According to Thomas Cowan, Head of Tokenization at Galaxy, Bitcoin’s price fluctuations are no longer impacting institutional investor interest in cryptographic techniques such as tokenization, meaning Bitcoin now has a solid foundation to become self-sustaining.
Cowan told Cointelegraph at the Bridge Conference in New York City on Wednesday that over the past few months, “the interest in tokenization has become decoupled from the price of Bitcoin.”
“In previous cycles, as Bitcoin and other alt currencies soared, interest in tokenization increased, and all the large traditional financial institutions built crypto and tokenization teams, but then as prices crashed, those teams became much smaller,” he said.
“I think we are now at a point where people can understand the benefits that blockchain has for moving and storing traditional financial assets, largely independent of the price of Bitcoin.”
Tokenization, in which assets such as oil and bonds are represented digitally on blockchain, has seen significant growth over the past year as the Trump administration eased regulations on cryptocurrencies and increased interest from large traditional financial companies.
Thomas Cowan speaks at an Aptos event in New York City on Wednesday. sauce: YouTube
Bitcoin (BTC) has been up and down throughout the year, reaching a high of over $126,000 in early October, but has since fallen nearly 20% to around $102,000.
Cryptocurrencies need to sell the “clear benefits” of tokenization
Cowan said he hopes that in the next year the industry will “actually demonstrate” to financial institutions that tokenization is “just a better, faster, cheaper way to move and store financial assets.”
“For these big companies that are thinking decades down the line, we want to make sure that we are demonstrating the clear benefits that this technology brings so that they can say, ‘Look, we think this is a permanent long-term trend. This is inevitable,’” he said.
“They only think of the technology as something that will be the back end of a financial institution.”
Stablecoins to money market funds ‘logical next step’
Cowan said stablecoins, which have exploded in popularity since the U.S. passed legislation regulating tokens earlier this year, are a use case for cryptocurrencies that are “up for the race.”
He added that tokenized money market funds, which invest in assets such as government bonds, are also “entering the market in earnest” with increased interest from institutional investors.
“When people move capital on-chain, they want the risk-free interest they are giving up when they hold stablecoins,” Cowan said. “Moving from the stable to a money market fund is a very logical next step.”
Cowan added that the industry is nearing a point where the technology is “really proving to the big financial companies that have been sitting on the sidelines this cycle that this is truly transformative.”
“Now is the time to invest,” he said. “Because they’re going to see it actually happen in the next few years.”
Additional reporting by Ciaran Lyons.
