Tokenization advocates often highlight faster settlement, 24/7 trading, and using tokens in decentralized finance (DeFi) as key advantages of bringing traditional assets onto blockchain rails. However, Thomas Sy, head of multi-asset solutions at New York Life Investment Management (NYLIM), told CoinDesk that the technology's biggest opportunity lies elsewhere: rebuilding how investment portfolios are constructed.
Sy oversees about $11 billion in assets within NYLIM, the $807 billion asset management arm of insurer New York Life. He said blockchains could eventually allow asset managers to craft tailored portfolios for individual investors at scale, something today's financial system cannot achieve. "We believe the future of asset management is going to be customization. The only technology that can help us get there at scale is the blockchain," Sy said.
Wall Street Accelerates Tokenization
This perspective highlights a less-discussed use case as Wall Street's blockchain efforts intensify. Banks, asset managers, and market infrastructure firms are increasingly issuing tokenized versions of money market funds, private credit, and equities, betting that blockchain can modernize financial plumbing. Citi projects the tokenized real-world asset (RWA) market could grow from $30 billion today to $5.5 trillion by 2030.
NYLIM is the latest asset management giant to enter tokenization, partnering with Centrifuge to bring its high-yield corporate bond strategy on-chain. For NYLIM, tokenization is less about launching blockchain versions of existing funds than improving how portfolios are assembled.
Embedding Customization into the Asset
Sy noted that customized investment strategies often combine ETFs, bonds, private credit, and other assets, creating operational complexity that makes personalization difficult to scale. "The end goal is to embed the customization within the asset itself, rather than the customization sitting around the operations of different assets," he said. Tokenization could also streamline transfer agency, settlement, and other back-office processes, reducing costs that ultimately benefit investors. "If you can bring that down by 10% or 20%, that's a better outcome for our clients," Sy added.
Stablecoins: The On-Ramp for Institutions
Sy said stablecoins have become the first practical bridge bringing traditional financial institutions on-chain. The stablecoin market has grown to over $300 billion and is increasingly used for cross-border payments and treasury management. As banks, payment firms, and fintech companies adopt stablecoins, they will eventually look for institutional-grade tokenized assets where those balances can earn yield instead of sitting in cash. "Stablecoins were probably one of the biggest unlocks in the past two years. Adopting stablecoins was the gateway to get them on-chain," Sy said, predicting this shift will broaden demand for tokenized investment products over the next several years.
DeFi Still Needs Time
NYLIM is also studying DeFi, but Sy said broader institutional participation will require more mature infrastructure, including tokenized collateral, central clearing, and prime brokerage services. "I do think there is a use case for [DeFi], but we need a little bit more time for it to institutionalize," he concluded.