Central banks are experimenting with smart contracts to implement monetary policy in tokenized environments, signaling a growing interest in integrating blockchain technology into traditional finance (TradFi).

According to a joint research study by the Federal Reserve Bank of New York’s Innovation Center and the Bank for International Settlements (BIS) Innovation Hub Swiss Centre, smart contracts could offer central banks flexible, rapid-response tools in a tokenized financial system.

The study, dubbed Project Pine, tested a prototype “generic customizable monetary policy tokenized toolkit” for further research by central banks, according to a BIS report published May 15.

“The smart contract toolkit was fast and flexible,” the BIS wrote. “In hypothetical scenarios, the central bank was able to add and change tools instantly.”

The report emphasized that if tokenization becomes widely adopted for money and securities, smart contracts could play a central role in how monetary policy is executed.

Project Pine system overview. Source: BIS

Related: Bitcoin more of a ‘diversifier’ than safe-haven asset: Report

This marks a “first step” in highlighting the potential benefits of tokenization for central banks, according to the BIS.

The framework “speed and consistency” was “validated” within a 10-minute hypothetical scenario where central banks quickly changed collateral criteria and exchanged liquid collateral for illiquid amid falling collateral values.

The smart-contract framework also allowed central banks to deploy a new facility offering reserves and changing the interest rates on the reserves in an “immediate” implementation.

Project Pine, smart contract operations. Source: BIS

Related: Coinbase faces $400M bill after insider phishing attack

Smart contracts, tokenization may help central banks

Smart contracts and tokenization technology may help central banks’ rapid response to “extraordinary events,” the BIS report said:

“This speed, coupled with the ability to adjust any of the parameters at any time, gives central banks flexibility in responding to unforeseen events and fast-moving crises.”

While promising, the report also acknowledged that central banks will likely face infrastructure challenges, as most existing systems are not designed for these advanced use cases.

Smart contract testing scenario. Source: BIS

Project Pine employed Ethereum’s ERC-20 token standard combined with another standard for “access control.”

Financial institutions have increasingly embraced tokenization in recent years.

At the Consensus 2025 conference, Joseph Spiro, product director at DTCC Digital Assets, called stablecoins the “perfect” financial instrument for real-time collateral management for financial transactions such as loans or derivatives.

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Bringing student loans onchain could increase the decentralized finance (DeFi) total value locked (TVL) by more than four times, supercharging the industry, according to Yat Siu, chairman of Animoca Brands.

Speaking at Consensus 2025 in Toronto, Siu pointed to the $3 trillion global student loan market as an untapped opportunity for the crypto industry. He said moving even 10% of that market onchain could significantly boost DeFi’s growth.

“You basically more than quadruple TVL in all of DeFi,” he said, underscoring how the industry is still in its early stages. 

Consensus chairman Michael Lau (left) with Animoca Brands chairman Yat Siu (right) at the Consensus mainstage in Toronto, Canada. Source: CointelegraphWeb3-based education tools to drive crypto adoption

Siu also argued that Web3-based financial tools for the education sector could drive mass crypto adoption, especially among the young and unbanked.

“The first unbanked are the kids,” he said. “If a student receives a loan onchain and pays it back onchain — which is regulated, better, faster, cheaper — they become onboarded for crypto for life.” 

Siu compared the situation to how PayPal and Venmo scaled by offering essential services to underserved users. The executive suggested that student loans could serve as crypto’s entry into the mainstream.

The executive also highlighted Animoca Brands’ recent investment in Pencil Finance, a startup providing crypto-native student loans. Siu said the project operates in markets like the Philippines and Indonesia, with plans of expanding into the United States. 

On April 30, Pencil Finance announced a $10 million student loan financing initiative to provide cheaper, blockchain-backed loans. 

Siu previously said in an interview that the industry needs these “positive-sum use cases” that everyone understands. The executive said students would be more pro-crypto if they gained more opportunities through crypto loans. 

Related: NFT founder stole millions from Bitcoin project, investors allege

Education is a natural Web3 use case

Siu also told the Consensus audience that education is a natural use case for Web3. The executive highlighted YouTube and TikTok, platforms that were often dismissed as entertainment applications. Siu said these social media apps are now the largest informal learning platforms in the world. 

He argued that everything is tied to education and that Web3 could do something similar. “Education is actually fundamental, something we do all the time,” Siu said. 

He suggested that by integrating financial infrastructure into educational experiences, Web3 can turn learning communities and reputational networks into capital assets, forming the basis of a new, decentralized financial ecosystem.

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Bringing student loans onchain would increase the total value locked (TVL) in decentralized finance (DeFi) by more than four times, supercharging the industry, according to Yat Siu, chairman of Animoca Brands.

Speaking at Consensus 2025 in Toronto, Siu pointed to the $3 trillion global student loan market as an untapped opportunity for the crypto industry. He said moving even 10% of that market onchain could significantly boost DeFi’s growth.

“You basically more than quadruple TVL in all of DeFi,” he said, underscoring how the industry is still in its early stages. 

Consensus chairman Michael Lau (left) with Animoca Brands chairman Yat Siu (right) at the Consensus mainstage in Toronto, Canada. Source: CointelegraphWeb3-based education tools to drive crypto adoption

Siu said that Web3-based financial tools for the education sector could drive mass crypto adoption, especially among the young and unbanked.

“The first unbanked are the kids,” he said. “If a student receives a loan onchain and pays it back onchain — which is regulated, better, faster, cheaper — they become onboarded for crypto for life.” 

Siu compared the situation to how PayPal and Venmo scaled by offering essential services to underserved users. He suggested that student loans could serve as crypto’s entry into the mainstream.

The executive also highlighted Animoca Brands’ recent investment in Pencil Finance, a startup providing crypto-native student loans. Siu said the project operates in the Philippines and Indonesia, and plans to expand to the US. 

On April 30, Pencil Finance announced a $10 million student loan financing initiative to provide cheaper, blockchain-backed loans. 

Siu previously said in an interview that the industry needs these “positive-sum use cases” that everyone understands. He said students would be more pro-crypto if they had more opportunities through crypto loans. 

Related: NFT founder stole millions from Bitcoin project, investors allege

Education is a natural Web3 use case

Siu also told the Consensus audience that education is a natural use case for Web3. He highlighted YouTube and TikTok, platforms that are often dismissed as entertainment applications. Siu said these social media apps are now the largest informal learning platforms in the world. 

He said everything is tied to education and that Web3 could do something similar. “Education is actually fundamental, something we do all the time,” Siu said. 

He suggested that by integrating financial infrastructure into educational experiences, Web3 could turn learning communities and reputational networks into capital assets, forming the basis of a new, decentralized financial ecosystem.

Magazine: Binance Wallet ‘killing’ MetaMask and airdrops, Chinese RWA tokens: Asia Express

Blockchain gaming user activity dipped and funding slowed in April, but the overall ecosystem is healthier and maturing, according to blockchain analytics platform DappRadar.

User activity dropped 10% over April, with blockchain gaming reaching a 2025 low of 4.8 million daily Unique Active Wallets, DappRadar analyst Sara Gherghelas said in the platform’s April Games Report.

Gaming dominance over the decentralized app industry also fell and is now tied with decentralized finance at 21%. 

Gherghelas said it’s clear user attention is shifting away from gaming, but under the surface, new infrastructure went live, major publishers doubled down, and high-quality games edged closer to launch.

Source: DappRadar

“The blockchain gaming industry isn’t dead — it’s evolving. It’s moving from noise to signal,” she said.

“Teams are building, and capital continues to flow into the space. What we might be seeing is a healthier ecosystem — one driven less by speculative play-to-earn mechanics and more by users who have a genuine interest in gameplay, asset ownership and community.”

April’s blockchain gaming investment activity also dropped 69% from March, reaching $21 million.

Weaker projects die off, funds shift to builders

Gherghelas said part of the drop is because investor and user interest is increasingly shifting toward real-world assets and artificial intelligence.

Another factor is the macroeconomic landscape, with ongoing market uncertainty weighing on investor sentiment, making capital harder to secure for startups.

Gherghelas said weaker projects “are falling away,” and funds are flowing into other projects that “are quietly laying the groundwork for the next generation of blockchain games.”

Blockchain gaming funding has seen a sharp drop since last year. Source: DappRadar

“Investors are now optimizing for sustainable models, player engagement, and actual retention, not just token hype,” she added. “This shows that the market’s clearly in reset mode.”

Gherghelas noted that “66% of all blockchain game funding in 2025 so far has gone to infrastructure,” signaling a more mature market.

Related: Crypto gaming has mixed Q1 as deals jump, investment totals dip: DappRadar

Mainstream gaming companies are also still experimenting with blockchain-powered games, with Gherghelas pointing to Ubisoft’s partnership with Immutable, and Sega adding non-fungible tokens and play-to-earn mechanics to its game, KAI: Battle of Three Kingdoms, as prime examples.

“April 2025 wasn’t a record-breaking month for blockchain gaming, and that’s okay. What we’re seeing is a space recalibrating,” she said.

“Speculative hype is cooling down, but the builders haven’t stopped,” she added. ”Games are launching. Ecosystems are expanding. Infrastructure is maturing.” 

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Blockchain gaming user activity dipped and funding slowed in April, but the overall ecosystem is healthier and maturing, according to blockchain analytics platform DappRadar.

User activity dropped 10% over April, with blockchain gaming reaching a 2025 low of 4.8 million daily Unique Active Wallets, DappRadar analyst Sara Gherghelas said in the platform’s April Games Report.

Gaming dominance over the decentralized app industry also fell and is now tied with decentralized finance at 21%. 

Gherghelas said it’s clear user attention is shifting away from gaming, but under the surface, new infrastructure went live, major publishers doubled down, and high-quality games edged closer to launch.

Source: DappRadar

“The blockchain gaming industry isn’t dead — it’s evolving. It’s moving from noise to signal,” she said.

“Teams are building, and capital continues to flow into the space. What we might be seeing is a healthier ecosystem — one driven less by speculative play-to-earn mechanics and more by users who have a genuine interest in gameplay, asset ownership and community.”

April’s blockchain gaming investment activity also dropped 69% from March, reaching $21 million.

Weaker projects die off, funds shift to builders

Gherghelas said part of the drop is because investor and user interest is increasingly shifting toward real-world assets and artificial intelligence.

Another factor is the macroeconomic landscape, with ongoing market uncertainty weighing on investor sentiment, making capital harder to secure for startups.

Gherghelas said weaker projects “are falling away,” and funds are flowing into other projects that “are quietly laying the groundwork for the next generation of blockchain games.”

Blockchain gaming funding has seen a sharp drop since last year. Source: DappRadar

“Investors are now optimizing for sustainable models, player engagement, and actual retention, not just token hype,” she added. “This shows that the market’s clearly in reset mode.”

Gherghelas noted that “66% of all blockchain game funding in 2025 so far has gone to infrastructure,” signaling a more mature market.

Related: Crypto gaming has mixed Q1 as deals jump, investment totals dip: DappRadar

Mainstream gaming companies are also still experimenting with blockchain-powered games, with Gherghelas pointing to Ubisoft’s partnership with Immutable, and Sega adding non-fungible tokens and play-to-earn mechanics to its game, KAI: Battle of Three Kingdoms.

“April 2025 wasn’t a record-breaking month for blockchain gaming, and that’s okay. What we’re seeing is a space recalibrating,” she said.

“Speculative hype is cooling down, but the builders haven’t stopped,” she added. ”Games are launching. Ecosystems are expanding. Infrastructure is maturing.” 

Magazine: Illegal arcade disguised as … a fake Bitcoin mine? Soldier scams in China: Asia Express

Blockchain gaming user activity dipped and funding slowed in April, but the overall ecosystem is healthier and maturing, according to blockchain analytics platform DappRadar.

User activity dropped 10% over April, with blockchain gaming reaching a 2025 low of 4.8 million daily Unique Active Wallets, DappRadar analyst Sara Gherghelas said in the platform’s April Games Report.

Gaming dominance over the decentralized app industry also fell and is now tied with decentralized finance at 21%. 

Gherghelas said it’s clear user attention is shifting away from gaming, but under the surface, new infrastructure went live, major publishers doubled down, and high-quality games edged closer to launch.

Source: DappRadar

“The blockchain gaming industry isn’t dead — it’s evolving. It’s moving from noise to signal,” she said.

“Teams are building, and capital continues to flow into the space. What we might be seeing is a healthier ecosystem — one driven less by speculative play-to-earn mechanics and more by users who have a genuine interest in gameplay, asset ownership and community.”

April’s blockchain gaming investment activity also dropped 69% from March, reaching $21 million.

Weaker projects die off, funds shift to builders

Gherghelas said part of the drop is because investor and user interest is increasingly shifting toward real-world assets and artificial intelligence.

Another factor is the macroeconomic landscape, with ongoing market uncertainty weighing on investor sentiment, making capital harder to secure for startups.

Gherghelas said weaker projects “are falling away,” and funds are flowing into other projects that “are quietly laying the groundwork for the next generation of blockchain games.”

Blockchain gaming funding has seen a sharp drop since last year. Source: DappRadar

“Investors are now optimizing for sustainable models, player engagement, and actual retention, not just token hype,” she added. “This shows that the market’s clearly in reset mode.”

Gherghelas noted that “66% of all blockchain game funding in 2025 so far has gone to infrastructure,” signaling a more mature market.

Related: Crypto gaming has mixed Q1 as deals jump, investment totals dip: DappRadar

Mainstream gaming companies are also still experimenting with blockchain-powered games, with Gherghelas pointing to Ubisoft’s partnership with Immutable, and Sega adding non-fungible tokens and play-to-earn mechanics to its game, KAI: Battle of Three Kingdoms.

“April 2025 wasn’t a record-breaking month for blockchain gaming, and that’s okay. What we’re seeing is a space recalibrating,” she said.

“Speculative hype is cooling down, but the builders haven’t stopped,” she added. ”Games are launching. Ecosystems are expanding. Infrastructure is maturing.” 

Magazine: Illegal arcade disguised as … a fake Bitcoin mine? Soldier scams in China: Asia Express

Ethereum layer-2 scaling platform Starknet has reached a decentralization milestone laid out by Ethereum co-founder Vitalik Buterin and is now the largest zero-knowledge rollup-based network by total value locked.

Starknet said in a press release shared with Cointelegraph that it has hit “Stage 1” decentralization, according to a framework Buterin laid out in 2022, which means the network operates with limited oversight or “training wheels.”

Starknet added that the framework was the “gold standard onchain tool for analyzing Ethereum scaling solutions,” and said it achieved the milestone through changes such as creating a security council and censorship-avoidance mechanisms. 

While the system still allows intervention from a security council, it has implemented a fully functional validity proof system governed by smart contracts.

Starknet is now the only layer-2 ZK-rollup network to have reached Stage 1 and has grown to be the largest ZK-rollup blockchain with a total value locked of $629 million, just ahead of ZKsync’s $610 million, according to L2beat. 

Starknet is the fifth-largest layer-2 network by value locked, with the top four all Optimistic rollup-based and all reached Stage 1 decentralization using fraud proofs. 

Layer-2 networks ranked by total value locked. Source: L2beat

Fraud proofs assume transactions are invalid until proven valid, while validity proofs assume transactions are valid only if proven valid with cryptographic evidence.

“Our goal is for the training wheels to come off completely and to reach Stage 2 decentralization on Ethereum, and simultaneously steam forward with our work on Bitcoin too,” said Eli Ben-Sasson, co-founder and CEO of StarkWare, the developer behind Starknet. 

“Stage 2” decentralization is the point where the network will be fully autonomous and community-governed. Only three small layer-2 scaling platforms have reached this stage, according to L2beat. 

Related: Vitalik Buterin says rollups must prove security before decentralizing

Buterin introduced the concept of “training wheels” or three stages for Ethereum scaling rollup projects at various phases of development in 2022.

Base leads layer-2 ecosystem

The Coinbase layer-2 network Base is the leader of the sector in terms of value locked, with $14.7 billion, giving it a market share of 33%. Comparatively, Starknet has a market share of 1.4%. 

The total value secured onchain in the layer-2 ecosystem is $44.2 billion. The figure has jumped recently as the value of Ether (ETH) has gained, but is down 20% so far this year.

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The Pacific US territory of the Northern Mariana Islands has passed a bill allowing its small constituent island of Tinian to launch a stablecoin, overriding an earlier veto by the territory’s governor.

The 20-member Northern Mariana Islands House voted 14-2 to undo Governor Arnold Palacios’ April 11 veto of the bill, which allows the Tinian local government to issue licenses to internet casinos and includes a provision for the Tinian treasurer to issue, manage and redeem a “Tinian Stable Token.” 

The territory’s nine-member Senate had revived the bill on May 9, voting 7-1 in a two-thirds majority to override the veto, which then needed a two-thirds majority in the House to pass.

Representative Marissa Flores (top left) had urged for “thoughtful deliberation” on the internet gaming and stablecoin bill. Source: YouTube

Originally, a four-member Tinian delegation to the Marianas legislature had unanimously passed the bill to Governor Palacios on March 12.

It may put the Tinian government in the lead to be the first US public entity to issue a stablecoin, which it must do before July if it’s to beat the state of Wyoming government, which is aiming to issue a stablecoin by then.

Tinian has just over 2,000 residents and a largely tourism-based economy. Its local government, the Municipality of Tinian and Aguiguan, is one of four municipalities in the Commonwealth of the Northern Mariana Islands, a US territory in the Pacific Ocean north of Guam.

Governor Palacios said in a letter that he vetoed the bill as it “presents several legal issues and may be unconstitutional,” would regulate an activity that could not “be clearly restricted” to Tinian and that it lacked needed enforcement measures to counter illegal gambling.

The stablecoin is called the Marianas US Dollar (MUSD) and will be backed by cash and US Treasury bills held in reserve by the Tinian Municipal Treasury, according to statements shared with Cointelegraph in March.

The Tinian government chose local tech services firm Marianas Rai Corporation as the exclusive infrastructure provider for MUSD, which will be launched on the eCash blockchain, a network that rebranded from Bitcoin Cash ABC in 2021 and is a fork of Bitcoin Cash, a blockchain forked from Bitcoin.

A Marianas Rai Corp. spokesperson did not comment beyond telling Cointelegraph the company would announce more on MUSD on May 19.

“Bitter pill to swallow”

Before the vote, House lawmakers heard from the public and discussed overturning Governor Palacios’ veto before they voted it through, with independent House floor leader Marissa Flores airing concerns over the bill.

Marianas Rai Corp. co-founder and technology chief Vin Armani had urged lawmakers to undo the veto, saying the bill would “attract billions of dollars of investment and tax revenue” from the crypto industry without the government having to pitch in.

Clyde Norita, a Marianas Rai Corp. director and local legal cannabis mogul, told the House that the local economy was “dying out” and the bill would allow business in the region “without affecting our culture, without affecting our environment, without affecting our immigration status.”

Representative Flores, who voted against the override, said, “Every time we talk about casinos, there’s always some kind of bitter pill to swallow.”

Related: Stablecoin regulation ‘next catalyst’ for crypto industry — Aptos head 

“It is true, we are in dire need of money, but what I don’t like is when we are desperate, and we are now forced to make a decision because we are desperate once again,” she added. “Every time we’re desperate, it always seems that we come back to casinos.”

“I don’t like to be pushed to a corner to make a decision based on fear,” Flores said.

Others were more supportive of the measure, with Republican Representative Patrick San Nicolas, a Tinian delegation member who initially voted on the bill, saying it would help pull the region out of “a deep economic crisis.”

“We need this legislation to unlock our potential,” he added. “This bill does not depend on tourists or federal subsidies — it builds a digital industry generating revenue from a licensed jurisdiction.”

Legal Panel: Crypto wanted to overthrow banks, now it’s becoming them in stablecoin fight 

Jason Guthrie, head of product at asset manager WisdomTree, says he’s optimistic despite a noticeable lack of hype that typically comes along with a crypto bull run. 

There hasn’t been a “really frothy use case that has typically driven these market cycles previously,” such as initial coin offerings (ICOs), non-fungible tokens (NFTs), or DeFi lending, Guthrie told Cointelegraph at Consensus.

“This time, we’ve continued to see the asset class gathering value, we’ve continued to see the companies that are built on this technology, growing revenue, growing client bases, continuing to innovate without really hanging their hat on one of these frankly less than useful use cases,” he said.

WisdomTree founder Jonathan Steinberg (left), Jason Guthrie, head of product (middle) and head of digital assets Will Peck (right). Source: Jason Guthrie

The ICO boom kicked off in 2017 with an estimated $4.9 billion raised. By 2018, this figure had jumped to $33.4 billion. By 2019, it had dropped to just over $370 million and has never returned to its previous highs.

NFTs also had their day, and saw a massive surge of popularity in 2020 and continued to grow until hitting a peak in 2022, with trading volumes reaching $57.2 billion and the market’s sales count hitting 121.7 million. The market has since cooled as well. 

“I think the fact that we’re still healthy without one of those to drive it is a really, really good sign,” Guthrie said.

Market more mature this cycle, despite memecoin hype 

The overall crypto market capitalization hit a new all-time high of $3.71 trillion on Dec. 9 last year, with many cryptocurrencies also registering significant price gains, according to CoinMarketCap. 

During this cycle, there has also been a growing trend of companies, such as video game retailer GameStop Corporation, and countries, Ukraine possibly being one of the latest, adopting crypto for treasuries and reserves.

“I think this is starting to feel like a more mature market that is really settling on its use case, its value prop,” Guthrie said.

“I know there has been a bit of memecoin stuff, particularly around Solana, but it doesn’t seem anywhere near as prevalent as the previous kind of hype has been,” he added. 

Related: Bitcoin experiencing ‘shakeout,’ not end of 4-year cycle: Analysts

There was a surge in memecoin activity after the launch of US President Donald Trump’s memecoin on Jan. 18, when Pump.fun usage recorded an all-time high of $3.3 billion in weekly trading volume. 

However, enthusiasm for memecoins dropped after a series of bad launches and rug pulls, killed off investor interest, such as the Libra (LIBRA) rug. 

Ultimately, Guthrie thinks there is still a “lot of innovation to do,” and it’s still “very early days,” but the market has matured and has greater sustainability compared to previous cycles. 

Additional reporting by Sam Bourgi.

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