Security tokenization set to explode in 2023, says VanEck executive

VanEck, a New York-based investment group, is bullish on security tokenization and expects financial institutions to tokenize over $25 billion in off-chain assets onto blockchains next year. According to VanEck's head of digital assets research, Matthew Sigel, this will allow companies to simplify custody and settlement, while also reducing costs for customers. The firm's CEO, Jan van Eck, has also stated that the company will focus on crypto-native products and solutions in the coming year.

VanEck is not the only institution interested in the tokenization space. The central bank of Singapore recently partnered with JPMorgan Chase for Project Guardian, a blockchain pilot that sought to tokenize bonds and deposits using smart contracts. State Street is also reportedly working on using distributed ledger technology to tokenize funds and private assets in order to improve efficiency and accessibility. Fund group WisdomTree, which manages $76 billion in assets, has also expressed an interest in bringing fixed income, equities, and commodities into the digital world through blockchain-enabled funds and tokenized exposures.

In addition to these developments, BlackRock CEO Larry Fink recently stated that "the next generation for markets and next generation for securities will be tokenization of securities." VanEck itself has a range of crypto-related products, including crypto indexes and exchange-traded products (ETPs) in Europe that invest in single tokens or baskets of cryptoassets. The firm also has 68 ETFs trading in the US, three of which offer exposure to the crypto space.

However, not all of VanEck's crypto-related products have been successful. Its Digital Transformation ETF (DAPP) and Bitcoin Strategy ETF (XBTF) are down 83% and 63% this year, respectively, and each have about $20 million in assets. The VanEck Gold and Digital Assets Mining ETF (DAM), which has less than $1 million in assets, is down 81% this year. Industry watchers have predicted that ETF issuers will shut down various crypto-related ETFs due to the persistent drawdown. VanEck's CEO has acknowledged that the company is reviewing the DAM fund due to the underlying constituents' shrinkage in market cap.

VanEck executives also expect that bitcoin could sink to a range between $10,000 and $12,000 in the coming months due to a wave of miner bankruptcies. However, they believe that sovereign institutions could drive a projected bitcoin price increase in the second half of next year. VanEck is not alone in this belief; billionaire investor Paul Tudor Jones recently stated that sovereign wealth funds could drive the next bitcoin bull run.

Overall, it seems that VanEck is confident in the future of security tokenization and the potential for sovereign institutions to drive adoption. The firm is focusing on crypto-native products and solutions in the coming year, and expects financial institutions to tokenize a significant amount of assets onto blockchains. While VanEck's crypto-related ETFs have not performed well this year, the company is still interested in the space and is looking to the future potential of tokenization.