Tokenization May Reduce Crypto's Reliance on Bitcoin, Schwab Says

Ferraioli, who joined Schwab in 2025, said activity across the crypto market is still largely driven by Bitcoin (BTC). When Bitcoin rises, investors put more money into stablecoins, decentralized finance (DeFi), lending and staking, increasing activity across smart contract blockchains. 

However, tokenized deposits, money market funds and other tokenized assets could create blockchain activity regardless of whether Bitcoin is rising or falling, giving platforms and networks such as Ethereum – the largest smart contract blockchain with around $41bn in locked assets – a source of demand that is less dependent on Bitcoin's performance.

"Tokenization is literally a fork in the road," Ferraioli said. "If I'm transferring you a deposit or a money market fund that's tokenized, I don't care what the price of Bitcoin is." 

Tokenization is the process of representing traditional financial assets, such as Treasuries, bonds and bank deposits, as digital tokens onchain, enabling faster transfer and settlement. The value of the broader tokenized assets sector has climbed to $34.8bn, up around 60% from $21.8bn a year ago, according to RWA.xyz.

Beyond speculative activity

Ferraioli told Sandmark that tokenization marks one of the first major blockchain use cases driven by traditional finance rather than speculative crypto trading.

"It's a signal that this technology is maturing," he said, pointing to growing adoption by some of the world's largest financial institutions.

BlackRock's USD Institutional Digital Liquidity Fund (BUIDL), the largest tokenized MMF, has grown to $2.6bn in assets. Meanwhile, Franklin Templeton's Benji Investments platform has reached $2.4bn in tokenized assets, according to RWA.xyz. 

In May, JPMorgan Asset Management launched its second tokenized fund on Ethereum, the JPMorgan OnChain Liquidity-Token Money Market Fund (JLTXX).

That move not only grew JPMorgan's list of blockchain-based liquidity products, but added yet another institutional use case to the Ethereum blockchain. The network currently hosts $15.5bn of tokenized assets, around 45% of the global market, according to RWA.xyz.

Ferraioli said that this broader institutional adoption "creates the potential that, over time, other crypto assets become less correlated to Bitcoin."

Bitcoin's grip on blockchain activity

The comments come as Bitcoin has fallen more than 50% since reaching an all-time high of about $126,000 in October 2025. The token's sharp decline in the same month marked the start of a broader market downturn that has weighed on most digital assets. Ether (ETH), the world's second-largest cryptocurrency, traded at $1,838 as of 18:00UTC on 17 Jul, marking a decline of about 61% from its $4,691 price on 9 Oct, 2025.

Meanwhile, DeFi total value locked (TVL) has fallen from $167bn on 9 Oct, 2025, to $74bn on 17 Jul, according to DeFiLlama. Ferraioli said these declines illustrate how activity across blockchains is still largely driven by the world's largest cryptocurrency. 

"All the activity that happens on these different blockchains is predicated on what Bitcoin's price is," he said. "And when we're in a bear market, as the price of Bitcoin's going down, there's not a lot of demand for that type of activity." 

Emerging evidence of a shift

While Ferraioli said any shift away from Bitcoin would take time, one example tied to tokenized assets may already be emerging.

Decentralized perpetual exchange Hyperliquid's open interest (OI) recently rebounded to more than $11bn despite Bitcoin remaining well below its all-time high. For context, the exchange's OI had fallen to $6.2bn on 11 Oct, 2025, after peaking at a record $15bn just four days earlier, on 6 Oct, 2025.

The recovery, according to the exchange, was driven in large part by record activity in its tokenized asset markets – most of which are hosted on its HIP-3 platform – where OI recently reached about $3.6bn.

Public and private blockchains

Looking ahead, Ferraioli said he expects tokenization to grow across both public and private blockchains, rather than one replacing the other.

Recent developments suggest that shift is already underway. On 15 Jul, the Depository Trust & Clearing Corporation (DTCC) said it successfully processed US trades using tokenized securities across both its private Besu network and the public Canton Network ahead of the launch of its tokenization service in October.

Banks including Société Générale and JPMorgan have also announced tokenization efforts on Canton, a Layer 1 blockchain designed for traditional financial markets. 

"There was never going to be a world where every single asset was on a public blockchain, and I don't think there's going to be a world where every single asset is on a private blockchain," he said.

Ferraioli explained that banks and other financial firms will likely use private blockchains for some purposes while continuing to use public networks for others.

"Any increased tokenization on private blockchains almost validates the public blockchains," he added. "It says there is something here."