US Banks Expect Digitized Finance to Start ‘Slow, Then Fast’

Major U.S. banks and financial market intermediaries told Moody’s that the shift to a digitized financial system will begin “slow, then fast,” with tokenization volumes rising in simpler segments before reaching a tipping point. Moody’s published the report on Tuesday after conversations with banks, asset managers and infrastructure providers.

Moody’s found current tokenization activity remains limited to cryptocurrency trading, cross-border retail payments and select institutional uses. Market data show rapid expansion in tokenized real-world assets: analytics platform RWA.xyz estimated the market grew more than 420% since the start of 2025 to $31.6 billion as of Thursday.

Traditional banks are building capabilities. Moody’s reported that almost all large banks and major intermediaries have set up digital-asset teams or innovation units and are running industry pilots to test new infrastructure. In January, Morgan Stanley appointed Amy Oldenburg to lead a new crypto unit after announcing plans for three crypto exchange-traded funds and a retail crypto wallet.

The report lays out three possible outcomes depending on the pace of tokenization. In Moody’s base case, tokenization scales steadily in select assets while incumbents-asset managers, banks and infrastructure providers-keep central roles. A low-growth scenario would confine tokenization to narrow use cases if regulatory barriers, unresolved legal issues and weak end-user demand persist. Rapid growth could be disruptive, reducing revenue for payment processors and parts of legacy market plumbing and prompting deposit outflows at smaller banks.

Independent forecasts show a wide range of potential size. ARK Invest projects digital assets could reach $28 trillion by 2030, driven by Bitcoin, decentralized finance, stablecoins and tokenized real-world assets. The International Monetary Fund in April said tokenization could reduce frictions and increase transparency while creating new financial stability challenges. Macro investor Jordi Visser predicted tokenization activity would begin this year and could support new payment models linked to artificial intelligence.

Industry participants told Moody’s that many early use cases are straightforward to integrate and likely to operate alongside current systems. Wider adoption depends on legal and regulatory clarity, common standards for token issuance and custody, and clearer settlement arrangements.

Tokenization converts ownership rights or claims into digital tokens recorded on distributed ledgers. Supporters point to faster settlement, fractional ownership and programmable features; critics cite operational, legal and regulatory hurdles that could slow broader uptake.