Bitcoin’s price swings are no longer affecting institutional interest in crypto technology, such as tokenization, meaning it now has a solid leg to stand on its own, according to Thomas Cowan, head of tokenization at Galaxy.
Cowan told Coinpectra at The Bridge conference in New York City on Wednesday that there has been a “separation of the interest in tokenization from the price of Bitcoin” over the past few months.
“In previous cycles, as Bitcoin and other alts have run up, there’s been an interest in tokenization, all the major traditional financial institutions have built out their crypto and tokenization teams, and then when the prices have crashed, those teams have gotten much smaller,” he said.
“Now, I think we’re getting to the point where it’s almost independent of the price of Bitcoin, that people see the benefits that blockchain can have to move and store traditional financial assets.”
Tokenization, where assets such as oil or bonds are represented digitally on a blockchain, has experienced significant growth over the past year, as the Trump administration has eased regulations on cryptocurrency, spurring interest from major traditional finance companies.
Bitcoin (BTC) has gone up and down through the year, reaching a peak of over $126,000 in early October, but it has since declined by nearly 20% to around $102,000.
Crypto must pitch “clear benefits” of tokenization
Cowan said that he hoped next year would see the industry “really demonstrate” to institutions that tokenization “is just a better, faster, cheaper way for them to move and store their financial assets.”
“For these large organizations that think in decades, you really want to make sure that we’re demonstrating the clear benefits that this technology has, so that they can say, ‘Look, we see this as a durable, long-term trend. It’s inevitable,” he said.
“They just see that technology as something that is going to be the back end of their financial institutions.”
Stablecoins to money market funds are “logical next step”
Cowan said that stablecoins, which have exploded in popularity after the US passed laws to regulate the tokens earlier this year, are a crypto use case that is “off to the races.”
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He added that tokenized money market funds, which invest in assets like government bonds, have also “really come into the market” with increasing institutional interest.
“As people move their capital onchain, they want that risk-free rate that they’re forgoing when they’re holding stablecoins,” Cowan said. “A very logical next step to go from stables to money market funds.”
Cowan added that the industry is nearing a point where the technology “does actually demonstrate to the major financial companies that have been on the sidelines of previous cycles that this really is transformative.”
“This is the time to invest,” he said. “Because they’re going to see it really happen in the next couple of years.”
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Additional reporting by Ciaran Lyons.