US Banks Anticipate Gradual Shift to Digitized Financial System

Major U.S. banks and financial market intermediaries foresee a gradual transition to a digitized financial system, which is expected to accelerate after reaching a tipping point, according to credit rating agency Moody’s Ratings. According to Cointelegraph, a report released on Tuesday highlighted that during discussions with U.S. banks and other financial market intermediaries, most participants viewed the shift as inevitable. They agreed that it would begin slowly before gaining momentum, with tokenization volumes increasing and extending to more market participants, assets, and use cases. Industry leaders generally believe that broad asset tokenization will occur, with uncertainties mainly revolving around the speed and sequence of this transition, Moody’s noted. In the short term, progress is anticipated to remain gradual, focusing on simpler segments like funds and short-term instruments, alongside traditional processes. However, many expect a tipping point where broader adoption accelerates rapidly. Tokenization has been a significant driver of institutional interest in blockchain and crypto, with projections indicating massive growth in the coming years. Cathie Wood’s ARK Invest forecasts that digital assets could evolve into a $28 trillion market by 2030, with Bitcoin, decentralized finance, stablecoins, and tokenized real-world assets as key drivers. Currently, tokenization activity is low, with primary uses in cryptocurrency trading, cross-border retail payments, and some institutional applications, according to Moody’s. However, traditional financial institutions are actively preparing for increased adoption. The tokenized real-world asset market has grown by over 420% since the start of 2025, reaching $31.6 billion as of Thursday, as reported by analytics platform RWA.xyz. Moody’s stated that almost all large banks and major financial market intermediaries have established dedicated digital-asset teams or innovation units and are participating in industry pilots to test new infrastructure. These efforts are strategic, aiming to ensure readiness to serve clients with digital asset and digital money capabilities if adoption surges, preventing a sudden shift in market demand from catching them off guard. Moody’s outlined three potential outcomes for the financial system based on the pace of tokenization. In the "steady growth" base case, which is deemed most likely, the financial system will largely remain unchanged, with tokenization scaling in select assets like stablecoins and tokenized deposits, while incumbent asset managers, banks, and infrastructure providers maintain central roles. In a low-growth scenario, regulatory friction, unresolved legal questions, and low demand from end users could stifle adoption, confining asset tokenization and digital money to narrow use cases with modest changes to the financial system. The most disruptive scenario would involve rapid tokenization growth, with assets like stablecoins becoming widely embraced as an on-chain settlement option, potentially pressuring incumbents like payment processors and correspondent banks. Macro investor and former hedge fund manager Jordi Visser predicted that the "tokenization reality" will commence this year, with tokenized assets powering agentic AI payments. Meanwhile, the International Monetary Fund noted in April that tokenization could enhance transparency and reduce friction in finance, but also warned of potential challenges to financial stability.