Nasdaq CEO Says Tokenization Could Unlock Billions in Trapped Financial Capital

Table of Contents

• You might want to know
• How tokenization could reshape financial markets
• Key Insights Table
• Afterwards...

You might want to know

• How could tokenization make capital tied up in collateral more accessible?
• What would financial institutions need to change before markets could operate around the clock?

How tokenization could reshape financial markets

Tokenization could release tens of billions of dollars currently tied up in assets used as collateral across the global financial system, according to Nasdaq CEO Adena Friedman. The opportunity, as Friedman described it, involves more than turning individual assets into digital representations. It also means connecting those assets to the movement of money, potentially allowing collateral to circulate more easily and be used more efficiently.

Friedman discussed the outlook with CNBC’s Joanna Ossinger at the TOKEN2049 conference in Singapore. She said that assets such as U.S. Treasurys, equities, and money market funds could be tokenized alongside the flow of money itself. In her view, linking those elements could make collateral more liquid. “If you tokenize all those instruments along with the flow of money, then the collateral becomes very fluid,” she said.

Tokenization generally means representing a financial asset, such as a stock or bond, as a digital token that can be transferred using blockchain technology. The concept can apply to different types of assets and may change how ownership records, transfers, and financial transactions are handled. In the context Friedman described, the potential benefit is not limited to faster transfers: tokenized assets could also be easier to use as collateral within a connected financial system.

Friedman said tokenization could free up tens of billions of dollars in capital tied up in collateral. That figure describes the potential scale of capital that could become more mobile; it does not mean that all such capital would automatically become available or that tokenization alone would remove every obstacle. Real-world outcomes would depend on the technology, market practices, and regulatory arrangements that support the assets and transactions.

Friedman said institutional interest in tokenization has grown over the past year. She pointed in part to the passage of the Genius Act in the U.S., which established a regulatory framework for stablecoins. Stablecoins are digital assets designed to maintain a stable value, and a clearer framework for them may contribute to broader institutional consideration of digital financial infrastructure. Friedman connected the ability to tokenize money with the prospect of tokenizing capital flows: “If we can tokenize money, then we can tokenize the flow of capital,” she said.

The interest from financial institutions is meeting demand from retail investors, Friedman said. Retail investors have long wanted the ability to trade around the clock, and she characterized the retail ecosystem as having developed ahead of the institutional environment. “The retail ecosystem has been about 10 years ahead,” she said. Her comparison points to a difference in pace: round-the-clock access has been more familiar in parts of the retail and digital-asset landscape, while established financial institutions have traditionally operated within defined market hours.

Moving to a fully 24/7 market would require substantial changes across the financial industry. Friedman said the exchange infrastructure itself may be the easiest part of the transition. “The easiest part is the exchange infrastructure,” she said. Exchanges would still need to support continuous operations, but the larger challenge lies in the systems and processes used by financial institutions to maintain stable operations and manage exposure.

Traditionally, institutions have used periods when markets are closed to update systems and manage risk. In a continuously operating market, those tasks could no longer rely on a standard overnight break. Processes such as risk management and collateral management would need to function without interruption, and firms would have to monitor and respond to changing conditions continuously. Friedman summarized the requirement plainly: “Everything has to be real time all the time.”

A 24/7 market would require risk and collateral management, as well as related operational processes, to run continuously. This requirement has implications for how institutions staff, monitor, and govern their systems. It also means that a move to continuous trading cannot be assessed solely by asking whether an exchange can remain open. The wider financial ecosystem—including participants, technology, and control processes—would need to work reliably at all hours.

Artificial intelligence could assist institutions with that transition. Friedman said Nasdaq has launched a series of digital agents within its risk management platform. At first, the agents provide recommendations, helping users assess situations and consider possible responses. Over time, banks could use them to take more direct action, she added. Friedman described AI as central to the challenge of continuous operations: “AI is critical for 24/7.”

The distinction between recommendations and direct action matters. Advisory tools can support human decision-making, while systems that execute actions would have a more active role in managing financial operations. As institutions consider such tools, they would need to determine how to oversee automated decisions and how those decisions fit with existing risk controls. Friedman’s comments describe a possible progression rather than a claim that every institution has already automated these responsibilities.

Interest in tokenization is also appearing among companies outside the U.S. Arjun Sethi, co-CEO of cryptocurrency exchange Kraken, told CNBC that international businesses are exploring tokenization and access to American capital markets. Sethi pointed to a company generating roughly $25 million in revenue that was considering ways to access capital markets. He also described interest among larger international companies in tokenization and U.S. public listings.

Sethi said tokenization could help widen access to capital markets for companies around the world. For businesses seeking financing or a public-market presence, the approach may offer another way to engage with financial systems. The comments suggest that interest is not limited to financial institutions or individual investors: companies at different stages and in different markets may also see tokenization as a possible route to broader capital access.

However, the prospect of continuous trading has important limits. Friedman cautioned that not every asset is sufficiently liquid to support a 24/7 environment. “Not every asset is liquid enough to support a 24/7 environment,” she said. This qualification underscores that tokenization and continuous availability are related but distinct ideas. An asset can be represented digitally without necessarily having enough buyers, sellers, or trading activity to support reliable round-the-clock markets.

Greater connectivity across the global financial system could nevertheless make asset classes accessible to some investors who previously could not reach them, Friedman said. The potential benefit depends on how markets, institutions, and technology develop together. Tokenization may facilitate transfers and connect assets to money flows, while continuous operations may broaden when participants can act. But the usefulness of those changes will vary according to an asset’s liquidity and the readiness of the systems that support it.

Overall, Friedman’s comments point to a possible shift in how collateral, money, and market access are organized. Tokenization could make some financial assets more transferable and help capital move through the system, while AI may support the continuous processes required by always-on markets. At the same time, the industry would need to address operational demands, manage risk without routine market closures, and recognize that round-the-clock trading is not appropriate for every asset.

Key Insights Table

Afterwards...

The next stage of tokenization will depend on whether institutions can connect digital assets, money flows, and operational controls in ways that are dependable in practice. Regulatory clarity, technology, liquidity, and risk management will all shape how quickly adoption advances. If these elements develop together, tokenization could make some collateral more usable and widen access to financial markets.

At the same time, the transition to 24/7 markets is likely to be selective rather than universal. Continuous trading may suit some assets and participants better than others, while institutional systems adapt to operating without conventional market breaks. Friedman’s remarks present tokenization and AI as potential tools for this evolution, while emphasizing that round-the-clock access must be supported by real-time operations and appropriate liquidity.