“The only technology that can help us get there at scale is the blockchain.”
That’s Thomas Sy, head of multi-asset solutions at New York Life Investment Management, making a claim that might raise eyebrows among tokenization skeptics. His team oversees about $11 billion within NYLIM’s $807 billion asset management operation, and he’s not talking about the usual blockchain pitch (faster settlement, 24/7 trading, DeFi composability). He’s talking about something the financial industry has wanted for decades but never quite figured out how to deliver: genuinely personalized portfolios at institutional scale.
The Customization Problem Traditional Finance Can’t Solve
Wealth managers have long promised tailored investment strategies. In practice, most clients end up in one of a handful of model portfolios that roughly match their risk tolerance. True customization, combining specific ETFs, individual bonds, private credit allocations, and alternative assets according to each investor’s preferences, creates operational nightmares that make it economically unviable for all but the wealthiest clients.
Sy’s argument is that tokenization changes the math. Instead of layering customization on top of separate operational systems for each asset class, blockchain can embed personalization within the assets themselves. “The end goal is to embed the customization within the asset itself, rather than the customization sitting around the operations around the different assets,” he told CoinDesk.
This isn’t how most Wall Street executives talk about tokenization. The standard pitch focuses on incremental efficiency gains: settlement in minutes instead of days, trading outside market hours, using tokenized assets as collateral. Those benefits are real, but they’re evolutionary rather than revolutionary. Sy is describing something more fundamental, a rearchitecting of how portfolios get built in the first place.
NYLIM’s Centrifuge Partnership and the RWA Race
NYLIM recently partnered with Centrifuge to bring a high-yield corporate bond strategy onchain, joining a growing list of asset management giants exploring tokenization. The partnership signals that the firm is serious about the technology, though Sy frames it as a step toward the customization thesis rather than an end in itself.
The real-world asset tokenization market has grown to approximately $30 billion, according to industry data. That’s still tiny relative to global financial markets, but it represents meaningful traction. Citi’s projection that the market could reach $5.5 trillion by 2030 implies roughly 183x growth over four years, a number that seems aggressive until you consider the institutional players now entering the space.
BlackRock, Franklin Templeton, and other major asset managers have launched tokenized money market funds. Earlier this year, Ondo Finance tapped an Invesco ETF veteran to build tokenized portfolios, signaling that the RWA sector is attracting serious talent from traditional finance. The question is no longer whether tokenization will find institutional adoption but how quickly the infrastructure can mature to support it.
The Back-Office Math That Actually Matters
Sy’s 10% to 20% cost reduction estimate for back-office processes deserves unpacking. Transfer agency, settlement, reconciliation, and custody services consume a meaningful portion of fund operating expenses. For a typical actively managed mutual fund with an expense ratio around 0.75%, even a 10% reduction in operational costs could translate to a few basis points of improved returns. Compound that over a decade, and investors notice.
The savings become more significant for complex multi-asset strategies. A personalized portfolio combining equity ETFs, individual municipal bonds, private credit, and perhaps some real estate exposure currently requires coordination across multiple custodians, transfer agents, and settlement systems. Each layer adds cost and introduces reconciliation risk. Tokenizing these assets onto a common rail could collapse that complexity.
This is where the customization thesis connects to practical economics. Personalized portfolios aren’t just operationally complex; they’re expensive to run. If tokenization can reduce those costs enough, strategies that were previously only viable for $10 million accounts might become accessible at $100,000 or even lower.
Stablecoins as the Gateway Drug
Sy identifies stablecoins as “probably one of the biggest unlocks in the past two years” for institutional blockchain adoption. The logic is straightforward: financial institutions that adopt stablecoins for payments or treasury management have already crossed the psychological barrier of holding assets onchain. Once those balances exist, the next question becomes obvious: why leave this money sitting idle when it could earn yield?
The stablecoin market has grown to over $300 billion, driven largely by cross-border payment use cases. Banks and fintech companies using stablecoins for treasury management now have a natural demand for institutional-grade tokenized assets. They don’t want to convert back to fiat just to invest in a money market fund; they want a tokenized version they can access without leaving the blockchain environment.
This creates a flywheel effect. More stablecoin adoption drives demand for tokenized investment products. More tokenized products give institutions more reasons to keep assets onchain. The infrastructure matures as capital flows increase, which makes the whole system more attractive to the next wave of adopters.
What DeFi Still Needs Before Institutions Dive In
Sy expressed interest in decentralized finance but emphasized that broader institutional participation requires infrastructure that doesn’t fully exist yet. He specifically mentioned tokenized collateral, central clearing, and prime brokerage services as prerequisites.
This is a pragmatic assessment. Institutions operate within regulatory frameworks that require specific protections: segregation of client assets, auditable clearing, counterparty risk management. DeFi protocols, even sophisticated ones, generally weren’t designed with these requirements in mind. Building the bridge will take time.
The tokenization of real-world assets creates an interesting middle ground. Assets like tokenized Treasury bills or money market funds carry regulatory clarity that purely crypto-native DeFi lacks. They could serve as a testing ground for institutional engagement with onchain finance before firms wade into more exotic protocols.
“I do think there is a use case for [DeFi], but we need a little bit more time for it to institutionalize,” Sy said. Translation: the technology works, but the compliance and operational wrappers aren’t ready.
The Timeline Question and What Could Go Wrong
Sy expects demand for tokenized investment products to broaden over the next several years, a deliberately vague timeline that reflects genuine uncertainty. The technology exists. The institutional interest is real. The regulatory environment, at least in the United States, has become meaningfully clearer since the passage of the GENIUS Act and related frameworks. But translating all of that into actual products serving actual investors at scale involves execution risk.
The customization thesis faces specific challenges. Tokenizing a bond fund is relatively straightforward. Building a system where individual investors can specify their tax-loss harvesting preferences, ESG exclusions, duration targets, and sector tilts, and have those preferences automatically reflected in a tokenized portfolio, requires software that doesn’t exist yet. NYLIM would need to build or buy those tools.
There’s also the question of whether investors actually want this level of customization. Direct indexing has grown rapidly in recent years, suggesting at least some appetite. But the mass affluent market has largely been satisfied with target-date funds and simple robo-advisor portfolios. The infrastructure investment required to deliver blockchain-native customization only makes sense if demand materializes.
The Securitize SPAC merger earlier this year created a publicly traded pure-play on tokenization infrastructure. How SECZ performs over the coming quarters will provide some signal about market confidence in the thesis.
The Bigger Picture for Asset Management
Sy’s framing positions blockchain not as a threat to traditional asset management but as an enabling technology that could entrench incumbents further. If NYLIM can deliver personalized portfolios at scale and competitors can’t, that’s a meaningful competitive advantage. The technology isn’t disintermediating asset managers; it’s potentially making good ones better.
This runs counter to the revolutionary narrative that dominated crypto discourse for years. The idea that DeFi would replace Wall Street assumes that traditional institutions can’t or won’t adapt. NYLIM’s engagement suggests a different trajectory: established players absorbing the useful parts of blockchain technology while leaving the anarcho-capitalist ethos behind.
Whether that’s good or bad depends on your perspective. For investors who care primarily about lower costs and better personalization, institutional adoption of tokenization seems straightforwardly positive. For those who hoped blockchain would fundamentally reshape power dynamics in finance, watching an $807 billion asset manager co-opt the technology might feel like a letdown.
The market, as usual, will decide. Tokenization’s next few years will reveal whether the customization thesis is real or just another pitch that sounds better in a conference interview than in a product roadmap.
Related Reading
- Tokenization news
- More on New York Life Investment Management
- More on RWA
- More on Centrifuge
- More on Stablecoins
