BNY Mellon predicts that the combined market for stablecoins and tokenized cash could reach $3.6 trillion by 2030, with stablecoins alone accounting for 41.6% of this figure. Meanwhile, tokenized deposits and digital money-market funds (MMFs) are expected to account for the remaining 58.3%.
This comes as more institutions adopt them and regulatory frameworks improve. The company released a report on Monday that shows how stablecoins, tokenized deposits, and money market funds will change financial markets.
More institutions use stablecoins and tokenized cash deposits
BNY says more financial institutions are using stablecoins today than ever before and that the token alone will grow to $1.5 trillion by 2030. Because organizations can quickly execute large transactions without waiting days for traditional bank transfers to clear, they feel secure using stablecoins for most of their financial activities.
Tokenized deposits and money market funds are expected to be worth $2.1 trillion, accounting for approximately $3.6 trillion of the total that BNY anticipates will be reached by 2030.
Institutions prefer tokenized deposits because they facilitate faster money movement, reduce errors, and are easier to track than traditional bank deposits. Tokenized money market funds, on the other hand, can quickly transfer between accounts, markets, or financial products, enabling institutions to manage their funds more effectively.
Stablecoins and tokenized cash also reduce counterparty risk. There is a significantly lower chance that one party in a financial deal will fail to deliver money or assets on time using digital cash compared to traditional finance. With these benefits, institutions can manage their liquidity more effectively and secure favorable investment opportunities more quickly than before.
BNY says institutions, such as pension funds, could use tokenized money market funds to post margins for derivatives in seconds, rather than waiting hours or days to clear bank transfers.
The global financial services company overseeing more than $53 trillion explains that the system will become faster and more efficient as more institutions use these digital tools. All factors are working in favor of the adoption of digital money, as organizations show an increasing interest in it. Meanwhile, regulators in the US, Europe, and Asia are working diligently to clarify the rules for everyone.
Blockchain will complement traditional financial systems and not replace them
BNY said blockchain will work alongside traditional financial systems and not replace them. It will simply enhance the transaction processes of banks, allowing institutions to send and receive money faster and reduce operational errors.
Carolyn Wienberg, the Chief Product and Innovation Officer at BNY, said that integrating traditional financial systems with blockchain will enable firms to enhance their operations and open new doors for investment. There will be fewer mistakes because transactions recorded on a blockchain are transparent and easy to verify, allowing institutions to create reports quickly and manage audits more efficiently.
Clear regulations also encourage companies to adopt these new technologies without incurring unnecessary risks. The Markets in Crypto-Assets (MiCA) legislation by the European Union, along with ongoing policy development in the United States and the Asia-Pacific region, will create a clear and safe path for investors and firms to adopt blockchain technologies.
Without these clear rules, many people will hesitate to use tokenized cash because they fear legal and operational risks that could result in billions of dollars in losses.
BNY says this is the turning point that global finance has needed, as blockchain will work in conjunction with traditional systems to enhance transactions and open new avenues for businesses to offer their products and services.
When more institutions adopt tokenized cash, they will be able to respond quickly to market changes and deliver better services to their clients. At this rate, BNY’s projection of $3.6 trillion by 2030 appears more achievable, even before that timeline.
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