Will tokenization have a greater impact than AI?

With the rapid development of tokenization, BlackRock's CEO stated that it may surpass AI in importance.

Original text: Beyond crypto: how tokenization is quietly rewiring markets (thepaypers)

Author: Fabienne van Kleef (Analyst at a global digital finance company)

Compiled by: Bilibili News

Tokenization is developing rapidly, and BlackRock's CEO claims it may surpass AI in importance. What are your thoughts on this trend?

Yes, tokenization is rapidly emerging as a transformative force in the financial sector. According to industry research by 21.co, the tokenized asset market is projected to grow from $ 8.6 billion in 2023 to over $ 23 billion by mid- 2025 . Forecasts indicate that the total size of tokenized assets, encompassing bonds, funds, real estate, and private equity markets, could reach trillions of dollars over the next decade. BlackRock CEO Larry Fink stated that tokenization may be even more impactful than artificial intelligence, highlighting the significance of this trend. Tokenization is reshaping how we express and transfer value, just as the internet reshaped information exchange. If the infrastructure is in place, tokenization has the potential to have a profound impact on the global financial landscape.

What are the main application scenarios and challenges of tokenized assets today?

Today, the most active applications of tokenization are concentrated in financial instruments where efficiency and liquidity are crucial. Tokenized money market funds and bonds are prime examples. These funds, already operating on multiple blockchains, enable near-instant transaction settlement and utilize stablecoins for subscription and redemption, thus creating entirely new cash management workflows. Real-world asset applications such as sovereign debt, real estate, and private credit are also continuously evolving. The advantages of these areas lie in the divisible ownership of assets and 24/7 markets, which open investment channels for traditionally illiquid assets and improve liquidity.

Nevertheless, several challenges remain to be overcome. While regulatory and legal frameworks are steadily improving, the pace of progress varies across jurisdictions, potentially creating uncertainty. Differences in definitions of digital asset custody or varying degrees of acceptance of blockchain records mean that tokenized assets may be treated differently in different regions. From a technical perspective, interoperability and asset security remain paramount, although many interoperability challenges have proven solvable. Cross-platform transfers have already been successfully implemented in the industry sandbox of the Global Digital Finance (GDF) Tokenized Money Market Fund (TMMF) report. Overall, tokenization has already created value in key financial services areas such as fund management and bond markets, but further harmonization of rules and broader upgrades to existing institutional infrastructure are needed to address these challenges in order to scale up and achieve wider adoption.

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

Tokenization is blurring the lines between traditional currencies and value transfers, with the US dollar at the heart of this shift. Most stablecoins are explicitly backed by the US dollar and short-term Treasury bonds, further driving the dollarization of cross-border payments. By 2025, the reserves of major US dollar stablecoins (primarily held in the form of US Treasury bonds) had grown to such a scale that the combined holdings of US Treasury bonds by stablecoin issuers exceeded those of some countries, such as Norway, Mexico, and Australia.

For the traditional foreign exchange market, the widespread adoption of tokenization presents both opportunities and challenges. On the one hand, the emergence of digital currencies, especially dollar-backed stablecoins and the increasingly prevalent wholesale central bank digital currencies (CBDCs), can make foreign exchange transactions faster and more efficient. This includes 24/7, near-instantaneous cross-currency transactions without relying on correspondent banks.

However, regulation remains a key factor across these different development paths, with governments seeking to ensure stablecoins gain trust in various markets to truly function as currency. In the United States, the recently passed GENIUS Act provides much-needed clear guidance for dollar-backed payment stablecoins by specifying reserve requirements and redemption criteria, which we expect will boost confidence in the large-scale use of tokenized dollars.

Overall, tokenization is not expected to completely replace traditional currencies; instead, it may lead to a continued strong influence of the US dollar, or even further expansion in the foreign exchange market. Settlement may become real-time, and markets will need to adapt to a system where sovereign currencies and their digital token versions can flow freely across interconnected networks.

What would happen if every company or institution used digital wallets to store tokenized assets?

If every company in the future has its own digital wallet for storing tokenized assets, we will see a dramatically different financial landscape—more interconnected, instantaneous, and decentralized. In this scenario, the roles of custodians and wallet providers will become crucial. Custodians will transform from simple custodians into critical infrastructure and essential service providers, ensuring the security, compliance, and interoperability of wallets and their internal assets.

From a practical perspective, widespread adoption of digital wallets means that value can flow freely across the web, much like email. Settlements can be completed in real time, significantly reducing counterparty risk and freeing up capital. Corporate Treasurers can directly manage assets (such as tokenized bonds or invoices) for peer-to-peer transactions or lending activities with minimal friction. This requires unified protocols, a standardized digital identity framework, and a clear legal status for on-chain transactions.

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

Tokenization promises to significantly improve liquidity in secondary markets, especially for historically illiquid or complex-to-trade assets. By converting assets into digital tokens, partial ownership and near-24/7 trading can be achieved, expanding the pool of potential buyers and sellers. We are already seeing this in practice. Tokenized funds and government bonds settle almost instantly, unlike traditional markets which often take days, allowing investors to reinvest more quickly. Recent analysis from the Global Development Fund (GDF) shows that tokenized money market funds (TMMFs) have settlement cycles of just seconds, compared to one to three days for traditional money market funds.

However, some points require attention. In the early stages, liquidity in the tokenization market may be fragmented. Many tokenized assets currently reside on different blockchains or closed networks, which reduces liquidity. Furthermore, institutional liquidity depends on market confidence. Large institutions need to ensure that these tokens represent enforceable interests in the underlying assets and that settlement finality is guaranteed. Nevertheless, we should remain optimistic. As standards unify and infrastructure matures, tokenization will unlock liquidity across various sectors, from private equity to infrastructure projects, by making secondary trading processes more seamless. In the meantime, we encourage the industry to develop shared standards and cross-platform integration solutions to avoid liquidity being trapped in a single blockchain or jurisdiction.

For institutional participants, what strategies can drive adoption and liquidity in the tokenization market?

Institutional adoption of the tokenization market ultimately depends on the synergistic development and maturity of regulation, custody, and infrastructure. Regulatory harmonization is fundamental; institutions need a unified legal definition of ownership, custody, settlement, and asset classification to confidently operate across borders. Otherwise, the tokenization market cannot scale because institutions will face uncertainties regarding legal validity, risk management, and the ability to transact seamlessly across jurisdictions.

Custody models are also rapidly evolving. As highlighted in the report "Understanding Digital Asset Custody," jointly released by the Global Digital Finance Consortium (GDF), the International Swaps and Derivatives Association (ISDA), and Deloitte, most institutional-grade custody frameworks already exist, particularly in areas such as 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, but new capabilities are also needed to manage risk, such as wallet management, distributed ledger technology (DLT) network governance, and effective segregation of client and corporate assets.

Capital treatment is another important consideration. Capital treatment refers to the way tokenized asset exposures are classified under prudential regulatory frameworks (such as the Basel Committee's crypto-asset standards), which determines how much regulatory capital banks need to hold. Recent reviews of the Basel standards have further emphasized the distinction between tokenized traditional assets and high-risk crypto assets. Under this framework, fully reserve and regulated tokenized assets, such as tokenized money market funds, should be classified as Group 1a, thus enjoying the same capital treatment as their non-tokenized counterparts.

Interoperability is another key driver. Today's decentralized ecosystems slow liquidity, making common standards and cross-platform settlement channels crucial. Early projects like Fnality and various central bank digital currency (CBDC) pilot projects have demonstrated that atomic, near-instantaneous settlement can reduce friction. The work of GDF TMMF provides concrete evidence for this. In an industry sandbox, TMMF transfers between multiple heterogeneous distributed ledger technologies (DLTs) and traditional systems, including Ethereum, Canton, Polygon, Hedera, Stellar, Besu, and institutional cash networks like Fnality, demonstrating that tokenized funds can flow freely between platforms. Simulation 6 further extends this to traditional payment channels, linking SWIFT messages to tokenized collateral workflows and completing a full bilateral to trilateral repurchase cycle in less than a minute. These findings collectively demonstrate that interoperability is already achievable in practice and, once deployed in the market, can support large-scale liquidity.

Looking ahead, what do you see as the most transformative impact of tokenization in 2026?

In 2026, tokenization will begin to reshape the daily operation of markets. The most direct shift is towards programmable settlement, and in many cases even real-time settlement, thanks to the support of tokenized cash, stablecoins, or central bank digital currencies (CBDCs).

We also expect that traditionally illiquid assets will be more readily accepted by the market. In areas such as private equity, infrastructure, and private lending, partial ownership will enable more institutional participants to access these markets and improve liquidity.

At the same time, the regulatory frameworks in major jurisdictions are becoming clearer, giving institutions confidence to move from pilot projects to full integration. Custodians will expand their native role in the digital realm, supporting the operation of smart contracts and strengthening recourse mechanisms.

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