Why tokenization is gaining momentum

PodcastMaking SenseOli HarrisSep 22

Tokenization’s momentum is framed as a change in market structure, with demand emerging for tokenized funds, bonds, and equities and financial market infrastructures weighing the foundations needed to scale. Its potential to improve cross-border operations, collateral use, and settlement depends on clearer regulation, interoperability, an on-chain cash leg, and easier integration for traditional users. The speaker expects tokenized funds, securities, and cash to become more common over the next five years, while the guest anticipates custodians will serve traditional and digital assets across legacy and blockchain-based rails.

Tokenization Market Structure Financial Regulation

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Key Takeaways

The guest says tokenization's renewed momentum is driven by market structure transformation, not crypto price speculation, with participants, assets, and cash coming together on shared rails. Demand for tokenized money market funds, bonds, and equities—and client discussions of tokenized ETFs as a potentially simpler distribution mechanism—are accompanying financial market infrastructures' efforts to prepare production-grade systems.

The guest says scaling blockchain adoption requires making the technology largely invisible to traditional users, since difficult navigation and integration with existing systems remain barriers. The speaker also identifies regulatory and legal clarity, interoperability across blockchains and platforms, and an on-chain cash leg for true DDP settlement as prerequisites for tokenization's efficiency gains at scale.

The speaker says international expansion leaves firms managing fragmented liquidity, differing settlement timelines, intermediaries, and operational complexity, while Treasury teams also handle pre-funding, multiple currencies, and around-the-clock payment flows. More efficient movement of assets, cash, and collateral could simplify operations and improve capital efficiency; tokenization could over time support that through collateral mobility and selected securities workflows that reduce idle time, manual cutoffs, and settlement friction.

TECHNOLOGY

Shared Rails — The guest says tokenization’s renewed momentum reflects a transformation in market structure, not crypto price speculation or hype around a single asset. Participants, assets, and cash are coming together on shared rails to drive commercial outcomes.

“This time around, it's not about crypto price speculation, nor is it about hype around any one asset…”—

Institutional Demand — The guest reports demand for tokenized money market funds, bonds, and equities. Financial market infrastructures are considering what foundations they need to scale production-grade systems.

“Then in the asset space, we see demand for tokenized money market funds, bonds, and equities as all areas of real interest…”—

User Experience — The guest says blockchain adoption at scale depends on making the technology largely invisible to traditional users. Difficult navigation and integration with existing systems remain barriers.

“Aside from a handful of well built apps, blockchain is still hard to navigate for a traditional user, and connecting it into existing systems is harder still…”—

MARKETS

Cross-Border Efficiency — The speaker says global expansion exposes firms to fragmented liquidity, differing settlement timelines, more intermediaries, and operational complexity. More efficient movement of assets, cash, and collateral across markets could simplify operating models, improve capital efficiency, and help firms scale with more confidence.

“Because global expansion exposes fragmented liquidity, differing settlement timelines, more intermediaries and growing operational complexity…”—

Treasury Demands — The speaker says Treasury teams expanding internationally must manage pre-funding requirements, multiple currencies, and around-the-clock payment flows simultaneously.

“We see Treasury teams, they grow internationally, finding themselves managing pre funding requirements, multiple currencies and around the clock payment flows all at once.”—

FORECASTS

Tokenization Growth — The speaker expects there to be more tokenized funds, securities, and cash in five years than today. The scale of the change will depend on how quickly the industry overcomes the challenges discussed.

“So given all of this, I think in five years' time, we are going to see more tokenized funds, securities and cash than we do today…”—

Tokenization’s Market Shift

The hosts and guest attribute tokenization’s renewed momentum to converging market participants, clearer regulation, on-chain cash, and institutions’ demand for practical liquidity and settlement improvements.

Tokenized Funds And Securities

The discussion highlights stablecoin-driven demand, tokenized money market funds, collateral use, and institutional interest in tokenized equities, bonds, and ETFs.

Payments And Market Infrastructure

Clients seek lower prefunding needs and always-on cross-border payments, while financial market infrastructures assess the foundations required to scale tokenized assets and settlement.

JPMorgan’s Digital Asset Roadmap

JPMorgan describes plans for digital custody and tokenization, its blockchain platform and payment capabilities, and support for tokenized funds, collateral, and securities workflows.

Scaling Tokenized Markets

The speakers see opportunities in treasury, payments, collateral, and securities but identify privacy, finality, integration, regulation, interoperability, and on-chain cash as conditions for broader adoption.

Custody’s Five-Year Outlook

The hosts expect more tokenized funds, securities, and cash over the next five years, with custodians servicing traditional and digital assets across legacy and blockchain-based rails.