Tokenization’s Next Big Test May Be Personalized Portfolios, NYLIM Executive Says

What to Know

• Thomas Sy, head of multi-asset solutions at New York Life Investment Management, says tokenization’s biggest opportunity may be personalized investing.
• Sy’s team oversees about $11 billion within New York Life Investment Management, the $807 billion asset management arm of insurer New York Life.
• He argues blockchain could allow asset managers to build tailored portfolios for individual investors at scale.
• NYLIM has teamed up with Centrifuge to bring one of its high-yield corporate bond strategies onchain.
• Citi has projected that tokenized real-world assets could reach $5.5 trillion by 2030 from the current $30 billion.
• Sy says stablecoins have become a practical bridge for traditional financial institutions moving onchain.
• The stablecoin market has grown to over $300 billion and is increasingly used for cross-border payments.
• Institutional DeFi still needs more mature infrastructure, including tokenized collateral, central clearing and prime brokerage services, Sy said.

Blockchain’s Portfolio Opportunity Moves Beyond Faster Settlement

Tokenization is often discussed in terms of faster settlement, around-the-clock trading and the ability to use digital representations of traditional assets in decentralized finance. Those advantages remain important, but New York Life Investment Management’s Thomas Sy sees a broader opportunity emerging: using blockchain infrastructure to change how investment portfolios are designed, assembled and maintained.

Sy, head of multi-asset solutions at NYLIM, has argued that tokenization’s most significant long-term role may be in personalized investing. His team oversees about $11 billion within New York Life Investment Management, the $807 billion asset management arm of insurer New York Life. In his view, the future of asset management is increasingly tied to customization, and blockchain may be the only technology capable of delivering that customization at scale.

The idea is not simply to place traditional funds on blockchain rails and call the job complete. Instead, Sy’s framing points to a more structural change in asset management. If investment exposures can be represented, transferred, tracked and combined more efficiently through tokenized infrastructure, asset managers may be able to create portfolios that are more closely aligned with the goals, risk tolerance, income needs and constraints of individual investors.

That shift could prove important because customized portfolios are operationally complex. Investment strategies built for individual clients can include ETFs, bonds, private credit and other assets. Each category may involve its own settlement process, administrative requirements, reporting workflow and operational limitations. As portfolios become more personalized, those frictions can become harder and more expensive to manage through legacy systems.

Customization Embedded Inside the Asset

Sy’s central argument is that tokenization could move customization closer to the asset itself. Rather than building personalization through layers of operational work around different holdings, tokenized structures could allow customization to be embedded within the investment product or exposure. That approach could make it easier for asset managers to deliver more individualized outcomes without multiplying administrative burdens across every account.

For investors, the promise is not purely technological. A more efficient portfolio construction process could eventually affect costs, access and implementation quality. Sy has said tokenization could streamline transfer agency, settlement and other back-office processes, and that lowering such costs by 10% or 20% would represent a better outcome for clients. The point is that blockchain-based infrastructure may be valuable not only because it changes trading mechanics, but because it may reduce the operational drag associated with managing complex allocations.

NYLIM’s work in tokenization is already moving from theory into market experimentation. The firm has teamed up with Centrifuge to bring one of its high-yield corporate bond strategies onchain. The move places NYLIM among asset management firms exploring how blockchain rails can support institutional-grade investment products, including strategies connected to credit markets.

While the tokenized asset market remains relatively small compared with the scale of traditional finance, expectations for growth are significant. Citi has projected that tokenized real-world assets could reach $5.5 trillion by 2030, compared with the current $30 billion. That forecast reflects growing interest from banks, asset managers and infrastructure providers seeking to modernize financial plumbing through blockchain-based issuance, servicing and transfer mechanisms.

Stablecoins Create a Bridge to Tokenized Yield

Stablecoins are playing a central role in this transition. Sy has described stablecoins as one of the biggest unlocks in the past two years and as a gateway for institutions to move onchain. The stablecoin market has grown to over $300 billion, and stablecoins are increasingly used for cross-border payments and treasury management.

That adoption may create a natural next step for institutional investors and financial firms. Once banks, payment companies and fintech platforms hold or move value onchain through stablecoins, they may seek institutional tokenized investment products where those balances can earn yield rather than remain in cash. In that sense, stablecoins can serve as the entry point, while tokenized investment products may become the next layer of onchain financial activity.

The link between stablecoins and tokenized assets is especially important for institutions because cash management is a core part of financial operations. If stablecoin balances are used for payments, settlement or treasury activity, firms may eventually want ways to deploy those balances into regulated or institutional-grade products. Tokenized money market funds, credit strategies and other yield-bearing instruments could become more attractive if they integrate smoothly with stablecoin-based workflows.

Sy expects demand for tokenized investment products to broaden over the next several years as more traditional financial firms become comfortable operating on blockchain rails. That expectation does not imply an overnight transformation. Instead, it suggests a gradual migration in which payments, treasury management and investment products begin to connect through shared digital infrastructure.

Institutional DeFi Still Needs Stronger Market Plumbing

Decentralized finance remains another potential use case, but institutional adoption is still constrained by infrastructure gaps. Sy has said there is a use case for DeFi, though the sector needs more time to institutionalize. For large asset managers and financial institutions, the ability to interact with DeFi-style markets requires safeguards and services that resemble those available in established capital markets.

Among the missing or still-developing components are tokenized collateral, central clearing and prime brokerage services. These functions are not minor details. Institutional investors typically rely on robust collateral management, counterparty risk controls, financing arrangements, custody solutions and settlement frameworks. Without those layers, many firms may remain cautious about using DeFi protocols at scale, even if they recognize the potential benefits of programmable markets.

The institutionalization of DeFi would likely depend on market infrastructure that can satisfy operational, regulatory and risk management expectations. Tokenized collateral could improve how assets are pledged and moved. Central clearing could help manage counterparty exposures. Prime brokerage could provide institutions with familiar access, financing and execution services. Until those elements mature, many market participants are likely to treat DeFi as an area of study rather than a core operating venue.

Why Personalized Tokenized Portfolios Matter

The investment industry has spent years moving from broad, one-size-fits-all products toward more targeted solutions. Investors increasingly want portfolios that reflect their objectives, time horizons and preferences. At the same time, asset managers must manage costs, compliance, reporting and execution across a large client base. That tension makes scalable customization one of the most important challenges in modern asset management.

Blockchain does not solve every challenge by itself. Asset allocation, risk management, liquidity, regulation and investor suitability remain central. However, tokenization could provide a more flexible infrastructure layer for combining exposures and automating parts of the investment lifecycle. If the operational complexity of assembling diversified portfolios can be reduced, asset managers may be able to offer more tailored strategies to more investors.

For NYLIM, the emerging thesis is that tokenization should not be viewed only as a new wrapper for old products. It may become a way to rethink product design, portfolio implementation and client-level customization. That is a more ambitious vision than faster settlement alone, and it places tokenization at the center of a broader debate about the future structure of investment management.

The market is still early, and the path from experimentation to broad institutional deployment remains uncertain. Yet the combination of stablecoin adoption, tokenized asset issuance and growing interest from major financial firms suggests that blockchain infrastructure is gaining relevance in traditional finance. If Sy’s view proves correct, the next major use case may not be simply trading tokenized assets more efficiently. It may be building portfolios that are more personal, more scalable and more operationally efficient than current systems allow.

Frequently Asked Questions (FAQs)

What is tokenization in asset management?

Tokenization in asset management refers to representing investment assets or strategies on blockchain rails. It can support issuance, transfer, settlement, administration and potentially new ways of building portfolios.

Why does Thomas Sy see personalization as a major use case?

Sy argues that the future of asset management is customization and that blockchain may help deliver tailored portfolios at scale. He sees the opportunity in improving how portfolios are constructed rather than simply creating blockchain versions of existing funds.

What role does NYLIM play in tokenization?

NYLIM has teamed up with Centrifuge to bring one of its high-yield corporate bond strategies onchain. The move reflects the firm’s interest in using tokenized infrastructure for institutional investment products.

How large is NYLIM’s asset management business?

New York Life Investment Management is the $807 billion asset management arm of insurer New York Life. Sy’s multi-asset solutions team oversees about $11 billion within that business.

How could tokenization reduce costs for investors?

Tokenization could streamline transfer agency, settlement and other back-office processes. Sy has said that bringing those costs down by 10% or 20% would create a better outcome for clients.

Why are stablecoins important to tokenized investing?

Stablecoins have become a practical bridge for institutions moving onchain. As stablecoins are used for payments and treasury management, institutions may look for tokenized investment products that allow those balances to earn yield.

How large is the stablecoin market?

The stablecoin market has grown to over $300 billion. Stablecoins are increasingly used for cross-border payments, which may help expand demand for tokenized financial products.

What is the projected size of tokenized real-world assets?

Citi has projected that tokenized real-world assets could reach $5.5 trillion by 2030, compared with the current $30 billion. That projection reflects expectations for continued growth in tokenized finance.

What does institutional DeFi still need?

Sy has said institutional DeFi needs more mature infrastructure, including tokenized collateral, central clearing and prime brokerage services. These features could help institutions manage risk and operate more confidently onchain.

Photo by RDNE Stock project on Pexels