Crypto sector flags liquidity gaps as tokenization and stablecoin use expand

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Crypto liquidity and tokenization

Highlights

Tokenized asset issuance is outpacing investor demand, fragmenting liquidity across increasing numbers of issuers and blockchain networks, according to CONNECT by Cointelegraph speakers.
Stablecoin market capitalization stands at $306 billion, up 2% year over year, but broader adoption faces hurdles in user experience, everyday spending, and regulatory compliance.
Venture capital investors report weakening liquidity is making crypto market exits, particularly for altcoins, significantly more challenging over the past three months.

CONNECT panels highlight market structure strains

As reported by Cointelegraph, speakers at CONNECT by Cointelegraph: Singapore Edition on Oct. 9 say tokenized assets are creating new trading access across pre-IPO stocks, commodities and global equities, but investor demand for fully tokenized real-world assets is still lagging the pace of issuance.

Alex Taaffe, chief revenue officer at GSR, says the market is facing a supply-demand imbalance as more asset managers and issuers seek to bring capital formation onchain. He says the rising number of issuers and blockchain networks is also fragmenting liquidity across tokenized markets.

Lingling Jiang, partner at DWF Labs, says fragmentation remains a challenge when different issuers tokenize the same underlying asset but build separate liquidity pools. She adds that crypto market liquidity has improved in recent years, even though the sector still has further to go.

Stablecoin use and crypto exits face adoption hurdles

On stablecoins, panelists say cross-border transfers are becoming easier, but broader consumer adoption depends on whether users can spend stablecoins in everyday life. Mike Silagadze, founder and CEO of ether.fi, points to Singapore as an example where consumers may hold USDC but still need local currency for bills, showing the gap between blockchain payment rails and daily financial services.

Yvonne Chia, head of communications at USDD, and Ashna Vaghela, chief customer officer at Mercuryo, say user experience remains central to adoption. They argue stablecoin payments need to become nearly invisible to consumers, comparable to using Apple Pay inside an application, while Ilya Podoynitsyn, co-founder and CEO of FinHarbor, says regulatory differences across jurisdictions continue to complicate product rollout and compliance systems.

The discussion comes as stablecoin market capitalization stands at $306 billion, up about 2% year over year after roughly 74% growth in the preceding 12 months, according to data cited from DefiLlama.

Elsewhere at the event, panelists on onchain trading say liquidity discovery across blockchain networks remains difficult and that risk management is becoming more data-driven. Austin Federa, co-founder of DoubleZero, says fragmentation is both an execution and data problem, while Miguel Morel, founder and CEO of Arkham Intelligence, says onchain data can help firms price counterparty risk and support exchange compliance reviews.

Venture capital investors also say weaker liquidity is making exits harder as crypto markets mature. Pulkit Gupta of Nomad Capital says altcoin exits have been especially difficult in the past three months, while Sonia Shaw, CEO of OneAsset, says startups now need stronger business fundamentals and can no longer rely on rapid exits as a default outcome.

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