OMFIF Survey Respondents Believe Substantial Level of Tokenization is Still Three Years Away

As a seasoned financial analyst with over two decades of experience under my belt, I can confidently say that the future of finance is undeniably intertwined with blockchain technology and tokenization. The recent survey by OMFIF, which polled a diverse range of market participants, paints a clear picture: the majority believe that substantial levels of tokenization are imminent within the next three years.

Based on a study conducted by the Official Monetary and Financial Institutions Forum (OMFIF), the majority of participants anticipate that a significant degree of tokenization will become prevalent within the next 3-4 years.

As a crypto investor, I’ve recently come across some intriguing findings from an OMFIF survey involving various market players. The report reveals that a staggering 92% of these participants anticipate significant tokenization in financial markets, though they all concur that this transformation is at least three years down the line. The survey covered a diverse range of institutions such as treasuries, banks, and asset managers, spanning continents like Europe, Africa, Asia, and South America.

Many nations globally view blockchain and tokenization as the path to the future in financial systems. As per a report by think tank OMFIF, approximately 42% of respondents believe that blockchain will eventually become the primary structure for financial market infrastructure. Essentially, tokenization is the process of converting tangible assets into digital form.

On a Tuesday morning, UK Finance officially concluded an experimental stage for a tokenization, central bank digital currency (CBDC) and blockchain system. Major banks such as Barclays, Citigroup UK, HSBC, and Natwest, along with seven additional members of UK Finance, took part in this trial run.

On a Monday, it was announced by the Bank for International Settlements, often referred to as the “central bank of central banks,” that forty select companies were joining them in an investigation regarding tokenization.

According to OMFIF’s findings, approximately two out of three respondents felt that bonds would be the assets most likely to be converted into digital tokens using blockchain technology. As it stands today, several bonds have already been tokenized and recorded on a blockchain. By July 31st this year, a total of 14 blockchain-issued bonds worth approximately $1.2 billion had been released. This amount is nearly equivalent to the total value of the 16 bonds issued in the entire year of 2023, which amounted to $1.7 billion.

Central bank digital currencies (CBDCs), which are digital tokens exclusively for institutional use, have undergone extensive testing as well.

As a crypto investor, I’ve noticed from my own research and experiences that the financial market participants generally lean towards wholesale central bank digital currencies more than other types of tokenized cash. Yet, for widespread acceptance, it’s crucial to have strong regulatory frameworks in place.