NYLIM was the latest addition to the list of asset management giants to embrace tokenization, partnering with Centrifuge (CFG) to bring one of its high-yield corporate bond strategies online.
For NYLIM, tokenization is less about launching blockchain versions of existing funds and more about improving the way wallets are built.
Sy said custom investment strategies often combine ETFs, bonds, private credit and other assets, creating operational complexity that makes customization difficult to scale.
“The end goal is to build customization into the asset itself, rather than customization tied to operations around individual assets,” he said.
Tokenization could also streamline transfer agency, settlement and other back-office processes, reducing costs that would ultimately benefit investors.
“If you can reduce that number by 10 or 20 percent, that will be a better outcome for our customers,” Sy said.
DeFi waits
Sy said that stablecoins have become the first practical bridge connecting traditional financial institutions to the chain.
The stablecoin market has grown to over $300 billion and is increasingly used for payments between companies.
As banks, payments companies, and fintech companies adopt stablecoins for cross-border payments and cash management, many will eventually seek institutional-grade tokenized assets where those balances can generate a yield instead of sitting in cash.
“Stablecoins have probably been one of the biggest unlocks over the last couple of years,” Sy said. “The adoption of stablecoins was the gateway to bringing them online.”
