Tokenized Funds’ Institutional Opportunity Is Moving Beyond 24/7 Liquidity

What to Know

• Fidelity International’s Giselle Lai sees balance sheet management as the more compelling long-term use case for tokenized funds than 24/7 liquidity.
• Tokenized money market funds and other onchain instruments may help pensions, insurers and companies use cash more efficiently across fragmented accounts and jurisdictions.
• Large global institutions often hold cash in multiple bank accounts to meet regulatory, currency and demand-related needs, and some of those balances may earn no return.
• Tokenized instruments can offer around-the-clock movement, yield-bearing features and potential integration with broader liquidity management.
• Tokenized money market funds, primarily backed by U.S. Treasuries, are the most popular category of tokenized products currently in use.
• BlackRock’s USD Institutional Digital Liquidity Fund, known as BUIDL, debuted in March 2024 and is the largest tokenized money market fund.
• Tokenized money market funds now have more than $15 billion in assets under management, while the broader onchain real-world asset market excluding stablecoins has surpassed $31 billion in value.
• The global asset tokenization market is valued at roughly $2.1 trillion when including assets such as alternative investments and tokenized financial infrastructures.
• Grand View Research forecasts the sector could reach $24.5 trillion by 2033, while some industry estimates suggest tokenized markets could reach as much as $88 trillion by 2035.
• Lai has cautioned that it may take decades for tokenization to mature into a comprehensive balance sheet management ecosystem.

Institutional Tokenization Is Looking Past the Trading Pitch

Tokenized funds have often been marketed around the idea of constant market access, instant settlement and fractional ownership. Those features remain important, especially for digital-asset platforms, stablecoin issuers and investors that want assets capable of moving at any time. Yet the larger institutional story is beginning to shift. For pension funds, insurers, treasuries and multinational companies, the deeper opportunity may be less about trading more often and more about making balance sheets work more efficiently.

Fidelity International’s Giselle Lai, director and digital assets strategist for APAC, has framed balance sheet management as the more appealing long-term use case for tokenized funds. The distinction matters because institutional investors do not necessarily want tokens for their own sake. They want financial instruments that can do more than existing wrappers, particularly when it comes to moving cash, maintaining yield, handling collateral and operating across jurisdictions without unnecessary friction.

That view reflects a more practical phase in the tokenization cycle. After years of experimentation, the question for large institutions is not simply whether an asset can exist on a blockchain ledger. It is whether that representation improves a real operational problem. Balance sheet management is one of the largest and most persistent of those problems for institutions that operate across regions, currencies, regulatory frameworks and banking partners.

Why Balance Sheet Management Matters for Large Institutions

Global institutions often maintain cash across multiple bank accounts worldwide. These balances may be needed for regulatory compliance, currency exposure management, local operating requirements or client and policyholder demand. In many cases, the deposits are fragmented, difficult to optimize and may earn no return while waiting to be used. Moving liquidity between accounts and jurisdictions can also be cumbersome, particularly when timing matters.

Tokenized money market funds and related onchain instruments may help address part of that challenge. If an institution can hold yield-bearing instruments that move around the clock, it may be able to manage liquidity more dynamically without leaving as much idle cash in place. The potential benefit is not simply faster trading. It is the ability to make cash-like assets more productive while still keeping them available for treasury, collateral or operational needs.

For corporations, the appeal may be especially clear when liquidity is spread across different bank accounts. A tokenized yield-bearing instrument that can be transferred efficiently could become part of a broader cash management process. Instead of seeing tokenization as a speculative market structure, some treasury and institutional participants are evaluating it as infrastructure that may help them use capital more efficiently.

Tokenized Funds Are Already Gaining Institutional Traction

Tokenized products already exist, though much of today’s activity is still centered on investing. Tokenized money market funds are the leading category, and they are primarily backed by U.S. Treasuries. The largest product in the category is BlackRock’s USD Institutional Digital Liquidity Fund, known as BUIDL, which debuted in March 2024.

The category has grown quickly by institutional standards. Tokenized money market funds now hold more than $15 billion in assets under management. The broader onchain real-world asset market, excluding stablecoins, has surpassed $31 billion in value. When the scope is expanded to include assets such as alternative investments and tokenized financial infrastructures, the global asset tokenization market is valued at roughly $2.1 trillion.

Growth forecasts have also added to institutional attention. Grand View Research projects the sector could reach $24.5 trillion by 2033. Some industry estimates suggest tokenized markets could reach as much as $88 trillion by 2035. These forecasts remain projections, but they show why major asset managers, infrastructure providers and financial institutions are treating tokenization as a long-term strategic theme rather than a niche digital-asset experiment.

Always-On Yield and Collateral Mobility Are Key Drivers

The fastest adoption has come where the functionality is easiest to understand. Stablecoin issuers, treasury teams and platforms that need always-on yield and collateral mobility have been among the most active users of tokenized money market funds. These users are not only looking for a tradeable token. They are looking for instruments that may be held, transferred, pledged or redeemed in ways that align with digital financial infrastructure.

For institutional investors, the decisive question is whether tokenized instruments are faster and cheaper than the tools they already use. Existing fund structures, custodial processes and settlement systems are deeply embedded in global finance. Tokenization must therefore prove that it can reduce friction without creating unacceptable operational, regulatory or counterparty risks. In that sense, the technology is being judged by its utility, not by its novelty.

Instant execution, fractional ownership and around-the-clock processing are meaningful advantages. They allow transactions, including purchase, sale and final processing, to be completed immediately. But the institutional use case goes beyond convenience. If tokenized funds can support liquidity planning, collateral transfers and cash optimization across fragmented systems, they could become part of the financial operating layer for large organizations.

A Long Road Toward a Full Ecosystem

Despite the momentum, a full balance sheet management ecosystem for tokenized assets is not likely to appear overnight. Lai has compared the expected evolution to the ETF industry, which took almost 20 years to build a comprehensive ecosystem. The same kind of gradual development may be needed in tokenization, where product design, custody, regulation, settlement, interoperability and institutional workflows all have to mature together.

This timeline is important for investors and institutions. Tokenization is not merely a product launch story. It is an infrastructure story. For tokenized funds to become widely used in balance sheet management, institutions must be able to integrate them with existing risk systems, accounting processes, compliance controls and treasury functions. Banks, asset managers, custodians and blockchain infrastructure providers must also develop standards that allow tokenized assets to move reliably across environments.

Regulatory clarity will also shape adoption. Pensions, insurers and large corporations tend to move carefully when balance sheet assets are involved. They need confidence that tokenized instruments are legally sound, operationally resilient and compatible with internal governance requirements. The more the market can demonstrate these qualities, the more likely tokenized products are to move from pilot programs into everyday treasury and liquidity management.

What This Means for Crypto and Real-World Assets

For the crypto market, the balance sheet management narrative represents a shift from speculation toward institutional utility. Tokenized real-world assets have become one of the most closely watched intersections between blockchain technology and traditional finance. Unlike purely speculative digital tokens, tokenized money market funds are tied to familiar instruments and institutional needs. That makes them a bridge between conventional financial markets and onchain infrastructure.

The implication is that the most important adoption may happen behind the scenes. Retail traders may focus on price action and liquidity, while large institutions may focus on operational efficiency, capital productivity and settlement design. If tokenized funds become useful for managing cash, collateral and yield, the market’s growth could be driven by treasury operations rather than trading desks alone.

FXCOINZ views this as a defining test for tokenization’s next phase. The technology has already shown that real-world assets can be represented on blockchain ledgers. The larger question is whether those assets can solve persistent institutional problems at scale. Balance sheet management may be where tokenization’s promise becomes most relevant to the financial system.

Frequently Asked Questions (FAQs)

What is the main institutional use case for tokenized funds?

The main long-term use case highlighted by market participants is balance sheet management. Tokenized funds may help large institutions use cash and cash-like assets more efficiently across accounts, jurisdictions and liquidity needs.

Why is 24/7 liquidity not the only focus?

Round-the-clock liquidity is useful, but large institutions are often more interested in what tokenized instruments can do operationally. They may value faster movement, yield-bearing features and collateral mobility more than constant trading access alone.

Which institutions could benefit from tokenized balance sheet tools?

Pension funds, insurers, corporations, stablecoin issuers, treasuries and digital platforms could benefit if tokenized instruments help them manage cash, yield and collateral across fragmented systems more efficiently.

What are tokenized money market funds?

Tokenized money market funds are fund interests represented on blockchain ledgers. The most popular versions are primarily backed by U.S. Treasuries and are designed to combine familiar money market exposure with onchain transferability.

How large is the tokenized money market fund category?

Tokenized money market funds now have more than $15 billion in assets under management. The broader onchain real-world asset market excluding stablecoins has surpassed $31 billion in value.

What is BUIDL?

BUIDL is BlackRock’s USD Institutional Digital Liquidity Fund. It is the largest tokenized money market fund and debuted in March 2024.

How big could the tokenization market become?

The global asset tokenization market is valued at roughly $2.1 trillion when including assets such as alternative investments and tokenized financial infrastructures. Grand View Research forecasts the sector could reach $24.5 trillion by 2033, while some industry estimates suggest tokenized markets could reach as much as $88 trillion by 2035.

Will tokenized balance sheet management develop quickly?

Market expectations remain measured. Lai has suggested that tokenization may take decades to mature into a comprehensive balance sheet management ecosystem, similar to the long development cycle seen in the ETF industry.

Why does tokenization matter for crypto markets?

Tokenization matters because it connects blockchain infrastructure with traditional financial assets and institutional workflows. If it improves treasury, collateral and liquidity management, it could become a major source of practical adoption for onchain finance.

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