New York (May 15, 2025) — In a notable shift, the Federal Reserve Bank of New York (NY Fed) has signaled that *tokenized assets*, not central bank digital currencies (CBDCs), will likely drive the future of financial infrastructure. In a recent report and public remarks, the institution emphasized the transformative potential of tokenizing traditional assets—such as stocks, bonds, and commodities—on blockchain networks, arguing this approach could enhance efficiency, accessibility, and security in global markets.
Tokenization Over CBDCs: Key Rationales
The NY Fed’s stance contrasts with growing global interest in CBDCs, which are digital versions of fiat currencies issued by central banks. While acknowledging CBDCs’ role in modernizing payment systems, the report highlights three critical advantages of tokenized assets:
1. Interoperability Without Centralized Control
Tokenized assets can operate across multiple blockchain networks, enabling seamless cross – border transactions and reducing reliance on legacy financial intermediaries. Unlike CBDCs, which would require centralized governance, tokenized assets leverage decentralized protocols to facilitate peer – to – peer exchanges.
2. Efficiency Gains for Complex Transactions:
Traditional financial processes—such as trade settlement, custody, and compliance—often involve fragmented systems and manual workflows. Tokenization streamlines these steps through smart contracts, automating processes like dividend distribution or interest payments and cutting settlement times from days to seconds.
3. Inclusive Access to Global Markets:
By dividing assets into smaller, tradable units (e.g., fractional shares), tokenization lowers barriers to entry for retail investors. This contrasts with CBDCs, which primarily target institutional or interbank use cases.
Case Studies and Pilot Projects
The NY Fed cited ongoing experiments to illustrate its point
U.S. Treasury Bond Tokenization: A pilot program with major banks tested issuing short – term Treasury securities as blockchain tokens, reducing settlement cycles from T+2 days to near – instant finality.
Commodity Tokenization: Energy firms have explored tokenizing oil and natural gas contracts, enabling real – time trading and hedging via decentralized exchanges (DEXs).
Equity Tokenization: Private companies are increasingly using blockchain to issue tokenized shares, allowing retail investors to participate in early – stage funding rounds traditionally reserved for institutions.
Challenges and Regulatory Considerations
While bullish on tokenization, the NY Fed warned of hurdles
Regulatory Frameworks: Current securities laws were designed for analog assets, creating ambiguity around tokenized securities’ legal status.
Cybersecurity Risks: Blockchain networks must fortify defenses against hacking and smart contract vulnerabilities, especially as tokenized assets grow in value.
Inter – Blockchain Standards: Fragmentation across blockchains (e.g., Ethereum, Solana) could limit interoperability without unified technical standards.
Industry Reaction and Broader Implications
The report has sparked debate in financial circles. Wall Street firms like JPMorgan and Goldman Sachs have already invested in tokenization platforms, viewing them as a way to modernize back – office operations. Meanwhile, CBDC advocates argue that central bank – issued digital currencies remain essential for maintaining monetary policy control and financial stability.
“Tokenization is a natural evolution of blockchain’s promise—to democratize finance and eliminate inefficiencies,” said William Dudley, former NY Fed president and a report contributor. “But it requires collaboration between regulators, tech developers, and financial institutions to ensure it grows safely and inclusively.”
What’s Next for the NY Fed
The institution plans to launch a “Tokenized Assets Research Hub” in Q3 2025, bringing together policymakers, innovators, and academics to address regulatory and technical challenges. The goal is to lay the groundwork for a future where stocks, bonds, and other assets are traded as digital tokens, potentially reshaping Wall Street’s infrastructure within the next decade.
Related topic:
- Twenty One Capital spent 458.7 million US dollars to purchase Bitcoin and became the largest holder. The listing is imminent
- S&P Global: Despite the improved efficiency of the cryptocurrency market, its liquidity still lags behind that of traditional finance
- 1.5429 million tokens will be destroyed in the first quarter of 2025! GateToken (GT) continues to consolidate its long-term value
