- TD Cowen projects onchain capital could exceed $100 trillion within five years.
- Current on-chain capital has grown to approximately $4.6 trillion since 2020.
- Major financial institutions are converging on common blockchain asset protocols.
TD Cowen analysts have projected that onchain capital could surpass $100 trillion within five years as tokenization gains traction across financial institutions. The forecast comes as political and regulatory developments have exceeded expectations, according to the bank’s recent note.
Onchain capital has grown to roughly $4.6 trillion since 2020. The analysts stated that major financial institutions are now converging on shared protocols for moving assets via blockchain technology.
Practical Benefits Drive Institutional Adoption
Tokenization involves creating blockchain-based representations of traditional assets, including bank deposits, money market funds, treasuries, stocks, and real estate. These digital versions enable near-instant settlement, operate continuously, and integrate with smart contracts.
The appeal centers on practical advantages such as reduced costs and accelerated settlement for cross-border transfers. Programmable finance capabilities allow direct integration with existing capital markets infrastructure.
Staked assets like ether have become part of the onchain capital formation yield engine, according to the analysis. This development adds return-generating mechanisms to blockchain-based asset holdings.
BNY Mellon is exploring tokenized deposits to modernize payment systems. BlackRock is evaluating opportunities to tokenize funds linked to real-world assets, moving tokenization from conceptual presentations to active pilot programs.
Policy developments support the trend. The United Kingdom plans to appoint a “digital markets champion” to coordinate tokenization across wholesale markets. Large U.S. and European banks are jointly exploring stablecoin products that could serve as onchain cash alongside deposit tokens.
Institutional Investors Increase Allocation Plans
Demand appears to be growing among institutional investors. A State Street survey found most institutional investors expect their digital asset exposure to double within three years. More than half anticipate 10-24% of portfolios will be tokenized by 2030.
Robinhood’s CEO has predicted that most major markets will implement tokenization frameworks by 2030. These projections align with TD Cowen’s bullish outlook on adoption timelines.
“While the path remains bumpy, political/regulatory progress has far exceeded what we had expected even two years ago,” TD Cowen analysts wrote. The bank characterized the trend as too large to ignore, given the current trajectory. If institutions settle on shared standards, onchain assets could reach an inflection point, pushing tokenization from pilots to production-scale deployment.
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