U.S. Tokenized Asset Market Value Doubles, Driven by Major Financial Institutions

According to Foresight News, U.S. Federal Reserve Board member and Chair of the Financial Stability Board, Lisa Cook, addressed the Central Bank of West African States (BCEAO) digital asset conference, highlighting that the market value of U.S. tokenized assets has doubled over the past year to approximately $25 billion. This growth has been primarily driven by the entry of large financial institutions. Cook expressed support for tokenization innovation, noting its potential to enhance collateral management efficiency, reduce settlement times, and broaden market access, particularly benefiting emerging economies. However, she also cautioned about two types of risks: first, some tokenized assets offer on-demand redemption, but the underlying assets may have low liquidity, posing a risk of runs, with 24/7 trading potentially accelerating such events. Second, the increasing interconnection between tokenized assets and traditional financial markets could lead to simultaneous transmission of shocks across both systems. Cook emphasized that tokenization is not a replacement for traditional market infrastructure but rather an integration with existing systems to improve overall efficiency.