Tokenization could unleash tens of billions of dollars in trapped capital, Nasdaq CEO says

The statement from Nasdaq CEO Adena Friedman highlights the potential for tokenization to unlock significant amounts of capital currently tied up in illiquid assets. This development could have major implications for funds, which often struggle to access liquidity in certain markets or assets. By leveraging tokenization, funds may be able to tap into new sources of capital and create more efficient investment vehicles.

Tokenization, which involves representing ownership of an asset as a digital token on a blockchain, has been gaining traction in recent years as a means of increasing liquidity and reducing barriers to investment. For funds, the ability to tokenize assets could open up new opportunities for investment and portfolio diversification, while also providing a more efficient and cost-effective way to manage assets. As the use of tokenization continues to grow, it will be important for funds to stay ahead of the curve and explore ways to integrate this technology into their investment strategies.

As the industry moves forward with tokenization, it will be important to watch for developments in regulatory frameworks and infrastructure development. The ability of tokenization to unlock trapped capital will depend in part on the creation of clear and consistent regulatory guidelines, as well as the development of robust and secure infrastructure to support the creation and trading of digital tokens. Funds should keep a close eye on these developments and be prepared to adapt their investment strategies as the use of tokenization becomes more widespread.

Originally reported by cnbc.com. FundNews adds analysis for finance & markets readers.