During a panel discussion at Benzinga’s Future of Digital Assets event, experts discussed how the adoption of digital assets is advancing steadily, driven by increased issuance of tokenized bonds and heightened interest from institutions.

The growing integration of digital assets into traditional finance was examined, underlining key trends and challenges in this rapidly changing space.

Steady Growth in Digital Bond Issuance

Rajeev Bamra of Moody's shared data on the rising adoption of digital bonds as a critical development in the tokenized economy. Since the first issuance by the World Bank in 2017, approximately 85 digital bonds have been issued, with a total value of $18.5 billion.

"What we've seen in the last 12 months is about 45 digital bonds having been issued, and of that, 37 were issued year to date, which is about $7.5 billion," Bamra noted. While this represents only a fraction of traditional bond markets, the numbers highlight the potential for tokenized assets to gain traction.

Bamra pointed to interoperability and scalability as two pressing issues that could hinder broader adoption, noting that continued collaboration and technological advancements are necessary to bridge these gaps.

Public-Private Partnerships Driving Change

Panelists emphasized the importance of partnerships between regulators, institutions and technology providers to advance adoption. Bamra highlighted regulatory sandboxes as one avenue fostering innovation while addressing compliance concerns. "We are already seeing a lot of sandboxes, which … are allowing the industry to innovate within a certain framework," he said.

He explained these controlled environments provide an opportunity for market participants to test tokenized assets while shaping the necessary guardrails for safe implementation.

Institutional Investment and Tokenization

The discussion also touched on the growing role of institutions in driving digital asset adoption. Gregg Wysocki of Coinbase noted institutions are increasingly exploring tokenized assets.

"We've crossed that Rubicon," he said, adding that demand for solutions like custody, collateral mobility, and settlement mechanisms is rising.

Panelists agreed tokenization alone is not a cure-all for liquidity challenges. Bamra emphasized the market infrastructure for secondary trading of tokenized assets is still underdeveloped. He described this as a critical area for further investment and innovation, suggesting that stablecoins and tokenized money market funds could help address these gaps.

Looking Ahead

As digital assets continue integrating into the financial ecosystem, the panelists expressed optimism for 2025 and beyond. Collaborative efforts between regulators and the private sector and advances in interoperability are expected to accelerate adoption further.

With a growing focus on creating accessible, secure and regulated products, digital assets are poised to transform how institutions and retail investors engage with financial markets. The conversation at Benzinga's event underscored the steps already taken and the remaining hurdles in realizing this vision.

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