Morgan Stanley Report Warns Tokenisation Could Impact Wealth Management Net Interest Income

The expanding adoption of tokenised assets and digital forms of money could put significant pressure on a key revenue source for wealth managers, according to a recent report by Morgan Stanley. The financial institution noted that net interest income currently accounts for 25 to 30 percent of total revenue for wealth management firms.

The report outlines that the growth of digital assets—including stablecoins and traditional financial assets represented as digital tokens on blockchain networks—is poised to reshape the asset and wealth management industry. This shift alters how investments are held, transferred, and utilized as collateral across the financial ecosystem.

While digital forms of money present challenges to net interest income economics, the report indicates that this pressure can be partially mitigated by new opportunities for clients to borrow against a broader set of assets. The expansion in lending capabilities against a wider range of securities may help offset potential revenue strains.

Morgan Stanley projects that tokenised real-world assets could grow substantially from approximately $40 billion currently to nearly $2.3 trillion by 2030. These assets encompass traditional investments like equities and bonds represented as digital securities on blockchain networks. This projected growth is expected to be driven by the increased movement of collateral between platforms, tokenised money market funds, short-duration financial instruments, and easier access to global securities.

For asset managers, the report identifies near-term opportunities primarily in developing and distributing investment products such as tokenised money market funds and tokenised equities. Such financial products could enable firms to reach a wider investor base through digital platforms and facilitate investment access across various markets. Furthermore, tokenised money market funds could allow digital institutions to hold interest-bearing assets on blockchain networks without altering their underlying digital infrastructure.

However, the report cautions that the advantages of tokenisation will not impact all financial markets uniformly. Expectations that blockchain will significantly improve liquidity in private markets are described as overstated in the near term, as tokenisation does not inherently resolve foundational challenges related to market liquidity and pricing.

For wealth managers, tokenisation presents a dual landscape of commercial opportunities and competitive risks. Institutions that develop the operational capabilities to offer clients enhanced benefits—such as borrowing against a wider range of assets—are positioned to strengthen their market standing. Conversely, firms that fail to adapt run the risk of losing vital assets and client data to emerging digital platforms that already provide these services.

Ultimately, the report concludes that asset and wealth managers will need to invest selectively in new technological and operational capabilities. Doing so will allow them to capture emerging opportunities while actively preparing for competitive risks that are likely to expand alongside the development of digital financial infrastructure.

"The findings from Morgan Stanley highlight an important transition point for the financial services industry. As tokenisation scales toward the projected multi-trillion-dollar mark by 2030, traditional wealth managers must look beyond legacy models. While net interest income pressures are real, firms that strategically adopt digital infrastructure and expand asset-backed borrowing capabilities will successfully protect their market share and capture new revenue streams." — Dr. Shishir Gupta, Founder & CEO, StartupLanes