Overview of Evolving Money: The Tokenization Tipping Point
This sponsored episode of Bloomberg’s Evolving Money (co‑produced with Coinbase) explores tokenization—the representation of real‑world assets on blockchains—and why traditional institutional players are increasingly experimenting with and adopting tokenized products. Through conversations with Rick Edelman (Digital Assets Council of Financial Professionals) and Scott Lucas (Head of Markets, Digital Assets, J.P. Morgan), the episode contrasts a strongly bullish timeline for broad token adoption with a measured, market‑driven implementation approach.
Guests
- Rick Edelman — Financial advisor, podcaster, founder of the Digital Assets Council of Financial Professionals. Bullish on rapid, transformative adoption of tokenization.
- Scott Lucas — Head of Markets, Digital Assets, J.P. Morgan. Leads institutional experiments and pushes a pragmatic, client‑led adoption path.
Key facts & context
- Tokenization = creating digital tokens on a blockchain that represent ownership/claims in real‑world assets (equities, bonds, real estate, private assets, etc.).
- The episode cites rapid growth: tokenized assets have grown roughly eightfold to more than $30 billion in under three years (early‑stage market).
- Major traditional asset managers (BlackRock, Fidelity, Franklin Templeton) and banks (J.P. Morgan, Goldman Sachs) have launched or piloted tokenized products or funds.
- Example landmark deal: J.P. Morgan arranged a tokenized commercial‑paper issuance on a public blockchain (late 2025) where tokenized paper was issued and traded/settled on‑chain (settlement used stablecoin; buyers included Coinbase and Franklin Templeton)—a concrete institutional proof of concept.
Why institutions are exploring tokenization
- Liquidity: fractionalization and on‑chain trading can make previously illiquid assets (e.g., commercial real estate) more tradeable.
- Broader access: lower price points and simplified settlement broaden investor participation (retail access to asset classes formerly out of reach).
- Operational efficiency: blockchain rails can simplify settlement, custody, and reconciliation; firms cite potential cost savings and faster movement of funds.
Rick Edelman — Bullish thesis and use cases
- Core claim: Tokenized products are the next evolutionary step (after mutual funds → ETFs); tokens will offer lower costs, greater liquidity, continuous (24/7) trading and superior disclosure.
- Prediction: Tokenization will be dominant in the industry within the decade; ETFs as we know them will be eclipsed.
- Practical examples highlighted:
- Real estate fractionalization (Aspen St. Regis and earlier Manhattan condo examples) enabling retail ownership and liquidity.
- Tokenizing a home to monetize equity without moving out (create many $1 tokens of a $1M house).
- Tokenizing salaries, celebrity contracts, music catalogs—fans can become fractional owners and earn revenue streams.
- Non‑financial records (IDs, health, employment, academic records) tokenized for portability and verification.
- Institutional adoption accelerants: clearer congressional/regulatory rules (custody, taxation, allowed participation) are needed to unlock mass institutional engagement.
Scott Lucas — Measured, market‑driven view
- Rationale for experiments: you must test real transactions on public chains to build evidence and refine assumptions about appetite and utility.
- Not prescriptive on technology choice: blockchain vs legacy rails should be decided by market needs and client demand—not by ideological preference.
- Key constraints to widespread on‑chain adoption:
- Usable and scalable cash‑on‑chain (stablecoins, tokenized deposits, CBDCs) are necessary for settlement.
- Legal, regulatory and risk frameworks must mature.
- Internal systems, risk appetite, and client preferences drive timing.
- Potential benefits beyond speed/cost:
- A single distributed ledger record makes ownership and entitlement indisputable, enabling innovations such as different coupon frequencies (millisecond/daily/monthly), embedded smart‑contract cash‑flows, and greater transparency.
- Tokenized structures could lower barriers for smaller issuers to access capital markets and let markets offer more flexible instrument designs.
- Timeline stance: possible broad change over time, but “possible, but improbable” to expect everything tokenized imminently; adoption will be selective and evidence‑driven.
Areas of agreement and contrast
- Agreement:
- Tokenization offers genuine technological and business advantages (liquidity, efficiency, new product forms).
- Institutional engagement is real and growing—experiments and pilots are underway.
- Contrast:
- Timeline and intensity of change: Rick foresees rapid, sweeping adoption within 5–10 years; Scott emphasizes incremental, client‑led adoption contingent on regulatory, cash‑on‑chain and operational readiness.
Notable quotes
- Rick Edelman: “We’re going to take those ETF shares and turn them into tokens…further reduce costs, further increase liquidity, improving your diversification.”
- Rick: “Why aren’t we able to do this 24/7, 365? Why aren’t we able to do it instantaneously?”
- Scott Lucas: “The market will decide whether blockchain is a better answer or not…that’s not our decision as J.P. Morgan.”
- From the episode: “There are three main drivers [for institutional adoption]: liquidity, broader access, and operational efficiency.”
Practical takeaways / recommendations
- For investors and advisors:
- Educate: learn tokenization basics and the regulatory environment (custody, taxation, stablecoin rules).
- Monitor institutional pilots and where settlement liquidity is developing (stablecoins, tokenized deposits, CBDCs).
- Consider tokenized exposure where appropriate, but weigh custody, counterparty and regulatory risks.
- For institutions:
- Run targeted pilots to build market evidence and determine which asset classes/flows benefit most from tokenization.
- Coordinate legal, compliance and treasury workstreams to identify acceptable settlement mechanisms and risk footprints.
- Engage clients to understand demand and tailor product design (not apply one‑size‑fits‑all).
Outlook
Tokenization is early but progressing from proofs‑of‑concept to institutional pilots. Whether it becomes the dominant investment platform depends on multiple levers: regulatory clarity, scalable cash‑on‑chain, client demand, and successful production‑grade use cases that clearly outperform legacy rails. Expect selective, accelerated adoption in certain niches (money markets, short‑term paper, some real‑assets and private markets) first, with broader transformation occurring over years rather than overnight.