Key facts
- Thomas Sy, head of multi-asset solutions at New York Life Investment Management, believes tokenization's main opportunity is in personalized portfolio construction.
- He stated that blockchains could enable asset managers to create tailored portfolios for individual investors at scale.
- NYLIM recently partnered with Centrifuge to tokenize one of its high-yield corporate bond strategies.
- Sy sees stablecoin adoption as a key driver for institutional interest in tokenized investment products offering yield.
- He believes that further institutionalization of DeFi requires more developed market infrastructure.
Thomas Sy, head of multi-asset solutions at New York Life Investment Management (NYLIM), believes that the most significant opportunity for tokenization lies in revolutionizing how investment portfolios are constructed, enabling personalized investing at scale.
Sy, whose team manages approximately $11 billion within New York Life's $807 billion asset management arm, stated that blockchains could allow asset managers to create highly tailored portfolios for individual investors, a feat currently difficult to achieve at scale. "We believe that the future of asset management is going to be customization," Sy told CoinDesk. "The only technology that can help us get there at scale is the blockchain."
This perspective highlights a less-discussed application of tokenization as Wall Street increasingly embraces blockchain technology. Banks and asset managers are issuing tokenized versions of various assets, anticipating that blockchain can modernize financial infrastructure. Citi projects the market for tokenized real-world assets could grow to $5.5 trillion by 2030 from its current $30 billion.
NYLIM recently partnered with Centrifuge to bring one of its high-yield corporate bond strategies onto the blockchain. Sy emphasized that for NYLIM, tokenization is less about creating blockchain versions of existing funds and more about improving portfolio assembly. He explained that customized strategies often involve complex combinations of ETFs, bonds, and private credit, making personalization operationally challenging. Tokenization could streamline back-office processes like transfer agency and settlement, potentially reducing costs for investors by 10% to 20%.
Sy also noted that stablecoins have become a crucial bridge for traditional financial institutions to engage with on-chain activities. The stablecoin market, now exceeding $300 billion, is increasingly used for cross-border payments. As financial firms adopt stablecoins, they are likely to seek institutional-grade tokenized assets to earn yield on their balances. "Stablecoins were probably one of the biggest unlocks in the past two years," Sy said. "Adopting stablecoins was the gateway to get them onchain."
While NYLIM is exploring decentralized finance (DeFi), Sy believes broader institutional participation will require more mature infrastructure, including tokenized collateral 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 added.