Markets US

Nasdaq CEO Adena Friedman said tokenization could free up tens of billions of dollars in trapped capital by improving collateral liquidity, according to CNBC. She highlighted the potential for tokenizing assets like Treasurys and equities to transform how institutions manage collateral.

Tokenization Could Unlock Tens of Billions in Trapped Capital, Nasdaq CEO Says

Friedman, speaking at the TOKEN2049 conference in Singapore, emphasized that tokenization could unlock significant capital by making collateral more fluid. She noted that assets such as money market funds and equities could benefit from this shift. Kraken co-CEO Arjun Sethi added that non-U.S. companies are exploring tokenization to access American capital markets.

A company generating roughly $25 million in revenue is among those evaluating tokenization to access capital markets, according to the Brief. The Genius Act in the U.S., which established a regulatory framework for stablecoins, is cited by Friedman as a catalyst for institutional interest in tokenization.

Tokenization may disrupt traditional collateral management by enabling real-time liquidity, reducing systemic risks from illiquid assets. AI integration for 24/7 trading could redefine market operations, while cross-border tokenization may expand access to capital markets for non-U.S. firms. However, liquidity constraints for certain assets remain a barrier.

Financial institutions could see improved collateral efficiency, while retail investors may gain expanded trading opportunities. Regulators face challenges in adapting frameworks for tokenized assets. Competitors like Kraken could leverage tokenization to enter U.S. markets.

Tokenization could unlock significant trapped capital by enhancing collateral liquidity, but the exact scale of impact remains unclear. Regulatory adaptation and the feasibility of 24/7 trading will determine its success.

Topics: Tokenization, Capital Markets, Collateral Liquidity, AI Trading, Stablecoins, Financial Institutions, Cross-Border Markets, Regulators

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Source: CNBC