The reality of "decentralization" in encrypted currency is very challenging: The biggest winner in asset tokenization may still be banks.

Between the high-profile fraudulent news and price crashes, investors are easily forgetting the utopian ideal behind the cryptocurrency movement: to build financial services on decentralized infrastructure, bypassing banks and other fee-charging intermediaries. However, despite years of speculation, cryptocurrencies and the blockchain ledger they rely on have not been widely adopted. Tokenization, the process of recording real-world assets on the blockchain, may change this situation - with banks and their clients most likely to benefit from it. The essence of registering asset ownership on cryptocurrency platforms lies in speed and convenience. As public blockchains operate around the clock with no fixed trading hours, settlements can be completed almost instantly. Supporters also believe that by dividing expensive and illiquid assets (such as real estate) into smaller units, trading would be easier. Tokenization theoretically allows for ownership of a small part of assets like commercial buildings. Currently, the outlook for this field is optimistic. Analysts at Standard Chartered Bank predict that by 2028, the market value of all tokenized real-world assets (RWAs) will reach $20 trillion. This does not even include stablecoins, cryptocurrencies pegged to existing currency prices. Vlad Tenev, CEO of brokerage app Robinhood Markets (HOOD.US), stated in an interview in October that tokenization is like a "freight train that will swallow the entire financial system." However, banks have an advantage and can be the first to capture the majority of cost savings from this new system. For example, banks could tokenize corporate clients' deposits, allowing them to transfer funds between their various global accounts in a matter of seconds. Citigroup (C.US) and HSBC Bank (HSBC.US) currently offer similar services to some institutional clients. Meanwhile, Alibaba Group Holding Limited Sponsored ADR (BABA.US), a giant in e-commerce, announced plans to launch a tokenized global payment network using technology developed by JPMorgan Chase. Zhang Kuo, President of Alibaba Group Holding Limited Sponsored ADR International, stated in an interview that the group will introduce a system similar to stablecoins to accelerate international transactions. Skeptics may argue that financial institutions are developing these products merely to counter the competitive threat posed by stablecoins. If customers use cryptocurrencies like cash, funds will flow out of the banking system. As major market interest rates decline, the income of lending institutions is already decreasing, further exacerbating their difficulties. Through tokenization of payments and deposits, customers can still enjoy instant settlements while receiving the security provided by banks. In addition, individuals trading tokenized stocks on platforms like Robinhood may not necessarily enjoy the same rights as traditional shareholders. As a result, although tokenized stocks are legal in Europe, regulators are still cautious about them. Despite the well-known enthusiasm of former US President Trump for cryptocurrencies, tokenized stocks are not widespread in the United States. Without clearer support from regulators, demand may stagnate. It appears that the dream of decentralized finance is gradually being replaced by a more pragmatic reality: cryptocurrency payment systems will help banks eliminate many frictions in existing infrastructure. Traditional lending institutions will not be excluded from the cryptocurrency feast, but will instead become important participants.