Yasuda on Tokenization

Money transfer methods today range from traditional cash and bank transfers to modern digital alternatives like stablecoins, payment services, and deposit tokens. In terms of speed, cash is instant but impractical for large or cross-border transfers. Bank transfers are reliable domestically but slow for large or cross-border payments. Payment services (like Wise and Revolut) offer near-instant transfers for small to medium amounts, especially cross-border. Stablecoins and deposit tokens, built on blockchain infrastructure, offer the fastest settlement speeds regardless of transaction size or geography.

In a notable shift toward blockchain integration, large financial institutions are increasingly embracing stablecoins to modernize payment systems and investment strategies. Fidelity Investments, one of the world’s largest asset managers, is currently testing a U.S. dollar-pegged stablecoin, signaling a move to bridge traditional finance with digital assets. This aligns with broader trends of institutional adoption, as stablecoins offer faster settlement, lower costs, and greater transparency in financial operations. The public sector is joining in too—Wyoming has started testing its state-backed stablecoin, WYST, across Ethereum, Solana, and Avalanche, reflecting growing interest in digital currency frameworks at the state level.

Despite the momentum, there are ongoing concerns about the safety and transparency of stablecoins, especially in light of past controversies around reserve backing and liquidity risks. Regulatory bodies and financial experts continue to stress the need for robust audits, real-time reserve verification, and legal clarity to prevent systemic risk. Stablecoins backed by reputable institutions like Fidelity may help improve confidence, but the sector remains under scrutiny as regulators seek to balance innovation with financial stability.

While the U.S. is currently leading the charge—with key moves by Fidelity, PayPal, and several state governments—Europe is beginning to show signs of joining the trend. The UK's Financial Conduct Authority (FCA) recently included support for tokenized assets, including stablecoins, in its new five-year strategy aimed at fostering innovation in financial markets. Though European institutions have been more cautious, this shift in tone suggests growing alignment with the U.S. on embracing digital asset infrastructure—hinting at a broader, global shift in financial systems.

Permissionless blockchains, such as those powering Bitcoin and Ethereum, offer significant advantages like decentralization, transparency, and open access. They eliminate the need for central authorities, enabling anyone with an internet connection to participate in the global financial system. This openness fuels innovation, supports financial inclusion, and allows for censorship-resistant transactions. Most stablecoins—like USDT and USDC—are also built on permissionless blockchains, benefiting from these same traits while offering price stability.

However, this freedom comes with trade-offs. The pseudonymous nature of transactions and the absence of centralized oversight can create opportunities for illicit use, including money laundering and terrorist financing. Mixing services, privacy coins, and decentralized platforms may obscure the origins of funds, creating a loophole for bad actors to exploit. The irreversible nature of blockchain transactions also means that once funds are transferred, they cannot be reclaimed in cases of fraud or abuse.

Proponents of permissionless systems are actively working to address these concerns. Blockchain analytics firms like Chainalysis and Elliptic help trace transactions and identify suspicious behavior, while some platforms are integrating identity and compliance features. There’s a growing push for privacy tools that allow selective disclosure to authorities without compromising the core values of decentralization. As regulators and developers continue to engage, the challenge remains: how to preserve user freedoms while ensuring security and accountability in a rapidly evolving financial landscape.