Key Takeaways
- Tokenization promises faster settlement, reduced intermediaries, and automated processes.
- While tokenization compresses traditional revenue streams like settlement and custody fees, it unlocks opportunities in tokenized asset services, compliance, and hyper-efficient capital management.
- Bonds and private funds will lead into 2026, followed by real estate and, eventually, public equities.
Nearly 30 years after the last great tech migration, we are witnessing arguably the first undercurrents of a different, albeit strangely familiar one.
Just as the internet forced every major bank to go digital in the late 1990s, tokenization is forcing a new wave of digital transformation in traditional finance.
While retail speculates on prices, institutions are silently building the rails of the future.
History has shown that whoever controls the infrastructure controls the revenue stream. With tokenization now a reality, it’s clear that assets won’t all evolve at the same pace, nor will they achieve equal levels of adoption.
Tokenization’s Liquidity Powerplay
Tokenization ushers in a fundamental settlement upgrade for diverse assets that banks, fund managers, and treasurers already trade every day.
Globally, investor interest is peeling away from purely traditional capital market models, thanks to crypto’s emergence as a complementary and not competing asset class.
Well over $25 billion assets (minus stablecoins) have been tokenized already, and this is just a fragment of the $400 trillion universe of bonds, loans, and deposits, underpinning the global financial system that is waiting to go on-chain.
For financial institutions (FIs), tokenization has come to make more sense than it did a decade ago. Trading on-chain assets solves the bottlenecks that have so far slowed them down, such as T+2 or T+3 post-trade settlement, underwriting & distribution, and asset servicing.
Today, the practicality of near-instant decentralized ledgers has come to replace days-long clearing, while on-chain custody has slashed layers of middlemen. Smart contracts, meanwhile, automate payouts and corporate actions that once took entire departments to process.
Consider this: blockchain’s promise of atomic settlement – One Transaction, All or Nothing, is all-encompassing, ensuring that everything in the deal happens together in a single, indivisible transaction. For the financial services industry, this means having cash movements, collateral transfers, and ownership records updated at the exact same moment – no waiting for one side to catch up.
This is a big deal because it kills failed trades, wipes out most counterparty risks, and removes the need for costly short-term credit (daylight overdrafts).
Double-Edged Sword
Obviously, institutions want to front-run this movement, even though it is a double-edged sword. Compressing front-office functions such as settlement fees, custody fees, trading commissions and origination fees mean a reduction in the bulk of the revenue streams.
On the bright side, it offers exponential growth in newer service categories such as tokenization of existing assets, on-chain brokerage, custody and compliance. Not to mention, the diversification opportunities for treasuries to free up locked capital and redeploy funds instantly to generate yields.
For a corporate treasurer, this could mean selling a security for cash, using that cash as collateral for a repo, and redeploying the proceeds into another position, all before the next traditional business hour starts. A classic case of hyper-capital efficiency.
Then, of course, there is the reality of fractional share ownership and making such shares more accessible to fund allocators. Hamilton Lane’s tokenized private equity share classes have slashed minimum investments from $5 million to $10,000, dramatically expanding their addressable market.
Another example is Franklin Templeton’s tokenized mutual fund on Solana, which provides daily interest payouts and near-instant settlement.
Forward-thinking institutions have no option but to factor these pros into account instead of debating the cons forever.
Early players such as Blackrock, Hashnote, and Franklin Templeton appear locked in a dominant position, building liquidity hubs that will be increasingly difficult to displace.
Their early success is just the tip of the iceberg, as more FIs and their special purpose subsidiaries take advantage of the various regulatory sandboxes. The aim: isolate and build the next generation of tokenized business lines, doing a wholesale rewrite of client relationships.
Progress, Not Just Market Share
When capital markets went electronic in the 90s, the winners were incumbents who built and embraced the infrastructure early on. Once electronic trading volumes passed that of floor trading, costs dropped by over 90% and liquidity came pouring in.
The pace at which financial services are being onboarded on-chain today, seems to indicate that the tipping point will arrive sooner than expected. FIs that have seen history in the making every few decades are no strangers to this new tech migration. They are entering the sector with an edge in several areas.
Intermediaries, dependent on settlement friction, will then be left fending for themselves, with institutions that build this infrastructure governing hybrid capital market models.
As tech slashes cost and speeds up execution, yesterday’s high-margin processes will become tomorrow’s commodity.
Charting the Tokenization Pipeline
That being said, like with any market dynamics, user demand will dictate which assets gain preference in jumping onto the tokenization bandwagon.
Presently, the RWA pie (minus stablecoins) is spread across traditional equity, bonds, commodities, and real estate.
Moving into 2026:
- We will see more rampant onboarding of bonds and short-term debt (already $12.8 billion across eight jurisdictions), mostly government and corporate bonds which are large, actively traded and for which settlement speed matters.
- Of second interest and extending well into 2026 next, will be tokenized Private Funds & Alternatives (private equities presently dominate 55% of the non-stablecoin RWA market). It helps that DeFi solutions built on tokenized feeders coupled with fractional ownership, are already solving this segment’s high barriers of entry – among both institutional and retail capital.
- Although nascent, we can expect the tokenization of real estate to pick up interest beyond 2027, especially with the gradual maturing of local laws, regulations, paperwork, and on-chain infrastructure.
- And the last segment to sprout will be Public Equities, which, although tiny now (~ $15 Million), will most likely springboard into billions with rapid regulatory shifts expected across markets.
With every major financial jurisdiction trying to create its own playbook, the pace of tokenization will depend on the legal claim backing each RWA.
Until then, keeping aside all hype, all spikes and resultant troughs should be seen as the market adjusting itself to a new reality – one, that will come to stay.
Institutions are just ensuring that when the dust settles, the ecosystem doesn’t frizzle out its inherent advantages in solving existing market inefficiencies, for the global capital markets they serve.
The views, thoughts, and opinions expressed in the article belong solely to the author, and not necessarily to CCN, its management, employees, or affiliates. This content is for informational purposes only and should not be considered professional advice.
About the Author
Adam Duritza, Head of Defi, Laser Digital- the digital assets arm of Nomura Group. Adam is a seasoned professional working at the intersection of finance, technology, strategy and data. He is based in Los Angeles, California, USA.
