Big Banks Bet Big on Tokenization: Who Will Win the Custody Race?

Big banks are diving into the world of tokenization, turning traditional assets into digital tokens. This isn't just about crypto anymore. It's about making old-school finance work better with new tech. Goldman Sachs and BNY Mellon have already launched tokenized money market funds. These funds are like digital versions of safe, short-term investments. They're not about making a quick profit. They're about making things run smoother. Corporate treasurers can move money faster and use these tokens as collateral. Citi is doing something similar but in a different way. They're working with Switzerland's SDX exchange to offer custody and tokenization services for digital securities. This means bonds and shares can be tokenized and traded more efficiently. BlackRock, the giant asset manager, has also jumped in. Their BUIDL fund holds tokenized Treasury bills. These tokens can be programmed to do different things automatically. The fund has grown a lot in a short time. BlackRock has the power to make tokenized products a normal part of investment portfolios. The real question is who will custody all these new digital assets. Banks are now competing with crypto-native firms like Coinbase and Fidelity. The fees they charge for custody services are similar to traditional fund administration fees. The difference is that tokenized assets can move instantly and settle in real time. This cuts costs for everyone involved. The future of tokenization depends on regulation. In Europe, MiCA rules are making it easier for banks to offer tokenized funds. In the US, accounting rules are still a hurdle. Until these rules change, big banks might not fully embrace tokenization. But if the rules do change, the race for custody fees could heat up. The potential revenue is huge. It all comes down to who controls the flow of funds in this new digital world.