Giselle Lai has a clear view of how tokenized funds can deliver the biggest value for large institutions, and it's not the usual 24/7 liquidity pitch, though that remains a key feature.
"I think over time, the more appealing use case will be balance sheet management," said Lai, a director and digital assets strategist for APAC at Fidelity International, in an interview at the WebX conference in Tokyo.
Global institutions need to hold cash in multiple bank accounts worldwide to comply with regulatory requirements, manage currency exposure and ensure they can meet demand when needed. Often, those deposits earn no return. Managing the balances and shifting them between jurisdictions in a timely manner is a challenge.
For corporations looking to maneuver their liquidity across different bank accounts, tokenized assets may be "a more efficient use case if they are able to have more 24/7 bearing instruments to manage their balance sheet."
Tokenized instruments, real-world assets represented on blockchain ledgers, can move efficiently, earn yield around the clock and integrate with broader liquidity needs. Their use could make balance-sheet management smoother and more capital-efficient without forcing an overhaul of long-term strategies, according to Lai.
Tokenized products already exist, though mainly for investing. The most popular category is tokenized money market funds, primarily backed by U.S. Treasuries. The largest, BlackRock's USD Institutional Digital Liquidity Fund (BUIDL), debuted in March 2024.
This category now has more than $15 billion of assets under management (AUM), with the broader onchain real-world asset market (excluding stablecoins) surpassing $31 billion in value. Casting a wider net to include assets such as alternative investments and tokenized financial infrastructures, the global asset tokenization market is valued at roughly $2.1 trillion.
According to forecasts by Grand View Research, the sector is projected to hit $24.5 trillion by 2033, with some industry estimates suggesting tokenized markets could reach as much as $88 trillion by 2035.
The key advantage they offer is instant execution around the clock and fractional ownership, which allows traders to buy small portions at any time, with all stages of the transaction — including purchase, sale and final processing — completed immediately.
That's not the focal point for institutional investors, who are more interested in the properties of the tokenized assets than their ease of trading.
“Generally speaking, they are not asking for tokens," Lai said. "They are asking for what tokens can do more compared to the existing wrappers they already have.”
They are looking for ways to manage assets faster and cheaper than they can at the moment. This helps explain why tokenized money market funds have gained the fastest traction among stablecoin issuers, treasuries and platforms that need always-on yield and collateral mobility.
Even with that demand, the development of a full-fledged balance-sheet management tool is likely to take time.
“It takes almost 20 years for [the ETF] industry to build a comprehensive ecosystem … same evolution is going to happen in the tokenization space," she said.