Large institutions embrace tokenization, even when Bitcoin prices are falling

Tokenization is gaining ground among banks and asset managers, even while the Bitcoin (BTC) price is far from stable. While institutions have often shied away from market volatility, this time the interest remains remarkably constant. The question is whether tokenization has now established its own position that no longer moves with the volatility of the crypto market.

Galaxy sees a clear shift in market behavior

According to Thomas Cowan, head of tokenization at Galaxy, that is exactly what is happening. He said at The Bridge conference in New York that there has been a “separation of interest in tokenization and the price of Bitcoin” in recent months.

In previous periods, banks and asset managers mainly moved towards crypto as soon as prices rose. Then many of those teams disappeared again when the market fell. But according to Cowan, that pattern has now been broken. Institutions are increasingly seeing that blockchain technology can play a role in moving and storing traditional financial products.

Tokenization involves converting traditional products such as oil or bonds into digital tokens on a blockchain, making them faster and easier to move. This development received a boost last year due to relaxed rules under the Trump administration. As a result, major financial institutions came up with new pilots.

Meanwhile, the Bitcoin price moved sharply back and forth. The coin was worth more than $126,000 at the beginning of October, but is now at $103,400.

Cowan: transformation will become visible in the coming years

Cowan hopes that next year the industry can show that tokenization is “simply a better, faster and cheaper way to move and store financial assets.” Because institutions often think for the long term, convincing evidence is especially important, he says. “They see this technology as something that will form the backbone of their financial systems.”

One area where he believes this is already happening is the stablecoin market. Since the United States passed legislation to regulate stablecoins earlier this year, adoption has skyrocketed. Tokenized money market funds are also gaining ground. These funds invest in government bonds, among other things, and mainly attract parties who want returns, but still want to keep their capital on-chain.

According to Cowan, the sector is approaching a point where the technology will really prove itself for large parties that were previously hesitant. He calls the coming years “the moment when the transformation becomes visible”.