How Digital Assets Are Rewiring Financial Markets

Amy Oldenburg · Morgan Stanley

Tokenizing high-friction, admin-heavy markets will drive the biggest transformations, via programmability.

Tokenizing equities and treasuries is currently just putting them into digital form. The larger value is programmability, embedded in products. Amy argues the biggest transformations will occur where there is high friction and a heavy administrative burden, which is where the innovation has the most to fix.

“So I think areas where you have high friction and even a heavier administrative burden, that's areas where we may see some of the biggest transformations happen in this space.”at 1:54

Felix Stratmann · Morgan Stanley

Tokenized real-world assets will grow from about $30-40B today to roughly $2.3T by 2030.

Tokenized real-world assets are about $30-40B today but growing quickly, from essentially nothing a couple of years ago. Morgan Stanley's forecast expects about $2.3T by 2030. Growth is driven by friction in traditional collateral management, where tokenized assets can move 24/7 and across borders. Tokenized money market funds and government securities are among the fastest-growing segments, since they can move between institutions or be used as collateral.

“tokenized real world assets are about 30 to 40,000,000,000 today, but they're growing quickly... we expect them to reach about 2,300,000,000,000 by 2030.”at 2:20

Felix Stratmann · Morgan Stanley

Tokenized stocks are a useful test of tokenization, but not yet a more efficient equity market.

Activity in tokenized stocks is increasing. Felix says they do not yet represent a more efficient state of the equity market. He sees them as an important step toward testing the benefits of tokenized assets for global distribution and enhanced utility.

“they're not necessarily representing a more efficient state of the equity market yet, but they're an important step towards testing demonstrating, you know, the benefits of tokenized assets in global distribution”at 3:10

Felix Stratmann · Morgan Stanley

Stablecoins are increasingly used in real payments, approaching about $100B a month.

Digital money is starting to operate at larger scale. Stablecoins, still largely crypto-focused, are increasingly used in real payment activity. Monthly volume is approaching roughly $100B, and Felix expects that growth to continue.

“stablecoins are increasingly being used in real payment activity... approaching a 100,000,000,000 or so a month right now.”at 3:33

Felix Stratmann · Morgan Stanley

Digital asset progress can continue under existing rules, even without comprehensive crypto legislation.

The Clarity Act was mainly a crypto market infrastructure bill that would have set trading rules and rules for decentralized finance. Tokenization can progress without it, because tokenizing a security does not change what the security is. Tokenized funds, payment infrastructure and institutional settlement can develop under existing legal frameworks. The SEC and CFTC are already proposing rules and guidance, and the GENIUS Act rulemaking is paving the way for stablecoin adoption. Firms still want regulatory clarity, but they do not need wholesale new legislation.

“So look, yes, progress can definitely continue, particularly for the financial use cases of digital asset technology, even without comprehensive legislation.”at 6:12

Amy Oldenburg · Morgan Stanley

Digital assets are a multiyear transformation; a hybrid TradFi-digital world persists for years.

Amy says we are living through many years of transformation. Like past financial technology shifts, digital assets take years to deploy. For a number of years the industry will operate a hybrid world. Firms must redesign workflows, upgrade policies and address governance, and this work competes with other innovation topics, which may slow adoption near term. Once the work is done, digital finance will simply become finance.

“and I see digital assets being a multiyear transformation just as we saw some of those other periods in history take many years to actually deploy over time.”at 7:17

Felix Stratmann · Morgan Stanley

Financial institutions are seriously adopting digital assets; crypto is converging with traditional finance.

Felix reviewed press releases from global financial companies. About a quarter by count, and roughly 60% by market cap, have announced, piloted or launched digital asset initiatives. He argues the institutions are seriously behind this. Digital money also enables 24/7 follow-the-sun treasury management, which could matter for corporate treasuries. Products are increasingly issued on public blockchains and firms are experimenting with decentralized protocols. Crypto has moved from trying to replace the financial system to converging with it and making it more efficient.

“I found that roughly a quarter by count and some 60 by market cap, you know, had announced, piloted, or launched digital asset initiatives. So the institutions are seriously behind this.”at 8:46