Tokenization demand is no longer tied to Bitcoin: Galaxy executive
Institutional interest in crypto technology, especially tokenization, is becoming independent of Bitcoin's price volatility, according to Thomas Cowan of Galaxy. At The Bridge conference in New York, he noted that tokenization, which digitizes assets like oil or bonds on blockchain, has grown due to regulatory easing and rising interest from traditional finance companies. Cowan emphasized the need for the industry to prove the clear advantages of tokenization, such as efficiency and cost-effectiveness, to ensure its integration into financial institutions. He highlighted stablecoins and tokenized money market funds as key areas of institutional interest, with the sector approaching a transformative phase that could prompt significant investments in the coming years.
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Institutional Interest in Tokenization Grows Beyond Bitcoin's Volatility
Bitcoin’s price swings are no longer affecting institutional interest in crypto technology, particularly in tokenization, according to Thomas Cowan, head of tokenization at Galaxy. Speaking at The Bridge conference in New York City on Wednesday, Cowan pointed out a “separation of the interest in tokenization from the price of Bitcoin” over the past few months.
Decoupling Tokenization from Bitcoin's Price
Cowan explained: “In previous cycles, as Bitcoin and other alts have run up, there’s been an interest in tokenization. All the major traditional financial institutions have built out their crypto and tokenization teams, and then when the prices have crashed, those teams have gotten much smaller.”
However, he noted that tokenization is now evolving independently of Bitcoin’s volatility, as institutions recognize blockchain's potential to store and move traditional financial assets. Cowan stated, “Now, I think we’re getting to the point where it’s almost independent of the price of Bitcoin, that people see the benefits that blockchain can have to move and store traditional financial assets.”
Tokenization Growth Fueled by Easing Regulations
Tokenization, where assets such as oil or bonds are represented digitally on a blockchain, has seen significant growth over the past year. This trend was sparked by the Trump administration’s policies easing cryptocurrency regulations. These developments have driven increased interest from major traditional financial institutions in tokenization.
Crypto Industry’s Next Steps: Clear Benefits of Tokenization
Cowan expressed optimism about the future, stating that he hopes the industry will "really demonstrate" the clear advantages of tokenization next year. He explained that large institutions, which plan for decades-long trends, need to see tokenization as a durable, long-term technology.
Cowan said: “For these large organizations that think in decades, you really want to make sure that we’re demonstrating the clear benefits that this technology has, so that they can say, ‘Look, we see this as a durable, long-term trend. It’s inevitable.’ They just see that technology as something that is going to be the back end of their financial institutions.”
Stablecoins and Money Market Funds: The Next Phase
Cowan highlighted the role of stablecoins as a key crypto use case. Their popularity has soared following the US legislation to regulate such tokens earlier this year. He further referred to tokenized money market funds, which invest in assets like government bonds, as another area of growing institutional interest.
He stated: “As people move their capital onchain, they want that risk-free rate that they’re forgoing when they’re holding stablecoins. A very logical next step to go from stables to money market funds.”
A Transformative Moment for Financial Institutions
Cowan concluded by emphasizing that the crypto industry is nearing a critical juncture. He said, “This is the time to invest. Because they’re going to see it really happen in the next couple of years.”
He added that tokenization technology is poised to convince the major financial companies—those who previously stayed on the sidelines—that this new approach is truly transformative.