Moody’s says banks are preparing for large-scale tokenized finance adoption

Major U.S. banks and financial institutions have increasingly prepared for a future in which tokenized assets become part of mainstream finance, even as industry participants expect adoption to begin gradually before accelerating rapidly at a later stage.

According to a report published Tuesday by Moody’s Ratings, discussions with U.S. banks and financial market intermediaries showed that most institutions now see tokenization as an eventual part of the financial system, although uncertainty remains around timing and the order in which adoption could unfold.

Moody’s said industry participants expect early activity to stay concentrated in simpler financial products, including funds and short-term instruments, while traditional systems continue operating alongside blockchain-based infrastructure. Over time, however, many executives interviewed by the agency expect adoption to expand into additional asset classes, use cases, and participants once the market reaches what they described as a tipping point.

Interest around tokenization has continued to build across Wall Street and the crypto sector, particularly as firms explore blockchain-based settlement systems, tokenized deposits, and digital money infrastructure. Investment firm ARK Invest has projected that digital assets, including Bitcoin, decentralized finance, stablecoins, and tokenized real-world assets, could grow into a $28 trillion market by 2030.

Banks continue testing tokenized finance infrastructure

Despite the optimism surrounding the sector, Moody’s said current tokenization activity remains relatively limited. The report identified cryptocurrency trading, cross-border retail payments, and a handful of institutional applications as the primary areas where blockchain-based finance is already being used at scale.

Data from RWA.xyz showed the tokenized real-world asset market has expanded more than 420% since the start of 2025, reaching $31.6 billion as of Thursday.

Across the traditional finance sector, institutions have continued building internal teams and testing blockchain infrastructure while waiting for demand to mature further. Moody’s said almost every major bank and large financial intermediary it spoke with has already created digital asset divisions or innovation units and has joined pilot programs focused on new financial infrastructure.

Among the firms moving deeper into the sector, Morgan Stanley appointed veteran executive Amy Oldenburg earlier this year to lead a newly formed crypto unit. The move came weeks after the bank disclosed plans to introduce three crypto exchange-traded funds and a crypto wallet offering.

Elsewhere in the market, macro investor Jordi Visser said Saturday that the “tokenization reality” could begin emerging this year, particularly as tokenized assets become integrated into agentic AI payment systems.

Moody’s outlines three possible outcomes

In a separate report released Monday, Moody’s laid out three possible paths for the financial system depending on how quickly tokenization adoption develops.

Under what the agency described as its most likely “steady growth” scenario, tokenized finance would expand gradually through products such as stablecoins and tokenized deposits while existing banks, asset managers, and financial infrastructure firms continue holding dominant positions in the market.

A slower adoption outcome, according to Moody’s, could emerge if legal uncertainty, regulatory obstacles, and weak consumer demand continue limiting activity. Under that scenario, tokenized finance would remain restricted to narrower applications with little impact on the existing financial system.

The agency identified a rapid-growth scenario as the most disruptive possibility. In that outcome, stablecoins and tokenized assets would become widely used for on-chain settlement, placing pressure on payment processors, correspondent banks, and parts of the traditional settlement network that currently generate revenue from delays and fragmented infrastructure.

For smaller and mid-sized banks, Moody’s warned that deposit balances could also face pressure if customers increasingly move funds into blockchain-based financial systems.