Beyond Crypto Assets: How Tokenized Assets Quietly Reshape Market Dynamics

In a recent interview, Fabienne van Kleef, a senior analyst at Global Digital Finance, delved into the current state of tokenized assets, their application scenarios, and their potential to reshape financial markets. She pointed out that tokenization is rapidly becoming the core driving force behind the evolution of financial infrastructure, and its impact may go beyond short-term fluctuations, touching on the deeper logic of market structure, liquidity, and global capital flows.

Tokenization is rapidly developing, and some (like the CEO of BlackRock) claim that its importance may surpass that of artificial intelligence in the future. What is your view on this trend?

Paula Albu: Yes, tokenization is rapidly emerging as a transformative force in the financial sector. 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. Predictions indicate that the potential total market for asset tokenization, covering bonds, funds, real estate, and private markets, could reach trillions of dollars in the next decade. BlackRock CEO Larry Fink stated that the impact of tokenization could even surpass that of artificial intelligence, highlighting the significant importance of this trend. Tokenization is reshaping the way value is represented and transferred, and its impact can be compared to the internet's transformation of information exchange. With a solid foundation, tokenization is expected to profoundly reshape the global financial system.

What are the main application scenarios and challenges facing tokenized assets currently?

Paula Albu: The most active tokenization applications are currently concentrated on financial instruments where efficiency and liquidity are crucial. Tokenized money market funds and bonds are typical representatives. These funds can now operate on multiple blockchains, achieving near-instant settlement of transactions and supporting new cash management processes that allow the subscription and redemption of funds using stablecoins. Sovereign debt, real estate, and private credit are also advancing as tokenization use cases for real-world assets. Their advantages lie in supporting fragmented ownership and providing around-the-clock trading markets, thereby opening up investment channels for traditionally illiquid assets and enhancing their liquidity.

However, challenges still exist. Although regulatory and legal frameworks are steadily advancing, progress varies across different jurisdictions, leading to uncertainty. Countries have different legal recognitions of digital asset custody or blockchain records, which means that tokenized assets may face different treatments when crossing borders. From a technical perspective, interoperability and asset security remain key focuses, although many interoperability issues have been proven to be solvable. The industry sandbox tests conducted by global digital financial organizations regarding tokenized money market funds have demonstrated this, showcasing successful practices in cross-platform transfers. In summary, tokenization has created value in key financial areas such as fund management and the bond market, but further coordination of rules and extensive upgrades to existing institutional infrastructure are still needed to scale these successes and address the challenges mentioned above.

How does tokenization affect the US dollar and traditional forex markets?

Paula Albu: Tokenization is blurring the lines between traditional currency and value transfer, with the US dollar at the center of this transformation. Most stablecoins are explicitly backed by US dollars and short-term US Treasury bonds, which further drives the dollarization in cross-border payments. By 2025, the reserves behind major dollar stablecoins (primarily US Treasury bonds) will be so massive that the total amount of US Treasury bonds held collectively by stablecoin issuers will exceed that of countries like Norway, Mexico, and Australia.

For the traditional foreign exchange market, the popularization of tokenization brings both opportunities and the need for adjustment. On one hand, the emergence of digital currency forms, especially USD stablecoins and the increasingly developed wholesale central bank digital currencies, can make foreign exchange transfers faster and more efficient. This includes achieving around-the-clock, nearly instantaneous cross-currency transaction settlements without relying on correspondent banking networks.

However, regardless of how it develops, regulation remains a key factor. Governments around the world want to ensure that stablecoins can circulate as a trusted form of currency in different markets. For example, the recently passed “GENIUS Act” in the United States clarifies the reserve and redemption requirements for dollar-backed stablecoins, providing the much-needed regulatory clarity. We expect this will enhance market confidence in the widespread use of tokenized dollars.

Overall, tokenization is not expected to completely replace traditional currency; instead, it may lead to a foreign exchange environment where the influence of the dollar remains strong and may even strengthen further. Settlements will tend to be real-time, and the market needs to adapt to a new system where sovereign currencies and their digital token versions can flow seamlessly across interoperable networks.

What happens when every company or institution uses digital wallets to manage tokenized assets?

Paula Albu: If every company holds digital wallets for managing tokenized assets in the future, we will face a vastly different financial landscape: stronger interconnectivity, instantaneous transactions, and a higher degree of decentralization. In this scenario, the role of asset custodians and wallet providers will become crucial. They will evolve from asset custodians to core infrastructure and key service providers, ensuring the security, compliance, and interoperability of wallets and their internal assets.

From a practical perspective, the widespread use of digital wallets means that value can flow easily across the network, just like emails. Real-time settlement will significantly reduce counterparty risk and free up capital. CFOs can directly manage tokenized bonds or accounts receivable, conducting peer-to-peer trading or lending activities with minimal friction. Of course, this requires establishing universal protocols, a regulated digital identity framework, and clarifying the legal status of on-chain transactions.

How does tokenization affect institutional investors in the secondary market and liquidity?

Paula Albu: Tokenization has the potential to greatly enhance liquidity in the secondary market, especially for assets that historically have poor liquidity or are complex to trade. By converting assets into digital tokens, fractional ownership and near-round-the-clock trading become possible, thus expanding the potential range of buyers and sellers. Signs have already been seen in practice: the settlement of tokenized funds and government bonds can be completed almost instantaneously, unlike traditional models which take several days, allowing investors to reallocate capital more quickly. Recent analyses of global digital finance indicate that the settlement of tokenized money market fund units takes only seconds, while traditional money market funds typically require a settlement period of one to three days.

However, it should be noted that in the early stages, the liquidity of the tokenization market may be relatively fragmented. Currently, many tokenized assets exist on different blockchains or closed networks, which can limit liquidity. Moreover, the true liquidity required by institutional investors relies on market confidence. Large participants need to be assured that these tokens represent legitimate claims on the underlying assets and that settlement has finality. Nevertheless, the outlook is optimistic. As standards are unified and infrastructure matures, tokenization will unlock liquidity across various assets, 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 avoid liquidity being trapped in a single chain or jurisdiction.

What strategies can drive institutional participants to adopt tokenized markets and enhance their liquidity?

Paula Albu: The key to the institutional adoption of the tokenization market lies in the coordinated development and mutual maturation of regulation, custody, and infrastructure. Regulatory coordination is the cornerstone. Institutions need a set of cross-border consistent legal definitions regarding ownership, custody, settlement, and asset classification to operate with confidence. Without this, the tokenization market cannot scale, as institutions will face uncertainties in legal enforceability, risk management, and cross-border seamless trading capabilities.

The custody model is also rapidly evolving. As emphasized in the report “Decoding Digital Asset Custody” jointly published by the Global Digital Finance, the International Swaps and Derivatives Association, and Deloitte, most institutional custody frameworks have taken initial shape, particularly in terms of client asset segregation, key management, and operational control. The report points out that many principles of traditional custody can and should be applied to digital assets, while new capabilities need to be introduced to manage risks such as wallet management, distributed ledger network governance, and effective segregation of client and company assets.

Capital treatment is another important consideration. This refers to how the risk exposure of tokenized assets is categorized according to prudential frameworks such as the Basel Committee's “Prudential Standards for Crypto Assets,” which determines the amount of regulatory capital banks must hold. Recent reviews of these standards have further clarified the distinction between tokenized traditional assets and high-risk crypto assets. Under this framework, fully reserved and regulated tokenized assets (such as tokenized money market funds) should fall under Group 1a, thus receiving the same capital treatment as their non-tokenized counterparts.

Interoperability is another key catalyst. The current fragmentation of the ecosystem limits liquidity, making universal standards and cross-platform settlement tracks crucial. Initiatives like Fnality and various central bank digital currency pilot projects have demonstrated that atomic, near-instant settlements can reduce friction. The global digital finance tokenization money market fund project provides a concrete example. In its industry sandbox, tokenized money market fund units have successfully transferred across multiple heterogeneous distributed ledgers and traditional systems (including Ethereum, Canton, Polygon, Hedera, Stellar, Besu, and cash networks like Fnality), proving that tokenized funds can flow freely between platforms. Subsequent simulation tests went further by connecting the SWIFT messaging system with tokenized collateral workflows, completing a full cycle from bilateral to tri-party repos in one minute. These results indicate that interoperability is already feasible in practice and, once widely adopted by the market, can support large-scale liquidity.

Looking to the future, what do you think will be the most transformative impacts of tokenization by 2026?

Paula Albu: By 2026, tokenization will begin to profoundly impact the daily operations of the market. The most direct change will be the shift towards programmable and often real-time settlements, driven by tokenized cash, stablecoins, or central bank digital currencies.

We anticipate that traditionally illiquid assets will gain broader investment channels. The fragmentation in areas such as 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, the regulatory framework of major jurisdictions will become clearer, giving institutions confidence to transition from pilot projects to comprehensive integration. Custodians will expand their digital native service capabilities, support smart contract operations, and strengthen asset recovery mechanisms.