274. How Tokenized Cash Is Modernizing Money, Markets and Investing
Web title: How Tokenized Cash Is Modernizing Money, Markets and Investing
Tokenized cash is emerging as one of the most tangible applications of tokenization in financial markets. While much of the attention around digital assets has focused on cryptocurrencies, a broader transformation is taking place behind the scenes as blockchain technology begins to change how cash moves, settles and operates across the financial system.
In this episode of The Bid, host Oscar Pulido speaks with Beccy Milchem, Global Head of Cash Distribution and Head of the International Cash Management business at BlackRock, about what tokenized cash actually is and why it is moving from concept toward real-world use. They break down the differences between cryptocurrencies, stablecoins, tokenized deposits and tokenized money market funds — and explore why the distinction matters as digital assets become a bigger part of the financial ecosystem.
Beccy also explains how tokenization could modernize the infrastructure underpinning capital markets, from faster settlement and around-the-clock cross-border payments to programmable transactions and potentially more efficient management of working capital. The conversation explores how digital wallets could evolve as more traditional assets become tokenized, why cash is playing an early role in this transition, and how regulation, interoperability and broader adoption could determine the pace at which tokenized finance develops.
Key insights:
What tokenized cash is and how blockchain can provide a digital wrapper around traditional cash instruments.
How cryptocurrencies, stablecoins and tokenized cash differ, including the distinction between stablecoins and yield-bearing cash instruments.
Why tokenization is gaining momentum, as technology advances, regulation develops and real-world use cases emerge.
How tokenized cash could modernize capital markets through faster settlement, 24/7 payments and more efficient movement of money.
Where AI and programmable money could intersect, including smart contracts and automated financial workflows.
What could determine mainstream adoption, including interoperability, global regulation and use beyond decentralized finance.
Keywords: Tokenized cash, tokenization, stablecoins, digital wallets, money market funds, blockchain, capital markets, digital assets
Written Disclosures In Episode Description: This content is for informational purposes only and is not an offer or a solicitation. Reliance upon information in this material is at the sole discretion of the listener. Reference to any company or investment strategy mentioned is for illustrative purposes only and not investment advice. For full disclosures, visit blackrock.com/corporate/compliance/bid-disclosures.
<<TRANSCRIPT>>
Oscar Pulido: When most investors think about innovation in financial markets, they tend to focus on the assets themselves: stocks, bonds, cryptocurrencies, or increasingly private markets. But some of the biggest changes are happening behind the scenes in the infrastructure that allows money and investments to move around the world.
And as markets become more digital, many believe that the way cash moves, settles, and acts as collateral could be on the verge of its biggest transformation in decades. So, what could that mean for investors? Welcome to The Bid, where we break down what's happening in the markets and explore the forces changing the economy and finance. I'm Oscar Pulido.
Joining me today is someone who's been at the center of these changes. Beccy Milchem is global head of cash distribution and head of the international cash management business at BlackRock. Beccy has joined us on The Bid before to help explain why cash matters in an investment portfolio.
Today, she's back to discuss why cash is becoming one of the most compelling real-world applications of tokenization, how new digital infrastructure could reshape the movement of money through financial markets, and why understanding these changes may become increasingly important for investors.
Beccy, thank you so much for joining us on The Bid
Beccy Milchem: It's great to be here, Oscar, and to be in the New York studio for the first time.
Oscar Pulido: Yes. We usually talk via video. You're in London normally, I'm in New York, but it's great to have you here, in person. The last time that we spoke was back in twenty twenty-four. when we have you on, we're usually talking about this topic of cash. In fact, we've used the title Queen of Cash. This is an area of expertise for you.
Back when we last spoke, tokenization felt like an interesting idea, and a topic that was nascent. We've recently spoken to Rob Goldstein, BlackRock's chief operating officer, and he's helped us understand a little bit more about w- tokenization and what it really is. Today, we're also hearing about the concept of tokenized money market funds, stable coins, and digital cash.
There's a lot of new terminology that we're having to learn. So, before we get into what's changed since we last spoke to you, can you explain what is tokenized cash?
Beccy Milchem: Yeah, and I think the concept of kind of tokenization can be a little bit confusing. A lot of people think it's a new type of product. but the way I describe it is it's just putting a technology wrapper around a traditional asset class. and what that essentially means is that you've got different types of cash today, and in this new world, you can have them digitally represented on a blockchain.
So, as you've mentioned, I think most people are familiar with stablecoins today. but you've got this emerging set of, traditional forms of cash, such as tokenized deposits, a bank deposit but with a tokenized wrapper, money market funds available with that tokenized wrapper as well. and I think the important thing to remember here is that these are the same things underneath. It's just that digital wrapper that's wrapping around it to effectively mean it can do different things than it used to be able to do
Oscar Pulido: And that sounds familiar with what Rob had mentioned when we spoke to him, which is the types of assets you own are the same, but the way in which you own them is what's different. And I think that's what you're explaining with tokenization, and that can apply to cash as well.
And Beccy, when people hear blockchain or tokenization, I think it's fair to say they immediately think about crypto. So, help me understand, what's the difference between cryptocurrencies, stable coins, and tokenized cash?
Beccy Milchem: Okay. So, a cryptocurrency is a type of digital asset. It can be used as a form of payment, and that's how it has traditionally been adopted, but its value is driven simply by supply and demand, on the blockchain, which means it can be quite volatile in terms of where that value goes to. And so, what you've seen as a result is an emergence of stablecoins, which designed to maintain a relatively stable value.
They are backed by a pool of reserve assets, and payment stablecoins, under some of the regulations that have come out, such as the Genius Act in the United States, have to be backed by a very defined pool of reserve assets. they enable you to move money and make payments as a store of value and a medium of exchange- through the blockchain.
I like to think of stablecoins as being quite synonymous to the cash in your pocket. and then you've got tokenized cash, which as I mentioned before, can be tokenized deposits, a, a bank deposit simply with that tokenized wrapper, and tokenized money market funds. and the distinction here is that stablecoins can't pay a return, whereas you have traditional cash investment tools, such as bank deposits and money market funds with their tokenized wrapper, that can have that, that, that return aspect, that yield aspect on them.
So, today, for example, I might have some dollars in my pocket. I normally, when I'm in the States, carry some dollars in my pocket, to perhaps tip or something. The stablecoin is simply doing that in the digital form and I wouldn't ordinarily keep too much cash in my pockets because it's not going to earn me anything there. I'd then put it into my bank account or put it into a money market fund where I can earn a return on that. And one thing I've been likening this to is if you think about some of the traditional forms of communication back in the day, you would've received like a, a letter in the post, and we went through a huge transformation when we moved to a world of email and instantaneous, receipt of communications.
And that's again, what this technology wrapper enables you to do on the blockchain. It's that instantaneous form of payment, rather than receiving something in the post. And I remember the days for birthdays and Christmas, when my relatives, perhaps my grandmother, might have sent me £10 in the post, and a couple of days later, I'd have received, hopefully received it. And essentially, what we're doing in a world of tokenization is enabling that instantaneous movement of cash.
Oscar Pulido: I can still think of when you go and buy somebody a birthday card or a graduation card, sometimes these cards are money holders where people drop physical cash in there. That's how the card is structured. And we're talking about something really basic, which is just payments and medium of exchange.
And for years, it has been something physical that you exchange, a piece of paper, whether it's dollars or pound sterling maybe when you're back in London. And what you're highlighting is that this is a modernizing space. You mentioned cryptocurrencies, which is one way of doing payment, but there's volatility associated with that, something like Bitcoin, for example.
And then, you mentioned stable coins and tokenized cash perhaps having more stability but also being digital in how they're used. Beccy, why is all of this moving from concept to reality? what's changed over the last couple of years that is causing us to have this conversation right now?
Beccy Milchem: I think of it about in sort of three areas, really. There's been huge advancement in the technology and we're starting to see that, that greater adoption in technology and use of the blockchain.
But I think one of the things that really propelled it, and probably since the last time we spoke, was some of the rules that are coming out from governments. And when you start to get some regulations in this space, that starts to bring more comfort and trust in the space, and so you start to see more adoption through that. And we've got around the world now a swathe of regulations looking at this space and looking particularly at the rules governing how stable coins, work today, how tokenized assets work today.
And then I think, and for me has really come to life a little bit more this year, is that we're starting to see real world uses of the technology. So, as we've mentioned, it makes things faster, it makes things more efficient, and there's been a lot of talk around that. But what I'm starting to hear in my job is actually some of those use cases coming across, and this is perhaps corporates around the world that are in more of a traditional finance, world.
We've clearly seen adoption across the DeFi community, but what we're starting to see are some of the more traditional use cases where people are leveraging the technology to make themselves faster and more efficient. And one of those use cases, again, is to transmit money around the world, and faster payments.
Oscar Pulido: And can you talk maybe more of an example? You say, traditional corporate. So, would this be a corporation that is managing cash on their balance sheet, and the way they're doing that is modernizing?
Beccy Milchem: Yeah. I think they're starting to realize the benefits of how efficient technology can make them and adopting that blockchain into their day-to-day systems and upgrading what would've been traditional treasury management systems.
Oscar Pulido: So, you mentioned technology, you mentioned, regulation, and you've talked a little bit about the infrastructure seems to be changing as well. And I don't think most investors spend much time thinking about how trades settle and how payments move through the plumbing of the financial system. But help me understand what actually is not working today that is why tokenized cash is maybe going to benefit markets and investors
Beccy Milchem: Yeah. And technology is overhauling really a lot of the financial markets ecosystem. and I often refer to, the cash team, as kind of plumbing experts because, we get to see and get to see all the movements behind the scene of where cash moves and what can go wrong, and things do go wrong today.
So, you've got multiple systems that are not designed to work together. and where I think in our sort of regular day-to-day lives we're coming, we're becoming more used to that digital experience and everything being instantaneous and available to us. Behind the scenes, that plumbing for payments in particular isn't that efficient today, and it can take hours, sometimes days, to settle transactions.
And that's really where the technology is going to help things like cash not just sit idle. It's going to enable that faster settlement, that transparency, and for all intents and purposes, making things more frictionless through the ecosystem.
Oscar Pulido: Right. Talk a little bit more about that. you're starting to highlight what starts to change if the payment system continues to modernize, because it's already starting to modernize. and what does tokenized cash actually improve in terms of how markets function?
Beccy Milchem: So, when I think about the, what the improvements and what they're actually going to mean, you can move money faster. So, you can have platforms around the world moving things seamlessly between each other. And I'm taking you back to that kind of example of the corporate that I mentioned.
This means that you can do around the clock cross-border payments in a world that could be more 24/7, 365 days a year. and I think the bit that really brings this all together is that once you've got something in that technology wrapper, it means that you can tell it what to do. You can program it. and if we think about the ability to then use things like AI and that ability to use agentic workflows, you can have something that can be automated through that. so, in the example of a smart contract around a money movement, you can have something that is literally programmed once a set of criteria is met to make that movement. You don't have to have that manual intervention. And
Oscar Pulido: And that makes a company more efficient in terms of how it is managing its cash or making payments to its suppliers or perhaps making investments. the fact that you're mentioning that this is where you can apply AI is not something I had considered, but you're saying that the technology that is being created is going to, improve the ability for that corporation to manage its cash on its balance sheet?
Beccy Milchem: Yeah. And it can make things much more instantaneous. And the fact that you've then got that immediate movement, that immediate transition of the, of a payment and a settlement, that you can have a more efficient, hold on your working capital, essentially. and what that means for cash is that you can then have a better grip on where it is, and you can be more efficient with the investments that you make.
And so, in the world of tokenization, it means that you can move very seamlessly from something such as a stablecoin, which isn't going to earn you any yield, into something like a tokenized money market fund, which has all the benefits of the traditional money market funds than they have today, but just in that tokenized form, and that can all happen instantaneously.
Oscar Pulido: Beccy, I want to come back to the discussion I had with Rob Goldstein, BlackRock's chief operating officer, and we started to talk about digital wallets, and in fact, he gave some personal anecdotes about how maybe the younger members of his family who are now entering financial markets would be, most likely to own their assets in a digital wallet as opposed to in a traditional financial system. What are you seeing in terms of the adoption of digital wallets, and where is cash maybe playing a leading role in those wallets?
Beccy Milchem: Yeah. And a digital wallet is a key part of the new ecosystem that we're talking about. you have to have it if you want to operate on the blockchain. and one of the reasons that, that cash is at the forefront of all of this is because you need cash to invest in anything.
And so, it has been adopted largely for the use of digital payments today. but you're then seeing that need from a client wanting to have cash, wanting to earn an investment yield on that. There being demand for traditional instruments like money market funds. And then there's a future world where we will see much more in terms of our assets wrapped in that tokenized wrapper, that digital wrapper, and available through your digital wallet.
But you have to start somewhere, and because cash is needed as an asset class everywhere, cash is the natural progression from that stable coin, that form of actual cash, into something like a tokenized money market fund where you can earn a yield.
Oscar Pulido: Beccy, when we think about these trends that you're seeing, the adoption of digital assets, digital wallets, tokenized cash, is this something that is taking place globally all at the same time, or are there particular regions that are leading on this?
Beccy Milchem: As I think about the adoption to date, a lot of the adoption of stablecoins has been in dollar-denominated stablecoins, and I think some of the rules and regulations that have come out to clarify that have helped that. But we are seeing demand across the world from some of our investors.
And again, back to the more kind of, traditional investors that we have around the world and some of our corporate clients, they're thinking about this in terms of how they can adopt and overhaul entire systems. and so naturally, you need something available in every single currency. But we haven't got all of the rules and regulations finalized around the world for what stablecoins are going to need to look like in terms of their reserve assets that back them.
And so, we're starting to see that, come out. and naturally, in the same way that we would have a digital form of cash in every currency, we're going to naturally want some yield-bearing solutions in every form of currency. And so those... You see those today in, again, in the more traditional wrappers that we have, like traditional money market funds, are available in lots of different currencies. And then so then naturally, the next step is to have those available in tokenized form
Oscar Pulido: So Beccy, we're still clearly in the early development of tokenized assets. We're talking about this and it seems like we're going to be talking about it more going forward. But what would you be watching over the next few years to know whether this is really becoming part of mainstream finance? And what do investors need to consider about this trend?
Beccy Milchem: So, I think clearly adoption is one thing. We're starting to see this growing ecosystem of digital cash, so are people using it. Is that growing beyond that kind of DeFi ecosystem that we see today? I think the second thing is that interoperability and really proving that out, can all these different technology systems work together?
And I think the third thing, as I mentioned before, is really how we bed down the rules around the world on this, how regulation gets formed, across the world, because largely today, a lot of the stable coins operate are in dollars, but we're starting to see emerging regulations around the world and different currency products coming to market.
So, this isn't a new asset class, as I said before. It's simply modernizing the ecosystem that we have around us today and providing these digital rails to allow money to move. And I think the test for me, and coming back to an analogy I made earlier about receiving money from p-perhaps a grandparent in the post, I think the real test for me is when we see maybe my dad, because my grandmother is no longer with us, sadly, but maybe my dad sends me a tokenized money market fund for Christmas.
Oscar Pulido: Well, I'm not sure how many kids will understand that gift right now, but maybe in the future they will. I'm actually remembering back when I was a kid. I don't know if you did this, Beccy, but when I would travel, I would collect the physical currency of various countries and store it in a book. And I'm wondering if I need to start doing that again just because some of these might go out of circulation at some point.
Beccy Milchem: I still have a glass jar with lots of different colorful notes from around the world!
Oscar Pulido: I wasn't the only person that was doing that. Beccy, I mentioned at the beginning that you are the queen of cash. This is a topic that you have come and talked to us about. you also mentioned that your team is known as plumbing experts. I'm going to stick with Queen of Cash as the title that, we will bestow upon you. Thanks for taking us into this, somewhat discreet part of the market and telling us about the modernization that is going on, and thanks for doing it here on The Bid.
Beccy Milchem: Thank you.
Oscar Pulido: Thanks for listening to this episode of The Bid. If you've enjoyed this episode, check out my discussion with BlackRock COO Rob Goldstein, where we explore how tokenization could revolutionize the finance industry.
<<SPOKEN DISCLOSURES>>
This content is for informational purposes only and is not an offer or a solicitation. Reliance upon information in this material is at the sole discretion of the listener. Reference to the names of each company mentioned is merely for explaining the investment strategy and should not be construed as investment advice or recommendation. For full disclosures, visit blackrock.com/corporate/compliance/bid-disclosures
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