Citi Says CBDCs and Tokenization to Drive the Mass Adoption of Blockchain and Cryptocurrencies

In its latest report released for the month of March 2023, banking giant Citi stated that the blockchain industry has already reached an “inflection point” and the potential for the same could be realized very soon.

The financial giant explains that the blockchain technology will soon see "billions of users and trillions of dollars in value” in its report titled "Money, Tokens, and Games: Blockchain's Next Billion Users and Trillions in Value”. Analysts at the Citi Group further suggested that the next major crypto adoption will be powered by the use of central bank digital currencies (CBDCs) as well as the tokenization of the real world assets.

Kathleen Boyle, managing editor of the Citi GPS said: "Successful adoption will be when blockchain has a billion-plus users who do not even realize they are using the technology. Although we think mass adoption could still be six to eight years away, momentum on adoption has positively shifted as governments, large institutions, and corporations have moved from investigating the benefits of tokenization to trials and proofs of concept”.

As we know, central banks across the world have been working on CBDCs for a while. CBDCs are nothing but blockchain-based digital assets issued and controlled by the central bank.

During the Citi Digital Money Symposium, Ronit Ghose, the bank's future of finance lead said that by the end of this decade i.e. by 2023, there will be a total of $5 trillion circulating in the form of CBDCs, in global economy. However, he added that "most of it will not be blockchain-based, but some of it will have blockchain interoperability or be DLT-specific.”

Furthermore, Citi is also betting on the tokenization of financial assets as well as the real-world assets which could be the “killer use-case” for driving the blockchain demand ahead.

In its March report, Citi said that it is possible to tokenize almost everything and expects $4 trillion in tokenized securities to flow worldwide by 2030. However, getting the traditional financial assets on the blockchain platform could be a challenging task with one of the biggest challenges being overcoming the regulatory hurdles. Currently, there are only a few jurisdictions that offer a clear framework for getting traditional assets on-chain.

However, Citi is not the only group betting on the potential of blockchain and its future. In a letter to shareholders released earlier this month, BlackRock’s Larry Fink said that the blockchain technology has “exciting applications”.

Fink added: "In particular, the tokenization of asset classes offers the prospect of driving efficiencies in capital markets, shortening value chains, and improving cost and access for investors”.