Austin King, co-founder of Omni Foundation, after engaging in dialogue with over 40 traditional finance leaders, has asserted that the future of global finance will be shaped by tokenization. However, King suggests that the adoption of tokenization will not occur in a blink of an eye, but rather, it will gradually progress, starting with assets that are easier to digitize.
King emphasizes that the trajectory of tokenization will likely follow a more institution-led path rather than a fully decentralized model. “This is going to reshape the entire industry—but it won’t happen the way people are expecting,” King stated, referencing a recent interview with the BlackRock CEO.
King contends that the notion that tokenization is a fresh concept is a misconception. In his opinion, tokenization has already been initiated, with over $200 billion in assets being tokenized on-chain, primarily through stablecoins, which essentially function as tokenized fiat currencies.
Looking beyond stablecoins, King identifies treasury bills as the next big wave in tokenization. He highlights that $1 billion worth of treasury bills is already on-chain. These assets, due to their stability and yield generation, are particularly valuable for both decentralized finance (DeFi) and traditional finance (TradFi) applications. King elaborated, “In DeFi, protocols usually require USDC as margin. In TradFi, exchanges usually require treasury bills as margin.”
King also points out that the expansion of tokenization is contingent on regulation and complexity. He notes that assets such as corporate bonds and stocks are tightly regulated, which could decelerate the adoption process. Moreover, assets with complex features like yields and dividends necessitate advanced blockchain solutions, which could make tokenization more challenging.
King predicts that short-term corporate bonds will be the next significant asset class for tokenization due to their predictable yield and standardized issuance. Given the global bond market is valued at $130 trillion, tokenizing even a small fraction of it could stimulate enormous growth in DeFi. “The global bond market is worth $130 trillion. If we tokenize even a fraction of that, DeFi could experience 1,300x growth,” King said.
In the interview shared by King, BlackRock CEO Larry Fink confirmed his belief that the tokenization of financial assets will revolutionize global markets. Fink stressed that tokenization could eliminate inefficiencies in stock and bond settlements, bolster security, and enhance investment customization.
Fink, at the helm of the world’s largest asset manager, envisions tokenization as a technological breakthrough that could reduce costs and increase transparency in traditional finance. “We believe the next step going forward will be the tokenization of financial assets,” Fink said. “Every stock, every bond will have its own CUSIP, and it’ll be on one general ledger.” He added that investors would have unique digital identifiers, reducing fraud and enabling instantaneous settlement of transactions.
