Another advantage, according to Hughes, is that tokenized funds can be used as collateral, allowing institutions to borrow against their holdings rather than leaving the money tied up in traditional investment accounts. He said major banks are already examining that use.

Hughes expects regulated, yield-bearing stablecoins to become an important tool for corporate treasuries, provided issuers meet requirements including reserve transparency.

“Whether that happens in one, three, or five years, it’s hard to judge,” the Bermuda-based financial firm’s CEO added.

Hughes said he expects tokenization to reach a wider range of investors, including retirement accounts and retail customers, as regulators become more comfortable with the…