According to Bernstein, if financial incumbents want to be part of the modernization of financial markets, they need to adopt blockchains. The cryptocurrency is recovering this week on a psychological boost from institutional efforts to secure its place in the future of finance. However, beyond tradable assets like bitcoin, there is an opportunity within the next five years for financial firms to tokenize real-world assets on blockchains, the company said in a statement. a note this week. “We believe that cryptography will transform financial markets over the next decade,” said analyst Gautam Chhugani in a note on Tuesday. “We forecast ~$5 trillion in real-world financial assets to be tokenized on blockchains over the next 5 years.” Specifically, blockchain tokens refer to the process of converting something of value, like gold or real estate, into a digital token that can be represented and traded digitally on block chain. Its benefits are “simple,” he said, citing lower costs, instant payments, liquidity, digital programmability, reduced counterparty risk and global reach. . “We forecast ~1-5% token adoption for the assets that benefit the most” from it, including corporate bonds, commercial real estate, and private market funds, “with penetration is lower in other asset classes (0.1-0.3%)” such as government bonds, stocks and residential real estate,” said Chhugani. ~2% penetration rate for currencies and bank deposits (i.e. broad money),” he added. “This means a ~$2 trillion opportunity over the next five years, excluding currency (~0.4% of ~$560 trillion in assets) and ~$3 trillion in stablecoins/CBDC tokens — bringing the total to ~$5 trillion in assets that will tokenized in the next five years.” Chhugani said opportunities for new businesses in custody, trading, trade finance and corporate advisory, Hamilton Lane manager Hamilton Lane launched three funds Meanwhile, KKR has tokenized part of its investment fund through its partnership with Securitize. Franklin Templeton founded a mutual fund that settles transactions and records ownership data on various blockchains. Additionally, JPMorgan has a bank-led blockchain platform called Onyx that focuses on international trade. – Michael Bloom of CNBC contributed to this report.