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Scratching the surface on new market demand
Crypto doesn’t usually suffer from a lack of activity. But the markets are currently going through yet another cycle of volatility, and narratives are consistently being overplayed. Even insiders are admitting the current cycle feels somewhat sluggish.
The industry may be lacking a breakthrough in such a mild climate, but a transition is seeping in nevertheless, thanks to tokenization, which, according to Xin Song, the CEO of GSR, is “foundational technology that is super disruptive.”
“I think it will ultimately end up eating the world, the capital markets world specifically,” Song said recently on StrataMedia’s Talking Tokens podcast.
That view may be why GSR, a market maker and liquidity provider founded by former Goldman Sachs traders in 2013, is focused on a newer, bigger strategy. Song says GSR is now seeing companies asking it for advice on tokenization strategy.
Historically, GSR’s conversations almost entirely involved crypto-native projects building infrastructure of application layer protocols, but now that mix is shifting: about 30% of the companies it advises are fintechs, neobanks and traditional financial firms.
While those conversations don’t necessarily translate into adoption, Song believes the shift signals a change in who is paying attention, and why.
Still, Song feels the notion that institutions are poised to move fully onchain is overstated at the moment. In fact, he pushed back on one of the industry’s most optimistic and repeated ideas: onboarding banks and large financial institutions will become a primary unlock for crypto.
“I think it’s a little bit of the wrong question,” Song said. “If you think about zooming out and the promise of blockchain and decentralization, it's all about this intermediation. It's all about reducing the need to have a huge infrastructure in a very centralized organization and institution to be able to create that trust, whether that's through legal structures, regulation and oversight or internal processes.”
While Song believes “institutions do need to come in,” since they control so much distribution and capital, he posits the transition will happen in phases.
“Over time, you'd expect that to dissipate more to a direct peer-to-peer approach, and also different types of institutions coming onchain,” Song said. With that in mind, he sees opportunity for a different segment of users: those already operating outside traditional financial systems.
“Who doesn’t have access? It’s people that are underbanked, people in emerging markets [who are] holding stablecoins,” he said. “They want to save, they want to earn some yield, they want to invest.”
That demand is already shaping parts of the market, particularly around stablecoins and tokenized funds. In such cases, tokenization is being used to provide access to basic financial tools to those who haven’t been able to avail it.
Even so, the broader tokenization market remains small relative to its projected potential. Estimates of high trillion-dollar opportunities are common, but current adoption levels are nowhere close.
That gap between expectation and reality is part of what’s driving consolidation across the industry. Firms are acquiring capabilities rather than building them from scratch, aiming to cover more of the value chain as the market evolves.
For GSR, that has meant expanding beyond its origins as a market maker into advisory, asset management, and primary market services to effectively position itself as a full-service platform for digital assets.
“We’ve only just scratched the surface,” Song said.
Check out the next section for more details and the full episode.
The latest Talking Tokens podcast 🎙️
For today’s episode, I interviewed Xin Song, CEO of GSR, about how the firm is evolving from a crypto market maker into a full-service digital asset investment bank. Xin, who started his career at BlackRock before later running his own crypto derivatives hedge fund and joining GSR in 2019, explains why tokenization will eat the capital markets world and why the firm acquired Architech and Autonomous to build end-to-end advisory, origination, and distribution capabilities.
He walks through how GSR got its start as a market maker for Ripple, how options and prediction markets are converging to unlock new liquidity, and why the real tokenization opportunity is distributing fund products to crypto-native foundations rather than trying to bring traditional institutions onchain. The conversation covers the Standard Chartered Ventures investment and what banking rails unlock for crypto, why the wrapped equity model is winning over issuer-led approaches, and how he sees the current altcoin drawdown as worse than post-FTX - by some measures.
This episode is sponsored by Securitize, the proven leader in tokenized funds, equities, and private markets. Discover more at securitize.io.
TIMESTAMPS
00:00 – Intro
00:33 – How Xin defines tokenization
02:46 – GSR's origin story as a market maker for Ripple's XRP in 2013
06:00 – How options evolved from a backwater to a core crypto market
09:12 – The crypto gap GSR is trying to fill: building a full-service investment bank
14:29 – Acquisitions of Architech and Autonomous and his bear market M&A thesis
17:27 – Why the infrastructure bridge between traditional finance and onchain markets still needs work
21:24 – Who tokenization actually serves: the underbanked, 24/7 traders, and AI agents
24:28 – Will tokenized assets steal market share from bitcoin over time?
27:57 – Stablecoin proliferation post-Genius Act and the yield pass-through debate
30:13 – How GSR's role evolves as more real world assets get tokenized
33:49 – Tokenized equities: wrapped vs issuer-led approaches and what's winning
41:17 – Standard Chartered Ventures investment and what banking rails unlock for crypto
49:46 – What Xin is watching: AI and blockchain intersection
52:07 – Final advice: grit, patience, and keep building through the lows
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Please note this content is for informational and educational purposes only. Any views shared should not be considered financial advice, nor should it be used to make investment decisions. Cryptocurrencies are high risk and you should consult a financial professional before making any financial decisions. Make sure you do your own research. We may have a direct or indirect financial interest in content mentioned in this newsletter.