Publicly traded cryptocurrency networks are capturing the interest of traditional finance companies and banks. This growing attention is leading to expanding partnerships between cryptocurrency ventures and trillion-dollar giants. Matt Savarese, the Nasdaq Digital Assets president, emphasizes this initiative as their top priority.
Tokenized Assets and Traditional Finance
Tokenized assets, in a broader sense, are attracting the attention of all major financial entities. Renowned examples include BlackRock’s tokenized bond, BUILD, and products launched long ago by giants like Franklin. These digital assets, issued on publicly traded cryptocurrency networks, are introducing the advantages of blockchain to traditional markets.
Matt Savarese mentions that Nasdaq is intensely focused on the proposal of tokenized stocks. Nasdaq is eager to complete this process swiftly, aiming to responsibly bring tokenization into the mainstream under the supervision of the SEC.
Easy access to tokenized stocks from anywhere in the world will simplify investments for everyone. This move will enhance accessibility and transparency and bolster the liquidity of stocks. Stocks, which can be held in cold wallets like cryptocurrencies, along with shares offered by crypto exchanges, might negatively impact crypto liquidity in the short term but are expected to support cryptocurrencies overall in the long term.
The Future Expansion of Cryptocurrencies
Savarese anticipates that other major exchanges might follow the same path and work towards “tokenized stocks and blockchain-based exchange infrastructure.” Last month, Robinhood CEO Vlad Tenev remarked that tokenization would engulf the entire financial system, with everyone eventually being compelled to adopt it.
The choice of cryptocurrency networks by Nasdaq and other early adopters will play a crucial role in cryptocurrency expansion. Ethereum has become the primary network for tokenized treasury bonds, with support for other networks being added. If this trend continues, liquidity in cryptocurrency networks, especially Ethereum, is expected to rise rapidly.
There is ongoing debate about the second leading network after Ethereum, with Solana being a strong contender. Chainlink is emerging for infrastructure and data communication, while major finance companies are known to be developing their layer-2 solutions. In the coming years, we will witness and experience this transformation.