Beyond Cryptocurrency: How Tokenized Assets Are Quietly Reshaping Market Landscapes?
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Beyond Cryptocurrency: How Tokenized Assets Are Quietly Reshaping Market Landscapes?
Tokenization is rapidly becoming a core driver in the evolution of financial infrastructure, with impacts that may extend beyond short-term fluctuations to touch the deeper logic of market structure, liquidity, and global capital flows.
Navigating Web3 tides with focused insightsBy: Paula Albu
Translated by: AididioJP, Foresight News
In a recent interview, Fabienne van Kleef, Senior Analyst at Global Digital Finance, delved into the current state of tokenized assets, their use cases, and their potential to reshape financial markets. She emphasized that tokenization is rapidly becoming a core driver in the evolution of financial infrastructure, with impacts likely to extend beyond short-term fluctuations to touch deeper aspects of market structure, liquidity, and global capital flows.
Tokenization is advancing rapidly, with some (like BlackRock's CEO) claiming its future significance could surpass that of artificial intelligence. How do you view this trend?
Paula Albu: Yes, tokenization is emerging as a transformative force within finance. According to industry research by 21.co, the market size for tokenized assets has grown from $8.6 billion in 2023 to over $23 billion by mid-2025. Projections suggest the total addressable market for tokenized assets—including bonds, funds, real estate, and private markets—could reach tens of trillions of dollars within a decade. BlackRock CEO Larry Fink’s statement that tokenization may have an even greater impact than AI underscores the significance of this trend. Tokenization is reshaping how value is represented and transferred, an effect comparable to how the internet transformed information exchange. With solid foundations in place, tokenization holds the potential to profoundly reshape the global financial system.
What are the current primary use cases and challenges facing tokenized assets?
Paula Albu: The most active applications of tokenization today center on financial instruments where efficiency and liquidity are critical. Tokenized money market funds and bonds are prime examples. These funds already operate across multiple blockchains, enabling near-instantaneous settlement and supporting new cash management workflows using stablecoins for fund subscriptions and redemptions. Use cases for tokenizing real-world assets such as sovereign debt, real estate, and private credit are also progressing. Their advantages include enabling fractional ownership and providing 24/7 trading markets, thereby opening investment channels into traditionally illiquid assets and enhancing their liquidity.
However, challenges remain. While regulatory and legal frameworks are steadily evolving, progress varies across jurisdictions, creating uncertainty. Differences in how countries legally recognize digital asset custody or blockchain records mean tokenized assets may face varying treatment when crossing borders. From a technical standpoint, interoperability and asset security remain key concerns, although many interoperability issues have been proven solvable. The Global Digital Finance industry sandbox test on tokenized money market funds demonstrated this, showcasing successful cross-platform transfers. In sum, tokenization is already creating value in key financial areas like fund management and bond markets, but scaling these successes will require further regulatory coordination and widespread upgrades to existing institutional infrastructure to address the aforementioned challenges.
How does tokenization affect the U.S. dollar and traditional foreign exchange markets?
Paula Albu: Tokenization is blurring the lines between traditional currency and value transfer, with the U.S. dollar at the heart of this transformation. Most stablecoins are explicitly backed by U.S. dollars and short-term U.S. Treasuries, further driving dollarization in cross-border payments. By 2025, the reserves behind major dollar-denominated stablecoins—primarily U.S. Treasuries—have become so large that the collective holdings of U.S. Treasuries by stablecoin issuers exceed those of countries such as Norway, Mexico, and Australia.
For traditional foreign exchange markets, the rise of tokenization presents both opportunities and necessitates adaptation. On one hand, the emergence of digital forms of currency—particularly dollar stablecoins and increasingly developed wholesale central bank digital currencies (CBDCs)—can make FX transfers faster and more efficient. This includes enabling 24/7, near-instantaneous cross-currency settlement without reliance on correspondent banking networks.
Regardless of developments, regulation remains a critical factor. Governments want to ensure stablecoins can circulate as trusted forms of money across markets. For example, the recently passed U.S. GENIUS Act clarifies reserve and redemption requirements for dollar payment stablecoins, providing much-needed regulatory clarity. We expect this will bolster confidence in large-scale use of tokenized dollars.
Overall, tokenization is not expected to fully replace traditional currencies, but rather may lead to a foreign exchange environment where the dollar’s influence remains strong—or possibly even strengthens. Settlement will trend toward real-time, and markets will need to adapt to a new system where sovereign currencies and their digital tokenized versions flow seamlessly across interoperable networks.
What happens when every company or institution uses digital wallets to manage tokenized assets?
Paula Albu: If in the future every company holds digital wallets for managing tokenized assets, we will face a fundamentally different financial landscape—one that is more interconnected, transactionally instantaneous, and decentralized. In this scenario, the roles of custodians and wallet providers will become crucial. They will evolve from mere asset keepers into core infrastructure and essential service providers, ensuring the security, compliance, and interoperability of wallets and the assets they hold.
From a practical perspective, widespread adoption of digital wallets means value can flow across networks as easily as email. Real-time settlement will significantly reduce counterparty risk and unlock capital. Corporate treasurers could directly manage tokenized assets such as bonds or receivables, conducting peer-to-peer transactions or lending activities with minimal friction. Of course, this requires establishing common protocols, regulated digital identity frameworks, and clear legal status for on-chain transactions.
How does tokenization impact secondary markets and liquidity for institutional investors?
Paula Albu: Tokenization has the potential to greatly enhance liquidity in secondary markets, especially for assets historically plagued by illiquidity or complex trading processes. By converting assets into digital tokens, fractional ownership and near-24/7 trading become possible, expanding the pool of potential buyers and sellers. Early signs are already visible: settlement of tokenized funds and government bonds can occur almost instantly, compared to days under traditional models, allowing investors to reposition capital much faster. Recent analysis by Global Digital Finance shows that units of tokenized money market funds settle in seconds, while traditional money market funds typically require one to three days.
However, in early stages, liquidity in tokenized markets may be fragmented. Many tokenized assets currently exist on separate blockchains or closed networks, which limits liquidity. Moreover, true liquidity required by institutional investors depends on market confidence. Major participants must be assured that these tokens represent legitimate claims on underlying assets and that settlements are final. Nonetheless, the outlook is positive. As standards converge and infrastructure matures, tokenization will unlock liquidity across asset classes—from private equity to infrastructure projects—by making secondary trading smoother. Currently, we encourage the industry to develop shared standards and cross-platform integration solutions to prevent liquidity from being trapped on single chains or within specific jurisdictions.
What strategies can drive institutional adoption of tokenized markets and improve their liquidity?
Paula Albu: Institutional adoption of tokenized markets hinges on the coordinated development and maturation of regulation, custody, and infrastructure. Regulatory harmonization is foundational. Institutions need cross-border consistent legal definitions regarding ownership, custody, settlement, and asset classification to operate confidently. Without this, tokenized markets cannot scale, as institutions would face uncertainties around legal enforceability, risk management, and seamless cross-border transactions.
Custody models are also rapidly evolving. As highlighted in the joint report by Global Digital Finance, the International Swaps and Derivatives Association (ISDA), and Deloitte titled "Decrypting Digital Asset Custody," most institutional-grade custody frameworks are now taking shape, particularly in areas such as client asset segregation, key management, and operational controls. The report notes that many principles of traditional custody can and should apply to digital assets, while new capabilities are needed to manage risks such as wallet management, governance of distributed ledger networks, and effective separation of client and firm assets.
Capital treatment is another key consideration. This refers to how exposures to tokenized assets are classified under prudential frameworks such as the Basel Committee’s "Prudential Treatment of Cryptoasset Exposures," which determines the amount of regulatory capital banks must hold. Recent updates to this standard have further clarified distinctions between tokenized traditional assets and high-risk cryptoassets. Under this framework, fully reserved and regulated tokenized assets—such as tokenized money market funds—should fall into Group 1a, receiving capital treatment equivalent to their non-tokenized counterparts.
Interoperability is another critical catalyst. Fragmentation in the current ecosystem limits liquidity, making universal standards and cross-platform settlement rails essential. Initiatives like Fnality and various central bank digital currency pilots have already demonstrated that atomic, near-instant settlement can reduce friction. The Global Digital Finance tokenized money market fund project offers a concrete example. Within its industry sandbox, units of tokenized money market funds were successfully transferred across multiple heterogeneous distributed ledgers and traditional systems—including Ethereum, Canton, Polygon, Hedera, Stellar, Besu, and institutional cash networks like Fnality—proving that tokenized funds can move freely across platforms. Subsequent simulation tests went further, integrating SWIFT messaging with tokenized collateral workflows to complete bilateral and tri-party repo cycles within one minute. These results show that interoperability is already feasible in practice and, once widely adopted, can support large-scale liquidity.
Looking ahead, what do you see as the most transformative impacts of tokenization by 2026?
Paula Albu: By 2026, tokenization will begin to deeply influence the day-to-day functioning of markets. The most immediate change will be a shift toward programmable—and often real-time—settlement, driven by tokenized cash, stablecoins, or central bank digital currencies.
We expect traditionally illiquid assets to gain broader investor access. Fractionalization in private equity, infrastructure, and private credit will open these markets to a wider range of institutional participants and enhance their liquidity.
At the same time, regulatory frameworks in major jurisdictions will become clearer, giving institutions the confidence to move from pilot programs to full integration. Custodians will expand their digital-native service offerings, supporting smart contract operations and strengthening asset recovery mechanisms.
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