Fidelity’s Giselle Lai Highlights Tokenization for Balance-Sheet Management

During the WebX conference in Tokyo, Giselle Lai, a director and digital assets strategist for APAC at Fidelity International, discussed the potential of tokenized funds. She argues that the most compelling long-term use case for these funds is their capability to improve balance-sheet management for large, global institutions instead of simply providing liquidity.

Lai points out that institutions like pension funds and insurers often face challenges in managing cash that is spread across various bank accounts worldwide due to regulatory requirements and currency exposure. Typically, these organizations hold cash deposits that do not yield returns. Lai highlights that tokenized financial instruments offer a more effective means to manage cash across fragmented accounts and jurisdictions.

She states, “I think over time, the more appealing use case will be balance sheet management.” This reflects a growing focus among institutional investors on the functional benefits of tokenized assets rather than just their trading convenience. Tokenization enables the movement of real-world assets through blockchain technology, providing benefits such as efficiency, yield generation, and integration with broader liquidity needs.

With major products like the USD Institutional Digital Liquidity Fund (BUIDL) launched by BlackRock in March 2024, the tokenized asset space has started to develop significantly. Tokenized money market funds, backed by assets like U.S. Treasuries, have accumulated over $15 billion in assets under management. Overall, forecasts suggest the asset tokenization market could expand to as much as $24.5 trillion by 2033.

Organizational demand for more efficient asset management underscores this trend. Lai comments on the slow evolution of the tokenization landscape, drawing parallels with the ETF industry’s lengthy development period. “It takes almost 20 years for [the ETF] industry to build a comprehensive ecosystem … the same evolution is going to happen in the tokenization space,” she explains, suggesting that a fully developed balance-sheet management tool through tokenization may still be years away.