The Mortgage Industry Meets Digital Asset Capital Markets

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Peter Gaffney is Vice President of Business Development & Strategy at Blue Water Financial Technologies.

Now that the tokenization industry is seeing investor demand, particularly for U.S. Treasury and money market products, on-chain issuers can start moving up the risk curve in the name of diversification.

Tokenized short-term liquidity funds have found product-market fit across institutions, Web 3.0 investment firms, blockchain foundations, and other crypto-native organizations this year. Six products each reached $100-plus million and one reached the $500 million mark in July 2024, eclipsing $2 billion in collective flows.in ARB tokens into BlackRock’s BUIDL, Ondo Finance’s USDY, and products offered by Superstate, OpenEden, Backed Finance, and Mountain Protocol.

Contrast that with the $14 trillion residential mortgage space and associated Mortgage Servicing Rights . Residential MSR have clocked an estimated $1 trillion in. Token-focused investors are typically seeking two-sided liquidity, an active market, and underlying asset velocity. Bringing an existing two-sided market to the tokenization space will alleviate current industry pain points, offering something attractive to the nearly $2 billion in liquidity fund capital that resides on-chain.

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