Tokenization was not short of developments in 2024, with the tech enjoying advancements in a number of key areas – real estate and finance, to mention just a few. Tokenization is expected to increase exponentially in 2025 as industry players see the advantages for themselves and the use of the technology is consolidated. The tokenization of time, government bonds, and energy projects are particularly noteworthy developments to be expected.
Tokenization Milestones on the Horizon
Tokenization is anticipated to reach a series of important milestones in the coming year, shaping the industry across numerous areas and tangential to the interests of many industry players. So let’s take a look at some important turning points in the use of the tech.
The first significant corner to be turned is the expected growth of the Treasury tokenization sector, especially since high-yield treasuries from the last few years have become more valuable due to the drop in central bank rates. Whilst numerous major banks have established platforms for tokenized bonds, including HSBC and Goldman Sachs, the stepping of public authorities into this area of tech is demonstrative of the new opportunities represented by tokenization.
The tokenization market is also gaining momentum in the field of energy: 2025 will see a global energy company tokenize a renewable energy project, enabling broader investment. This will be met in other spheres: the tokenization of time will emerge, with the purchase, selling or exchange of units of time unlocking entirely new and unforeseen economic models. As the tokenization of time becomes an established practice, professionals will benefit from transformative effects: the ability to monetize their skills and availability.
The aforementioned milestones really speak for themselves – but so do the numbers. The tokenization of real-world assets (RWAs) is a rapidly developing industry, valued at approximately $118.6 billion in September 2024. Infrastructure development will allow RWA tokenization to reach new heights still: it is projected to become a trillion-dollar global industry by 2030 – or, almost certainly, sooner (source).
Stablecoins: The Foundation for Growth
In order to understand the surge in the field of tokenization, we need to take one step back – to stablecoins, which effectively laid the groundwork for tokenization. Stablecoins, that is, cryptocurrencies or digital assets with a stable price, simplify payments and offer transparency in complex payment flows. Their use grew exponentially in 2024. According to RWA.xyz, stablecoins grew by 3800% between 2020 and 2024, with a jump in value from $4 billion to over $156 billion. When the total RWA market share of stablecoins is over 90%, it is safe to see RWA tokenization as the next development to watch (source). Rapid growth is soon to be matched by a new U.S. stablecoin law, which will provide clarity and boost trust and usage of the tech.
Its rapid expansion and promising advent into different areas means that RWA tokenization has attracted a fair amount of attention in traditional finance: a recent survey by Tokenized Assets Coalition indicates that some 86% of Fortune 500 executives recognize the potential benefits of the tech (source).
Growth Generators: Industries Leading the Way
Tokenization is being driven forward across a number of sectors, so it pays to take a look at the industries that are pivotal in their growth. Let’s kick off with real estate: increasingly a major player in the advancement of tokenization, real estate is a beneficiary of the tech because it allows increased investment in a property through fractional ownership. This reduces, in turn, entry barriers to ownership and widens access to lucrative markets.
Next up is private companies. Tokenization has shown the potential to radically alter private equity by simplifying shareholder management, dividend distribution, and funding. When asset ownership is converted into digital tokens, the accessibility of private equity is massively enhanced. Tokenization, therefore, represents a seamless way for businesses to operate and grow. Another area involved in the growth of tokenization is the trading of commodities, with the trading of resources such as gold, silver, and carbon credits simplified by the tech. The improved transparency of trading enhances efficiency and trust in these established markets.
A final area enjoying the benefits of tokenization is insurance. Whilst many traditional insurance policies have hidden fees, tokenized insurance offers clear and transparent cost structures. By eliminating hidden costs and providing clarity, tokenization can drive the modernization and growth of the insurance sector. The recent wildfires in Los Angeles have underscored the pressing need for revitalization, highlighting the industry’s immense pressure to adapt to escalating risks. Applications of tokenized insurance include drought-resistant insurance that helps farmers navigate climate challenges. The core idea is simple yet powerful: offer faster payouts and better protection by adjusting payments during droughts, giving small farmers better financial security.
Where Next?: New Industries for Tokenization
The scope of tokenization is impressive and innovative applications of tokenization are emerging in new spaces still. The benefits of the technology are reflected by its expansion into three key areas: business, energy, and time.
Firstly, tokenization offers businesses and startups simplified fundraising, accounting, and shareholder management models. Representing traditional shares or equity as digital tokens offer startups, as well as seasoned financial institutions, new ways to promote themselves and grow. Furthermore, in the energy sector, projects on wind farms or solar plants can be tokenized. An otherwise fragmented carbon credits market is streamlined, and fractional ownership is becoming a possibility.
Finally, the tokenization of time has far-reaching implications for professionals: when professionals are able to tokenize their time, they effectively turn their skills into assets. Time tokenization can also raise funds for growth. The selling of time tokens representing future work hours means that professionals can unlock capital upfront. The approach allows access to funding which can be used for education or in starting a business. This is just one application of many, with the tokenization of time as a powerful tool for professionals.
Emerging Opportunities in Tokenization
An overview of the new industries gaining a foothold in tokenization leads us next to consider the numerous specific opportunities emerging in tokenization. Firstly, the tokenization of expertise is useful for professionals offering consulting, mentorship, or therapy sessions, as skills can be tokenized into easily tradable assets. Time tokenization can also be engaged in event and gig management. Confusion or clashes in event timetables can be easily resolved through the tokenization of time slots and service provider availability. The result? Simplified scheduling and seamless trading or resale. The tokenization of time will also extend into the lives of other professional groups, not just those offering services and expertise. For example, tokenizing hours will allow employees to buy or sell unused vacation and overtime, fostering flexibility and fairness.
The reach of tokenization extends yet further to opportunities with natural resources, such as precious metals and agriculture. Tokenization makes the trading of gold, silver, and crops a more transparent process, streamlining markets and lowering barriers for investors. It also leads renewable projects and carbon credits to become increasingly accessible: fractional ownership allows for the purchase of a percentage or a share in a high-value asset, reducing high entry thresholds and enabling easier co-investment opportunities. Finally, even water rights can be tokenized: regions with scarce or mismanaged water resources, including large parts of Africa, can be subject to inefficient and unclear water distribution. The tokenizing of ownership and rights helps to ensure water is fairly allocated and avoids mismanagement.
Anticipated Growth: Numbers and Potential
The scope of tokenization across the industry is impressive, and the market is expected to grow only further. The numbers speak for themselves: according to a report by Standard Chartered, the market for tokenized real-world assets is projected to reach $30.1 trillion by 2034 (source). The massive growth potential is reflected notably in the area of real estate, expected to become the largest type of tokenized asset in 2030 and representing nearly one-third of the overall market (source). Growth is not expected to stop there but will accelerate further as major players like BlackRock and governments enter the space and Web3 technologies become more accessible.
Taking Stock of the Tech: Preparations for the Future
Tokenization is more than just a novel concept: it is a technology that promises to extend far and wide across businesses and commodities – and 2025 will be a key year. To stay ahead of the curve, it will be critical for businesses, investors, and governments to understand the technology, work with the right partners, and involve key stakeholders. Beyond this, strategies can be refined through the testing of tokenization models, understanding and eliminating shortcomings. Finally, the application of clear rules and standards, as well as improved education, will help unlock tokenization’s full potential.