Moody's predicts slow start, rapid spread for institutional tokenization

The adoption of asset tokenization and digital finance by major U.S. banks and financial institutions will start slowly before spreading rapidly, according to global credit rating agency Moody's. In a recent report cited by Cointelegraph, Moody's noted that while tokenization is currently limited to simple asset classes like funds and short-term financial products, institutions anticipate its expansion to more assets and market participants. The report added that most large banks and financial infrastructure firms have already established dedicated digital asset teams and are participating in pilot projects. Moody's outlined three potential paths for the financial system's evolution: gradual growth, low growth, or rapid proliferation. The most likely scenario, the agency said, involves the spread of stablecoins and deposit tokens while existing banks and asset managers maintain their core roles. However, if tokenization spreads rapidly, stablecoins could become the primary on-chain payment infrastructure, putting profitability pressure on some payment companies and banks.