Nasdaq CEO Adena Friedman stated that tokenization could unlock tens of billions of dollars currently tied up as collateral in the global financial system. Speaking at the TOKEN2049 conference in Singapore, Friedman explained that tokenizing assets such as Treasurys, equities, and money market funds, along with the flow of money, would make collateral more liquid and fluid [1]. Tokenization refers to representing financial assets as digital tokens on blockchain technology, enabling easier and potentially more efficient transfers [1].
Friedman noted a growing institutional interest in tokenization over the past year, attributing part of this trend to the passage of the Genius Act in the U.S., which established a regulatory framework for stablecoins [1]. She emphasized that if money can be tokenized, so can the flow of capital, and highlighted that retail investors have long sought 24/7 trading capabilities, with the retail ecosystem being about a decade ahead of institutions in this regard [1].
Transitioning to a fully 24/7 market would be a significant challenge for the financial industry, according to Friedman. She pointed out that while exchange infrastructure is the easiest part, continuous real-time risk and collateral management would be required, replacing traditional market closure periods used for system updates and risk management [1]. Artificial intelligence is seen as a critical tool for this transition, with Nasdaq already deploying digital agents in its risk management platform to provide recommendations, and potentially enabling banks to take more direct action in the future [1].
Arjun Sethi, co-CEO of cryptocurrency exchange Kraken, added that companies outside the U.S. are showing interest in tokenization and accessing American capital markets. He cited a company with approximately $25 million in revenue exploring capital market access, as well as larger international firms interested in tokenization and U.S. public listings [1]. However, Friedman cautioned that not every asset is liquid enough to support 24/7 trading, though increased global connectivity could open access to previously inaccessible asset classes [1].
CONCLUSION
Tokenization is poised to significantly enhance liquidity and access to capital markets, potentially unlocking billions in trapped collateral. While institutional and retail interest is growing, the transition to 24/7 trading and broader adoption will require advances in real-time risk management and AI. The market impact is high, with both opportunities and operational challenges ahead.