For many of us in and around crypto this time feels different. Tokenization of financial assets has arrived in ways we have not seen before.
When we charge ahead, it is important to zoom out, slow down – something our industry is not known for – and take off a snapshot today and where we are going tomorrow.
Stableecoins are tokenization’s first smash hit
While tokenization is revolutionary for the financial markets, its adoption has so far been evolutionary. First we had stableecoins as a more effective means of payment. Then we had tokenized money market funds as a more efficient value of value.
What is the next? Structured credit combined with private funds. As with previous technological waves of adoption, tokenization will come slowly and then at once. Tighten up: We are about to enter the vertical slope of the S-curve.
Since the last crypto market cycle in 2021, stableecoins have shown a clear product marketing. With more than $ 250 billion in circulating supply, stablecoins continue to demonstrate long -term demand and benefit. It includes Tether and USDC for cross -border payments through companies such as Moneygram, Stripe, PayPal and Felix; Overseas dollar access in new economies and those with weaker currency regimes such as Nigeria, Venezuela, Turkey and others; And as the most important trading pairs for crypto trader including Bitcoin and Ethereum. Regulatory clarity, especially the passage of the genius action in the United States, covering stableecoins, can only speed up this trend. The great demand for Circle’s share after its IPO is another positive sign.
Tokenized money market funds bring a technological and financial upgrade to storing value on-chain. Market leaders, including Buidl, Benji, Ondo and others, have shown that there is a clear demand for the risk -free rate onchain.
This means not only as a security and state-box instrument, but also as a stablecoin replacement for crypto-native players who need fiat-denominated liquidity. While the preliminary versions offer hybrid structures with the Tokens Foundation that reflects traditional transfer agents and off-chain shares, we begin to see token-native issues percolere throughout the industry.
What is next to tokenization?
Given that tokenization has shown a more effective method of moving and saving value, which parts of the industry are next? To begin with, we have seen the industry leaders tokenize private foundations-such as Apollos Acred, Hamilton Lane’s Tokenized Fund with Republic, Multiple On-Chain Fonds offered by WisdomTree and Andre-Other people have begun to show utility through transparency, defense loans and liquidity improvements.
The value that tokenization brings today to different fund structures only scratches the surface of what is possible, but as Defi and Tradfi overlap more and more, benefits are likely to take off.
Structured credit is an ideal candidate for tokenization. Traditionally, it can be complex, opaque, involving multiple counterparts and can be relatively expensive to issue and operate. Smart contracts streamline and not only automate debt service of a loan pool, but also follows a pre -programmed waterfall for each investor ranche.
Pair it with immediate settlement within the structure and the cost basis can decrease significantly. And because the structure is on-chain, we do not have the lack of transparency that plagued the financial system in 2008. In the expense’s estimates, holders of structured credit products could see the results of the underlying in real time, 24/7.
This transparency is not only transformative of the supervisory authorities to better monitor underlying risks, but it also increases security acceptance by standardizing and providing more information to lenders.
This combination of value and information will also mean a more fluid secondary market for these assets. While larger traditional institutions can offer some of these benefits – such as transparency or their own secondary marketplaces – tokenization has the potential to bring everything and standardize it beyond today’s walled gardens.
Tokenization of shares
Discussion about tokenization of shares has started in 2025. Although companies, including inx and supported, have tokenized stocks before, have regulatory discussions with Security and Exchange Commission’s Crypto Task Force accelerated the decision -time line. Superstate, Kraken, and we at Galaxy have all announced stock demonization initiatives to continue pushing the industry forward.
While the industry has made progress, several challenges are ahead. The United States still lacks the stablecoin and market infrastructure bills needed – though Genius Passage in the Senate is a remarkable step forward. Solving KYC/AML remains a barrier that holds the technology back from adoption in scale; Private chains are too limiting and public chain structures without sufficient KYC/AML are challenging for Tradfi to adopt.
Instead, the industry has to land in the middle and take advantage of public chains with the regulatory and trust-based KYC policies on which our financial system is built today.
Education on the potential of technology also remains an obstacle. The industry must continue to highlight cases of material use and concrete benefits that tokenization can not only bring to traditional funding, but completely new opportunities and structures that could not exist before.
Takeaways
What should we take away from this time?
First, we have come far from the initial Bitcoin transactions and Ethereum -Smarte contracts that formed a cornerstone of crypto; Now the industry has partnerships with the biggest names in financing, payments and technology that lead the global economy today.
Secondly, we are at the bottom of the second round – we have put some points on the board, but this is just the start. Adoption in scale requires a pairing of the revolutionary benefits of this technology with the timeless confidence that has been the cornerstone of the financial industry since its founding.
This balance between technology and trust is at the heart of achieving the potential for tokenization in financing: to do for value what the Internet did for information.
