Europe Digital Tokenization Market to Hit Valuation of USD 3,742.2 Million By 2032, at 18.9% CAGR: Astute Analytica

The European digital tokenization market is booming, fueled by regulatory clarity, institutional adoption, and diverse use cases. While challenges like workforce upskilling and interoperability remain, the market shows immense potential for efficiency, security, and liquidity across sectors, positioning Europe as a leader in this transformative technology.

New Delhi, April 16, 2024 (GLOBE NEWSWIRE) — According to the latest research by Astute Analytica, the Europe digital tokenization market is projected to reach US$ 3,742.2 million by 2032, up from US$ 789.0 million in 2023, at a CAGR of 18.9% during the forecast period 2024–2032.

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Europe’s digital tokenization market offers a highly lucrative landscape for businesses. The region’s established market share – approximately 25% of the global tokenization market as of 2022 – is heavily influenced by progressive regulatory approaches. The EU’s MiCA regulation stands out as a major catalyst, prioritizing innovation, consumer protection, and financial stability. It offers clarity and a unified framework under which crypto businesses can confidently operate within the EU, aiming to close regulatory gaps by 2024. As per Astute Analytica, favorable consumer sentiment further solidifies Europe’s potential. Roughly 35% of European adults had invested in or used cryptocurrencies or tokenized assets by 2021, with adoption likely to increase significantly by 2025. This demonstrates growing public acceptance and trust in the benefits of this technology. The institutional demand for tokenized assets is even more pronounced, as reports indicate over 60% of European institutional investors plan to increase their exposure – a clear sign of confidence in the long-term viability of the market.

This favorable environment has spurred cross-sector innovation. Mainstream financial institutions across the Europe digital tokenization market are integrating tokenization platforms with far-reaching applications. Société Générale’s €100 million bond issuance as a security token in 2019 serves as a prime example. The trend is further supported by European countries collectively investing over €350 million in blockchain projects, demonstrating a commitment to the underlying technology.

Specific to MiCA, its harmonization of the regulatory landscape is likely to make Europe even more attractive for crypto businesses. MiCA strives to protect European consumers while fostering innovation, all within a framework that aims to prevent misuse and combat market manipulation. A focus on stablecoins, transparency requirements via whitepapers, and strong consumer protections within MiCA illustrate how the regulation seeks to create a space where both responsible businesses and the everyday investor can thrive.

Trends to Watch Out in Europe Digital Tokenization Market

Increased Institutional Adoption

  • Major financial institutions like BlackRock, JP Morgan, and Hamilton Lane are developing tokenized funds and assets, signaling growing mainstream adoption.
  • HSBC has tokenized physical gold in its London vault for institutional clients
  • The World Bank issued a digital bond on Euroclear’s DLT solution
  • Regulated entities will start tokenizing cash, with large financial institutions issuing stablecoins, e-money or deposit tokens.

Tokenization of Real-World Assets (RWAs)

  • There is immense interest and potential in tokenizing real-world assets like real estate, art, commodities, stocks, and intellectual property rights
  • Tokenizing RWAs can bring hundreds of trillions of dollars on-chain and transform both the crypto and financial industries
  • Benefits include increased liquidity, reduced friction in asset transfer, and greater accessibility to a global market

Key Findings in Europe Digital Tokenization Market

Market Forecast (2032) US$ 3,742.2 million
CAGR 18.9%
By Component Solution (81%)
By Deployment Mode Cloud (64%)
By Industry BFSI (20%)
By Organization Size Large (68%)
By Applications Payment Security (37%)
Top Trends
  • Regulatory clarity and proactive frameworks like MiCA
  • Increased adoption by institutional investors and the BFSI sector
  • Tokenization use cases expanding to sectors like art and real estate
Top Drivers
  • Demand for enhanced security and fraud prevention
  • Growth of digital payments and e-commerce
  • Need for greater liquidity and fractionalization of assets
Top Challenges
  • Need for upskilling/reskilling programs for a digitally fluent workforce
  • Nascent technology with evolving implementation standards
  • Ensuring interoperability between different tokenization platforms

Digital Transformation Powers the Future of BFSI in Europe Digital Tokenization Market, Capture over 20% Market Share

Europe is embracing tokenization technology with a proactive regulatory approach. The Markets in Crypto-Assets (MiCA) regulation offers much-needed clarity, contrasting with the stifling uncertainty in the US.  This, along with early regulatory adoption in Germany, has made Europe a more attractive environment for digital securities. The BFSI sector is a key driver, with a substantial 20% revenue share in the market in 2022. Open banking frameworks and GDPR compliance necessitate tokenization to protect customer trust. Successful STOs are proliferating – 64 projects were launched in 2019 alone. Tokenization offers benefits beyond finance. It unlocks potential revenue streams within the metaverse for European companies, particularly major sports brands. Within traditional finance, tokenization promises efficiencies, cost savings, and new revenue opportunities.

Digital adoption trends in Europe digital tokenization market correlate with a country’s per capita GDP.  Wealthier nations like Denmark and the UK lead the charge, while others demonstrate growth even with lower GDP. European organizations are tackling the skills gap through upskilling and reskilling programs focused on data analysis and digital fluency. Challenges remain, with some technology vendor misalignment and 30% of European companies lagging in technology adoption. To drive this transformation, the European Commission launched the Tokenise Europe 2025 initiative. Industry surveys highlight widespread belief in both the relevance of tokenization and Europe’s ability to become a global leader in this revolutionary space.

Large Enterprises are Capturing Over 68% Revenue Share of Digital Tokenization Market in Europe

Large enterprises dominate the European digital tokenization market, claiming a 68% share in 2023. This is due to factors like the sheer volume of data they handle, magnifying the risks of potential breaches.  Tokenization offers enhanced security, making it a compelling solution for these companies. Regulatory developments are playing a crucial role. The recent approval of the EU’s Markets in Crypto-Assets (MiCA) legislation provides the clear guidance businesses crave. Europe’s proactive approach, focused on clarifying token types while supporting innovation, contrasts with US regulatory uncertainty.

While large enterprises lead the charge, adoption is accelerating among small and medium-sized enterprises (SMEs) in the EU. In 2021, 55% of SMEs had reached a basic level of digital intensity compared to 88% of large enterprises. This underscores the growing mainstream acceptance of tokenization solutions. Early experimentation across various asset classes (like corporate bonds and private funds) showcases the potential for tokenization to scale significantly within the next 2-5 years. Businesses are closely examining the value proposition and implementation paths for this technology. The rise of high-speed connectivity supports this transition. Between 2011 and 2019, the share of EU enterprises using internet connections of over 100 Mb/s tripled. This robust infrastructure is crucial for handling tokenized transactions in the Europe digital tokenization market.

The pandemic accelerated digital transformation, further boosting tokenization. New regulations (like GDPR), competitive pressures, and growth opportunities were key drivers. Additionally, industry forecasts highlight an AI-driven future, with AI embedded in 90% of new enterprise apps by 2025 and over 50% of enterprises adopting industry cloud platforms by 2027. With security a major concern, tokenization offers a compelling answer. Businesses and consumers seek its ability to reduce risk exposure, combat fraud, and enable frictionless digital payments while maintaining compliance. Tokenization’s potential to tackle payment card fraud and associated lost sales is a significant factor in driving its adoption.

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Europe Digital Tokenization Market is Highly Consolidated with Top 10 Players Capturing More Than 51% Revenue Share

The Europe digital tokenization market is highly consolidated, with the top 10 players holding over 51% market share as of 2023. Mastercard International Incorporated, Hewlett-Packard Enterprises, Fiserv, and Thales are the clear market leaders.

The key players are competing based on solution functionality, technology partnerships, pricing, and ability to cater to specific industry needs. Continuous innovation is critical to gaining market share. Consolidation through mergers and acquisitions is a key trend as companies look to quickly gain capabilities and scale. For example, Fiserv acquired First Data in 2019 to boost its payments infrastructure and tokenization capabilities. Moreover, partnerships are also common, such as MeaWallet launching a unified tokenization solution in 2019 supporting Visa, Mastercard and American Express tokens through a single connection. This allows them to more easily connect to various ecosystem stakeholders.

Astute Analytica’s latest report says that Mastercard leading the European digital tokenization market with over 8% market share. Mastercard’s aggressive expansion in the digital payments ecosystem positions it as a formidable player in the European market. Its partnership with Nexi, along with collaborations with major players like Circle, Crypto.com, and Goldman Sachs, underscore its innovation focus. Mastercard’s acceptance at 100 million locations globally further solidifies its reach and influence within Europe. The company holds a sizable share of Europe’s credit card market – 36% by cards in circulation and 24.13% in market share. Its impressive financial performance, including 11% revenue growth in Q1 2023, is fueled by robust European figures like a 22% increase in purchase volume (reaching $510 billion) and a 16% rise in cards issued (totalling 743 million).

Mastercard’s dominance in the digital tokenization market extends to cross-border transactions, with a 35% growth in volume in Q1 2023. This aligns with the growth of digital tokenization, which simplifies cross-border payments.  Secular shifts away from cash within key European markets benefit Mastercard directly. The company’s value-added services, reflected in a 19% worldwide growth in Q1, leverage its data capabilities for further differentiation. Within tokenization, Mastercard enables mobile payments through major digital wallets and supports cross-network tokenization, demonstrating adaptability in a competitive market.  Despite competition, Mastercard’s significant market share, strategic partnerships, financial growth, and innovation in cross-border and tokenized payments suggest it holds a strong position in the evolving European digital tokenization landscape.

Europe Digital Tokenization Market Key Players

  • American Express
  • Fidelity National Information Services Inc
  • First data corporation
  • Fiserv
  • Futurex
  • Global Payments
  • Hewlett-Packard Enterprises
  • Lookout (CipherCloud)
  • Mastercard International Incorporated
  • Micro focus
  • Protegrity
  • Thales
  • TokenEx
  • Visa (CyberSource)

Key Segmentation:

By Component

  • Solution
  • Services
    • Professional Services
    • Managed Services

By Deployment Mode

  • Cloud
  • On-Premises

By Organization Size

  • Large Enterprises
  • SMEs

By Application

  • Payment Security
  • User Authentication
  • Compliance Management

By Industry

  • BFSI
  • Retail
  • Healthcare and Pharma
  • Travel & Hospitality
  • IT & Telecom
  • Media & Entertainment
  • Government and Defense
  • Others

By Country

  • Western Europe
    • The UK
    • Germany
    • France
    • Italy
    • Spain
    • Rest of Western Europe
  • Eastern Europe
    • Poland
    • Russia
    • Rest of Eastern Europe

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About Astute Analytica

Astute Analytica is a global analytics and advisory company which has built a solid reputation in a short period, thanks to the tangible outcomes we have delivered to our clients. We pride ourselves in generating unparalleled, in depth and uncannily accurate estimates and projections for our very demanding clients spread across different verticals. We have a long list of satisfied and repeat clients from a wide spectrum including technology, healthcare, chemicals, semiconductors, FMCG, and many more. These happy customers come to us from all across the Globe. They are able to make well calibrated decisions and leverage highly lucrative opportunities while surmounting the fierce challenges all because we analyze for them the complex business environment, segment wise existing and emerging possibilities, technology formations, growth estimates, and even the strategic choices available. In short, a complete package. All this is possible because we have a highly qualified, competent, and experienced team of professionals comprising of business analysts, economists, consultants, and technology experts. In our list of priorities, you-our patron-come at the top. You can be sure of best cost-effective, value-added package from us, should you decide to engage with us.

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