Moody's Ratings anticipates a significant shift towards digitized financial systems, with U.S. banks planning a two-phase approach to tokenization. Initially, progress will be gradual, focusing on simpler segments like funds and short-term instruments. This phase is expected to accelerate as infrastructure matures, potentially leading to widespread adoption across various asset classes and participants. The report highlights that while current tokenization activity is modest, major banks and market intermediaries are actively preparing for increased demand. The market for tokenized real-world assets has surged over 420% since early 2025, reaching approximately $31.6 billion. Moody's outlines three potential trajectories for tokenization: steady growth, constrained growth due to regulatory challenges, or rapid disruption if adoption accelerates, impacting traditional financial systems.