Thomas Sy, head of multi-asset solutions under the New York life investment management, stated that, according to external media, greater opportunities for monetization might lie not in faster settlement or 24-hour trading, but in the way the portfolio is re-structured. As Wall Street accelerates the move of assets such as money market funds, private loans and equities into the chain, institutions are also looking for new products that are more appropriate to the chain environment.

It's not just about moving the fund.

Sy believes that the next step in the management industry will be to place more emphasis on customization, while the block chains are a small number of technologies that can land this on a large scale. Traditional tailor-made strategies often involve a combination of multiple types of assets, such as ETF, bonds and private loans, long operating chains and complex back-office processing, making it difficult to replicate them for a large number of clients.

His judgement was that the value of monetization was not merely a chained version of existing funds, but that it was a direct embedding of “detailed capacity” in the asset structure itself, reducing the large volume of operations around different assets. As a result, portfolio build-up, adjustment and holding processes could be smoother.

Back-office cost or further decline

Sy mentioned that monetization could also simplify the transfer registration, settlement and other back-office processes, thus reducing operating costs. If the associated costs drop by 10 to 20 per cent, the final beneficiary will be the client.

At present, many banks, regulators and market infrastructure companies on Wall Street are promoting the monetization of real-world assets. Citicorp had previously predicted that by 2030, the size of the real world asset market for monetization could have increased from about $30 billion to $5.5 trillion at present.

  • Stable currency market size has exceeded $30 billion
  • The current monetization of real world assets is about $30 billion.
  • Citigroup forecast market in 2030 or $5.5 trillion

Stabilized coins.

Sy believes that the stabilization currency was the first practical bridge in the chain of entry for traditional financial institutions in the past two years. As banks, payment companies and financial science and technology enterprises use stable currency for cross-border payments and fund management, it is likely that the institution will follow up by looking for a chain of income-producing assets rather than allowing this balance to remain in cash for a long time.

Under this logic, demand for institutional-level monetized investment products may continue to expand in the coming years. According to the article, such demand does not come only from home-grown users of encryption, but more likely from traditional financial participants who have already started to use stable currencies.

The agency DeFi is still waiting to complete the infrastructure

In the case of DeFi, Sy indicates that the agency is also looking at opportunities, but broader participation still requires the development of infrastructure, including matching capacities such as monetized collateral, central clearing and primary brokering services.

His judgment is that the institutional version of DeFi is not without space, but it is still a while away from mass landings. In contrast, the connection between stable currency and tokenized revenue products may be the next step in the integration of traditional management and chain finance at an earlier stage.