At the TOKEN2049 conference in Singapore, Nasdaq CEO Adena Friedman emphasized the potential of tokenization to unlock substantial capital currently tied up in assets within the global financial system. Speaking with CNBC’s Joanna Ossinger, Friedman highlighted that tokenizing assets like Treasurys, equities, and money market funds could enhance liquidity in collateral management. The process of tokenization involves creating digital representations of financial assets that can be transferred via blockchain technology.
Friedman noted a significant increase in institutional interest in tokenization over the past year, partly driven by new regulations established by the Genius Act in the U.S., which provides a legal framework for stablecoins. This heightened interest among institutions aligns with ongoing demand from retail investors, who seek around-the-clock trading opportunities and have been ahead of the institutional market for nearly a decade.
Transitioning to a fully 24/7 trading environment poses challenges for the financial sector, particularly in managing risk and collateral continuously. According to Friedman, the foundational infrastructure for exchanges is ready, but processes must adapt to operate in real-time without interruptions. Artificial intelligence can facilitate this shift by automating risk management and operational tasks, thus streamlining the transition toward continuous market operations.
Additionally, Arjun Sethi, co-CEO of cryptocurrency exchange Kraken, noted that companies outside the U.S. are increasingly looking to tokenize assets for access to American capital markets. Although tokenization presents new avenues for capital access globally, Friedman cautioned that not all assets possess the liquidity necessary to support round-the-clock trading.
Key Points:
- Why this story matters: Tokenization could significantly transform asset liquidity and capital access in the global financial market.
- Key takeaway: The move toward 24/7 trading is feasible but requires advanced risk management and regulatory frameworks.
- Opposing viewpoint: Not all asset classes may be suitable for continuous trading, raising concerns about liquidity and market stability.
