Tokenization has the potential to unlock tens of billions of dollars in capital currently locked in asset collateral across the global financial landscape, according to Nasdaq CEO Adena Friedman. During discussions at the TOKEN2049 conference in Singapore, she emphasized that tokenizing a wide array of financial instruments—including Treasurys, stocks, and money market funds—could significantly enhance the fluidity of collateral within the financial system.

Friedman explained that this transformation involves using blockchain technology to represent financial assets as digital tokens, facilitating seamless transactions. With the recent passage of the Genius Act in the U.S., which provides a regulatory framework for stablecoins, institutional interest in tokenization has surged, reflecting a changing climate in finance. “If we can tokenize money,” she stated, “then we can tokenize the flow of capital.” This shift comes at a time when retail investors are also eager for opportunities to trade on a 24/7 basis, highlighting a convergence between institutional goals and retail demands.

The transition to a fully operational 24/7 trading market presents substantial challenges for the financial industry, as outlined by Friedman. Historically, financial institutions have designated closed periods to update systems and manage risk. In a continuous operating environment, however, these processes would need to occur in real-time, necessitating a complete overhaul of traditional operational practices. “Everything has to be real time all the time,” she noted.

To facilitate this transition, the integration of artificial intelligence becomes crucial. Nasdaq has already initiated the use of digital agents within its risk management platform, which can offer recommendations based on real-time data. As these technologies mature, they could enable banks to take more proactive measures in managing risk and streamlining 24/7 operations. “AI is critical for 24/7,” Friedman emphasized, highlighting the importance of technology in evolving the financial landscape.

Interest in tokenization and access to American capital markets is not limited to U.S. companies, as noted by Arjun Sethi, co-CEO of cryptocurrency exchange Kraken, during the discussions. He highlighted that international firms, including one generating approximately $25 million in revenue, are now exploring avenues for leveraging tokenization to tap into U.S. capital markets. This suggests a growing global appetite for innovative financial solutions that can result in more equitable access to capital.

Despite the promising prospects, Friedman cautioned that 24/7 trading may not be feasible for all assets, citing liquidity issues as a potential barrier. “Not every asset is liquid enough to support a 24/7 environment,” she explained. Nevertheless, expanding connectivity across the global financial system via tokenization could democratize access to asset classes that were previously inaccessible to certain investors, ultimately creating a more inclusive financial ecosystem.