Cryptocurrencies were born out of the 2008-2009 financial crisis and were intended to provide an alternative to banks, according to Bloomberg. Although initially mocked by banks as a cypherpunk pipe dream, 15 years later, many banks and other financial institutions on Wall Street have not only begun to get involved in the cryptocurrency business (such as ETFs, Bitcoin), but have also begun to adopt the underlying blockchain technology. Physical asset tokenization is the process of representing physical assets such as bonds, stocks, artworks, and even ownership shares of office buildings as digital tokens on the blockchain. The tokenization process can eliminate settlement delays caused by the need to clear transactions and record transactions in multiple record systems and the use of a large number of intermediaries. In addition, by placing contract information such as ownership terms and transfer conditions on the blockchain, assets can be split, bought and sold, and traded outside of market trading hours.
However, U.S. bank regulators have yet to approve innovations such as deposit tokens. They also say instant settlements could exacerbate bank runs because customers could use programmable tokens to automatically withdraw funds from banks when bad news comes out.
