Recently, there has been a significant increase in institutional interest in the digital asset and blockchain sector. This is especially noticeable post-2022, a year that saw increased regulation and acceptance of cryptocurrencies. Financial sectors have been among the first to adopt these technologies, leading the way in understanding and accepting this new wave of digital innovation.
The U.S. Securities and Exchange Commission’s approval of Bitcoin ETFs in January was a game-changer. Blackrock’s Bitcoin ETF notably reached the $10 billion mark in wealth managed within two months, revealing the major growth of cryptocurrency within the mainstream financial markets. Further evidence can be seen in the fact many technology companies are also exploring blockchain technology.
Blackrock’s CEO, Larry Fink, remains optimistic about the future of digital assets, predicting a world in which securities and real-world assets will all be tokenized. A 2022 BCG report supports this view, projecting that the global tokenized assets market could be worth a staggering $16 trillion by 2030.
Post-2022 surge in digital asset interest
This shows the magnitude of this digital transformation, with everything from trade and investment to personal finance potentially being revolutionized.
Blackrock made a pioneering move with the launch of a tokenized fund, investing in US Treasury bills, cash and repurchase agreements. Notably, this fund was launched on the public Ethereum network, with a fixed token value of $1 and monthly dividends for investors.
The Hong Kong government too is getting in on the digital action, recently issuing a $750 million digital green bond via the Orion platform. This historic move was the largest of its kind, involving over 50 international investors and multiple currencies, and underlines the Hong Kong government’s commitment to both sustainable finance and digital innovation.
Over the course of 2022, many institutions, along with fintech partners, utilized smart contract and distributed ledger technology, two innovations that have greatly enhanced transparency and security in transactions. Moreover, with the interest in digital assets growing ever higher, it seems probable that the mainstream financial ecosystem will continue to integrate these technologies as we move further into 2023.
The rapid turnaround in digital asset market interest raises the question, what led to this shift? Many see the introduction of Ethereum in 2015 as a critical catalyst, with the platform’s support of smart contracts and the launch of new digital currencies paving the way for a new era in digital assets. Although this growth did lead to inflated expectations and market volatility, many see these challenges as necessary hurdles to creating a more mature market. As such, the reinvigorated interest is not just hype, but the result of years of development in the realm of digital assets and blockchain technology.
