic Securities Act and the Capital Markets Act are expected to accelerate the issuance and distribution of tokenized securities. However, asset tokenization carries potential risks to financial stability. Risk factors cited include liquidity mismatches between tokenized securities and underlying assets, increased leverage through rehypothecation, operational, technical, and legal vulnerabilities, concentration in a small number of platforms, and market fragmentation.
Against this backdrop, Park Sang-hoon, a senior officer on the Nontraditional Financial Analysis Team in the Financial Stability Group at the Bank of Korea, said in the issue note that the current global tokenization market remains tiny compared with traditional financial markets. However, he noted that, given the rapid growth of tokenization, it is necessary to pay attention to the possibility that vulnerabilities in the financial system could accumulate.
The report's authors argued that the domestic asset tokenization market needs to take root early, and said this requires securing liquidity for tokenized securities centered on unconventional assets with proven market demand and building related infrastructure, including systematic frameworks for asset valuation, custody, and disclosure. They said such measures would help boost investor confidence.
Source: TECHWORLD · Kim Hye-jin
Original: https://www.epnc.co.kr/news/articleView.html?idxno=406433
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Source: TECHWORLD
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