Tokenization is poised to revolutionize the financial industry at a pace exceeding that of the digital disruption witnessed in media, according to Keith Grossman, president of crypto payments company MoonPay. This prediction highlights the transformative potential of representing real-world assets (RWAs) on the blockchain, offering benefits such as increased market access, enhanced scalability, reduced costs, and faster settlement times.
Grossman emphasizes that while digitization initially sparked fears within traditional media, it ultimately drove evolution and adaptation. Similarly, tokenization is expected to compel traditional financial institutions to embrace change or risk being left behind. Examples such as BlackRock's tokenized funds and Franklin Templeton's tokenized money market funds operating on public blockchains, coupled with major global banks piloting on-chain settlement and tokenized deposits, illustrate this shift.
Several advantages of tokenization are contributing to its rapid adoption. Tokenization can unlock trillions of euros in currently illiquid assets. One key benefit is the potential for 24/7 market access, a significant departure from traditional markets with limited operating hours. The SEC and CFTC have already issued a joint statement about establishing a regulatory framework that would facilitate 24/7 capital markets. Tokenization also enables the global scalability of asset classes, reduces transaction costs through disintermediation, and achieves faster settlement times. Smart contracts automate certain parts of the exchange process, reducing the administrative burden and the need for intermediaries, leading to faster deal execution and lower transaction fees.
The rise of stablecoins and tokenized money is also a factor, potentially unlocking annual savings of up to £30 billion through instant settlements, reduced intermediation, and programmable collateral. The UK, a leader in foreign exchange markets, recognizes the importance of implementing tokenization and utilizing stablecoins to maintain its competitive edge.
The UK government and the Financial Conduct Authority (FCA) are actively exploring blockchain technology. The Bank of England conducted a survey in collaboration with the Bank for International Settlements, revealing the UK's dominance in foreign exchange and OTC interest rate derivatives markets. The FCA is committed to finalizing digital asset rules and progressing UK-issued stablecoins in 2026.
While the transition to a tokenized financial system presents challenges, including regulatory hurdles, the potential benefits are substantial. Companies are emerging to build the infrastructure to support the token economy, and traditional market infrastructures are also showing signs of embracing mainstream adoption. Ultimately, tokenization has the potential to create a more democratic, efficient, and vast financial system.
