Talk around stablecoins, tokenization picking up

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Felix noted he came out of the Digital Asset Summit “incredibly bullish” on stablecoins. He’s not the only one expecting big things around that sector and the broader tokenization category.

After Galaxy CEO Mike Novogratz addressed the firm’s $200 million settlement with the New York Attorney General during this morning’s earnings call, he answered a question on where the firm would focus most of its resources in 2025.

“The first obvious answer is stablecoins, both here and abroad,” he said — for payments, cross-border transactions and beyond.

Stablecoins are “the first real-world asset that’s been tokenized,” he added. And the tokenization of mortgages, collectibles, equities, etc. is coming.

“I keep saying it’s going to be like bankruptcy — it happens real slow, then real fast,” Novogratz said. “It hasn’t happened real fast, but every single TradFi participant is gearing up for that [tokenization stage], and I think the crypto world is working on that.”

The promise of crypto boosting efficiency and transparency has been held back by a lack of regulatory clarity. That’s changing.

Galaxy said it’s “close” to the euro-denominated stablecoin it plotted to bring with DWS and Flow Traders. Galaxy’s investment in GK8 is a way for the firm to serve as “an infrastructure technology provider” in this category as adoption picks up, firm executives added. 

Those comments came after NYSE parent Intercontinental Exchange said it plans to explore using Circle’s stablecoin (and Hashnote’s tokenized money fund USYC) within its derivatives exchanges, clearinghouses and data services.

“We believe Circle’s stablecoins and tokenized digital currencies can play a larger role in capital markets as digital currencies become more trusted by market participants as an acceptable equivalent to the US dollar,” NYSE president Lynn Martin said in a statement.

Fidelity is reportedly exploring a stablecoin launch. And we won’t rehash World Liberty Financial’s USD1 here, but the point is there’ve been ample developments with US stablecoin legislation expected as soon as this summer.

A focus at DAS

There was plenty of talk around stablecoins and RWAs at DAS, too.

I was on stage with Securitize chief operating officer Michael Sonnenshein last week. It happened to be the one-year anniversary of BlackRock (with help from Securitize) launching its tokenized money market fund, BUIDL.

BUIDL recently hit the $1 billion AUM mark and, this week, launched a new share class on Solana. While stablecoins have “made the crypto system go ’round,” Sonnenshein said, you now have assets onchain that offer a stable value and are yield-bearing. People are waking up to that.

“That conversation, I think, is well underway, and you’re starting to see OTC desks, market makers, and all kinds of participants in crypto beginning to think about these assets in a new way — in many cases the same way they historically relied on stablecoins,” Sonnenshein said. 

Ondo Finance’s Ian De Bode noted that BUIDL and Ondo’s OUSG display the benefits of onchain assets — i.e. 24/7 movement, programmability —  to legacy institutions who may want to follow suit with their own offerings.

Rather than believing tokenized MMFs/Treasurys (a roughly ~$5 billion market) will replace stablecoins (with a market cap of nearly $230 billion), industry execs have noted the powerful combo of the two. Circle alluded to the demand for moving between yield-bearing collateral and cash when acquiring Hashnote in January.

“Tokenization cannot exist without stablecoins,” Alogrand Foundation CEO Staci Warden told me on the DAS main stage. “Because if you have tokenized the asset side but you haven’t tokenized the money side, it just doesn’t work.”

Combining yield with quick transferability is “incredibly potent,” she added. And every TradFi player “will no longer tolerate that their money is just sitting there doing nothing.”

After talking about less-liquid tokenization segments (like real estate rental income or airline tickets), she reverted to money market funds when imagining future transactions. 

Perhaps a decade from now, she envisioned, one could buy a coffee with a tokenized MMF sliver. The person being paid then starts earning the yield tied to that fund.

“Cash is an asset, [an] apartment building’s an asset, they’re all assets,” Warden said. “This continuum will get just completely blurred and more liquid.”

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