US bank Citizens said blockchain technology could accelerate global GDP by removing “friction taxes” on payments, settlement, administration and ownership verification.
“We believe blockchain adoption can support economic expansion, driven by faster velocity and recirculation of capital; a larger and more innovative investable universe; and infrastructure that better meets the demands of an increasingly digital, AI-enabled world,” analysts led by Devin Ryan said in Tuesday’s report.
The bank’s analysts pointed to a wave of large institutions putting on-chain infrastructure into production. They highlighted the New York Stock Exchange’s plan to launch a tokenized securities platform that would support 24/7 trading of U.S. stocks and exchange-traded funds (ETFs) with near-instant settlement, pending regulatory approval.
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The move signals that incumbent market operators are integrating blockchain into core systems to seize new opportunities and fend off disruptions, the analysts said.
Blockchain’s economic impact will first be reflected in higher capital velocity, the report states. 24-hour markets and near-T+0 settlements can reduce captured collateral and counterparty risk, freeing up balance sheets and allowing the same capital pool to support more real economic activity.
Over time, the analysts said tokenization could expand the investable universe by making it economical to issue, trade and finance assets that are currently illiquid or operationally complex. That includes not only traditional securities, but also new asset classes connected to the digital economy, in addition to more efficient, on-chain collateral for lending.
Tokenization is the process of converting real-world assets into blockchain-based tokens.
Blockchain technology fits in with an increasingly digital, AI-driven economy.
As automation drives the growth of machine-initiated transactions, the bank argued that always-on, programmable blockchain rails are well suited to support the rising demand for real-time settlement, authentication and auditability at scale.
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