The Tokenization Market Opportunity

November 28, 2022

The previous crypto-asset bull market has driven the total capitalization of the crypto-asset market to over $3 trillion in November 2021, according to Bloomberg.  As a stigma of this volatility, that same year saw exponential growth in stablecoins like Circle (USDC) or Tether (USDT) with record capitalizations exceeding $180 billion.

While stablecoins are rapidly gaining traction and becoming an essential part of protecting oneself from the volatility of crypto-assets, they however don’t provide a solution to the monetary inflation of traditional currencies that erode purchasing power. This is where the tokenization of finance and security tokens come in.

Tokenization, a new financial paradigm

We are now entering a new maturity cycle with tokenization. This approach offers a powerful framework that reconciles traditional finance and asset management with the technological mechanisms brought by blockchain and decentralized finance, for which Petale is a pioneer.

Defined as a securitization process on blockchain, tokenization initiates a paradigm shift in asset management. This evolution allows a fractionalization of assets on an atomic scale, which can be exchanged instantly, transparently and at lower costs.

The crypto-asset market is opening towards institutional investors and adapts to the traditional finance standards to better connect with the economy. We created Petale to offer a decentralized blockchain combining tokenized investment opportunities and a stable and performing value asset into a single token (XPTL), offering protection against the hyper-volatility of crypto-assets and the inflation of the traditional economy.

Market Dynamics

This new momentum for the crypto asset market is starting its widespread adoption by both institutional and retail players.

A recent BCG study demonstrates the importance of the emergence of a new market cycle driven by asset tokenization, representing a market opportunity of $16 Trillion, potentially opening up a total addressable market of $68 Trillion by 2030.

According to the Boston Consulting Group, asset tokenization could represent up to 10% of global GDP. As pioneer in this market, Petale is initiating in 2021 a first €100M tokenized fund to support the financing of wheat producers in France, offering an alternative and innovative financing model to meet the liquidity needs of farmers.

This first tokenization operation is an illustration of the possibilities, as Petale allows 99% of unlisted companies and assets worldwide to be listed, with the aim of making the economic fabric more fluid.

Security tokens for institutional DeFi

Many of the players in the crypto-asset market are trying to avoid the classification of security tokens, which would lead to regulatory red tape and the associated procedures to operate. However, framing tokens as securities makes sense when backing real assets in a decentralized infrastructure. This is the pioneering position that Petale is taking with its security token XPTL, backed by real tokenized assets.

As of May 2022, the total market capitalization of traded security tokens has surpassed $19 billion, creating a 20x growth in one year. This trend is mostly related to the growing interest in tokenized assets, which offer great liquidity for funds and asset managers of all sizes around the world.

On May 31, 2022, JP Morgan Bank announces it will to bring in trillions of dollars of tokenized assets through its partnership with the Monetary Authority of Singapore, DBS and Marketnode called, Project Guardian.

In November 2022, the stablecoin issuer Circle and asset manager Blackrock announced a partnership to enable massive access to liquidity in the Crypto and DeFi markets.

In Europe, the MiCA framework has been validated, and opens a clear regulatory framework for the development of the industry. Petale continues its activities and prepares the release of new funds and tokenization operations to contribute to the emergence of the tokenization of finance.

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