Beyond Cryptocurrency: How Tokenized Assets Are Quietly Reshaping Market Dynamics

Tokenization is rapidly becoming a core driving force in the evolution of financial infrastructure, with an impact that may surpass short-term fluctuations and touch upon the deeper logic of market structure, liquidity, and global capital flows.

Written by: 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 application scenarios, and their potential to reshape financial markets. She pointed out that tokenization is rapidly becoming a core driving force in the evolution of financial infrastructure, with an impact that may surpass short-term fluctuations and touch upon the deeper logic of market structure, liquidity, and global capital flows.

Tokenization is developing rapidly, and some (such as the CEO of BlackRock) claim that its future significance may surpass artificial intelligence. How do you view 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 $860 million in 2023 to over $2.3 billion by mid-2025. Forecasts indicate that the potential total market for asset tokenization—including bonds, funds, real estate, and private markets—could reach tens of trillions of dollars within a decade. BlackRock CEO Larry Fink has stated that the impact of tokenization could even be greater than that of artificial intelligence, highlighting the significance of this trend. Tokenization is reshaping the way value is represented and transferred, with an impact comparable to how the internet transformed information exchange. With a solid foundation, tokenization is poised to profoundly reshape the global financial system.

Currently, what are the main application scenarios and challenges for tokenized assets?

Paula Albu: The most active applications of tokenization are currently focused on financial instruments where efficiency and liquidity are crucial. Tokenized money market funds and bonds are typical examples. These funds can already operate on multiple blockchains, achieving near-instant settlement of transactions and supporting new cash management processes that allow fund subscriptions and redemptions using stablecoins. The tokenization of real-world assets such as sovereign debt, real estate, and private credit is also advancing. The advantages lie in supporting fractional ownership and providing 24/7 trading markets, thereby opening investment channels for traditionally illiquid assets and enhancing their liquidity.

However, challenges remain. Regulatory and legal frameworks are steadily catching up, but progress varies across jurisdictions, leading to uncertainty. Countries differ in their legal recognition of digital asset custody or blockchain records, meaning tokenized assets may face different treatment when crossing borders. From a technical perspective, interoperability and asset security remain key focuses, although many interoperability challenges have proven solvable. The industry sandbox test on tokenized money market funds by Global Digital Finance demonstrated this, showcasing successful cross-platform transfers. In summary, tokenization has created value in key financial areas such as fund management and bond markets, but scaling these successes will require further regulatory coordination and extensive upgrades to existing institutional infrastructure to address the above challenges.

How does tokenization affect the US dollar and traditional foreign exchange markets?

Paula Albu: Tokenization is blurring the boundaries between traditional currencies and value transfer, with the US dollar at the center of this transformation. Most stablecoins are explicitly backed by the US dollar and short-term US Treasuries, further driving dollarization in cross-border payments. By 2025, the reserves behind major US dollar stablecoins (mainly US Treasuries) will be so substantial that the total amount of US Treasuries collectively held by stablecoin issuers will exceed the holdings of countries such as Norway, Mexico, and Australia.

For traditional foreign exchange markets, the rise of tokenization brings both opportunities and the need for adjustment. On one hand, the emergence of digital currency forms—especially US dollar stablecoins and the growing development of wholesale central bank digital currencies—can make FX transfers faster and more efficient. This includes enabling 24/7, near-instant cross-currency transaction settlement without relying on correspondent banking networks.

Regardless of how things develop, regulation remains a key factor. Governments want to ensure that stablecoins can circulate as trusted forms of currency in different markets. For example, the recently passed GENIUS Act in the US clarifies reserve and redemption requirements for US dollar payment stablecoins, providing much-needed regulatory clarity. We expect this will boost market confidence in the large-scale use of tokenized US dollars.

Overall, tokenization is not expected to completely replace traditional currencies; rather, it may lead to a foreign exchange environment where the influence of the US dollar remains strong or even further strengthened. Settlement will become more real-time, and markets will need to adapt to a new system where sovereign currencies and their digital token versions flow seamlessly across interoperable networks.

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

Paula Albu: If, in the future, every company holds digital wallets to manage tokenized assets, we will face a radically different financial landscape: more interconnected, with instant transactions and a higher degree of decentralization. In this scenario, the roles 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 the assets within them.

From a practical perspective, widespread use of digital wallets means that value can flow through the network as easily as email. Real-time settlement will significantly reduce counterparty risk and free up capital. Corporate treasurers could directly manage tokenized bonds or receivables, conducting peer-to-peer transactions or lending activities with minimal friction. Of course, this will require the establishment of universal protocols, regulated digital identity frameworks, and clear legal status for on-chain transactions.

How does tokenization affect secondary markets and liquidity for institutional investors?

Paula Albu: Tokenization has the potential to greatly enhance secondary market liquidity, especially for assets that have traditionally been illiquid or complex to trade. By converting assets into digital tokens, fractional ownership and near-24/7 trading become possible, expanding the pool of potential buyers and sellers. This is already evident in practice: settlement of tokenized funds and government bonds can be completed almost instantly, rather than taking several days as in traditional models, allowing investors to reallocate capital more quickly. Recent analysis by Global Digital Finance shows that settlement of tokenized money market fund units takes only a few seconds, whereas traditional money market funds typically require a one- to three-day settlement period.

However, it should be noted that in the early stages, liquidity in tokenized markets may be relatively fragmented. Many tokenized assets currently exist on different blockchains or closed networks, which can limit liquidity. In addition, the true liquidity required by institutional investors depends on market confidence. Large participants need to be assured that these tokens represent legitimate claims on the underlying assets and that settlement is final. Nevertheless, the outlook is optimistic. As standards become unified and infrastructure matures, tokenization will unlock liquidity for a wide range of 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 on a single chain or within a single jurisdiction.

What strategies can drive institutional adoption of tokenized markets and enhance their liquidity?

Paula Albu: The key to institutional adoption of tokenized markets lies in the coordinated and simultaneous development 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 in order to operate with confidence. Without this, tokenized markets cannot scale, as institutions would face uncertainties in legal enforceability, risk management, and seamless cross-border trading capabilities.

Custody models are also evolving rapidly. As highlighted in the joint report "Decoding Digital Asset Custody" by Global Digital Finance, the International Swaps and Derivatives Association, and Deloitte, most institutional-grade custody frameworks have already taken shape, especially in terms of client asset segregation, key management, and operational controls. The report notes that many principles of traditional custody can and should be applied to digital assets, while new capabilities must 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 risk 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 reviews of this standard have further clarified the distinction 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 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, so universal standards and cross-platform settlement rails are essential. Initiatives such as Fnality and various central bank digital currency pilot projects have already demonstrated that atomic, near-instant settlement can reduce friction. The tokenized money market fund project by Global Digital Finance provides a concrete example. In its industry sandbox, tokenized money market fund units 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 between platforms. Subsequent simulation tests went further, connecting the SWIFT messaging system with tokenized collateral workflows and completing the full cycle from bilateral to triparty repo within one minute. These results show that interoperability is already feasible in practice and, once widely adopted by the market, can support large-scale liquidity.

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

Paula Albu: By 2026, tokenization will begin to deeply influence the daily operations of markets. The most direct change will be the shift toward programmable and often real-time settlement, driven by tokenized cash, stablecoins, or central bank digital currencies.

We expect that traditionally illiquid assets will gain broader investment channels. The fractionalization of 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 projects to full integration. Custodians will expand their digital-native service capabilities, support smart contract operations, and strengthen asset recovery mechanisms.