Tokenization
Updated
Summary
Tokenization is recording a claim on an asset, or on money, as a token on a programmable ledger. The BIS defines it as 'the digital representation of assets on programmable platforms'. A tokenized Treasury, share or fund unit is the same legal claim in a new wrapper. It is not a second asset. The SEC staff said on 2026-01-28 that the token format 'does not affect application of the federal securities laws'. The claimed gains are fewer reconciliations, faster collateral moves, settlement outside banking hours and asset and payment moving together. The market is still small. Fed Governor Cook put U.S. tokenized assets at about US$25 billion in May 2026, using Fed staff calculations on private data. There is no official audited global total; that number is UNKNOWN.
Key numbers
U.S. tokenized assets, market capitalization (Fed staff estimate from Allium Labs data): about US$25 billion, more than doubled in a year (as of 2026-05-08). Source: federalreserve.gov
Tokenised traditional assets on public blockchains, global (ECB speech; source unnamed): EUR 23.3 billion (EUR 4.7 billion a year earlier) (as of 2026-03-31). Source: ecb.europa.eu
Stablecoin market capitalisation (BIS): about US$320 billion (as of 2026-05-31). Source: bis.org
Value of securities transactions processed by DTCC subsidiaries in 2025: US$4.7 quadrillion (gross flow, not a stock) (as of 2025-12-31). Source: dtcc.com
Securities in DTC custody and asset servicing: US$114 trillion (as of 2025-12-31). Source: dtcc.com
Firms in DTCC's first production tokenization trades: more than 30 (as of 2026-07-15). Source: dtcc.com
Securities available to tokenize at DTCC service launch (undated fact sheet): 25 (as of 2026-10-19). Source: communications.dtcc.com
Franklin OnChain U.S. Government Money Fund total net assets: US$843.8 million (as of 2026-03-31). Source: sec.gov
Project Agora participants: 8 central banks, 40+ financial institutions (as of 2026-05-27). Source: bis.org
Firms in Bank of England/FCA Digital Securities Sandbox live work: 16 (as of 2026-05-18). Source: bankofengland.co.uk
Term of SEC Innovation Exemption for tokenized NMS stock venues: 5 years from publication (as of 2026-09-17). Source: sec.gov
Timeline
2026-09-21 — ECB launches Pontes for settling DLT trades in central bank money and starts preparing to invest some own funds in tokenised securities. (Source: ecb.europa.eu)
2026-09-17 — SEC grants a five-year Innovation Exemption for venues trading tokenized NMS stock, with caps and issuer objection rights. (Source: sec.gov)
2026-09-16 — DTCC Fund/SERV admits Ondo Finance's broker-dealer as its first tokenization platform member. (Source: dtcc.com)
2026-07-16 — HM Treasury sets the pilot digital gilt (DIGIT) issuance for Q1 2027 on HSBC Orion. (Source: gov.uk)
2026-07-15 — DTCC runs production trades with DTC-tokenized assets: 30+ firms, Canton and private Besu, repo, collateral and CCP margin. (Source: dtcc.com)
2026-06-23 — BIS Annual Economic Report 2026 says tokenisation should build on the two-tier system; stablecoins fall short on key properties of money. (Source: bis.org)
2026-05-27 — BIS Project Agora reports tokenised reserves and deposits can settle cross-border payments with finality; real-value testing next. (Source: bis.org)
2026-05-27 — DTCC and Stellar Development Foundation target DTC-tokenized assets on Stellar in the first half of 2027. (Source: dtcc.com)
2026-05-18 — Bank of England and FCA set out a shared tokenisation vision; RTGS synchronisation targeted for 2028. (Source: bankofengland.co.uk)
2026-05-13 — DTCC publishes collateral research: US$4.7 quadrillion processed in 2025; intraday funding costs 'could be cut in half' (projection). (Source: dtcc.com)
2026-05-08 — Fed Governor Cook puts U.S. tokenized assets at about US$25 billion and flags 24/7 run risk. (Source: federalreserve.gov)
2026-05-04 — DTCC says 50+ firms are shaping its tokenization service; July pilot trades and October 2026 launch planned. (Source: dtcc.com)
2026-03-18 — SEC approves Nasdaq rule to trade securities in tokenized form, settled through the DTC pilot. (Source: sec.gov)
2026-03-11 — Eurosystem publishes the Appia roadmap for a tokenised wholesale market, to conclude in 2028. (Source: ecb.europa.eu)
2026-03-05 — FDIC, Fed and OCC say tokenized securities generally keep the capital treatment of the original. (Source: federalreserve.gov)
2026-01-28 — SEC staff statement: tokenized securities are still securities; issuer-sponsored versus third-party types. (Source: sec.gov)
2025-12-11 — SEC staff no-action letter lets DTC run a three-year tokenization service for Russell 1000 stocks, index ETFs and Treasuries. (Source: sec.gov)
2025-12-08 — CFTC opens a digital-asset collateral pilot and issues guidance on tokenized collateral (Letter 25-39). (Source: cftc.gov)
2025-09-23 — CFTC launches a tokenized collateral and stablecoins initiative for derivatives markets. (Source: cftc.gov)
2025-06-24 — BIS proposes a tokenised unified ledger of reserves, bank money and government bonds. (Source: bis.org)
Key actors and links
DTCC (actor:dtcc): Main U.S. incumbent tokenizing DTC-held securities; production trades 2026-07-15, service launch targeted for October 2026 (covered in depth in its own node).
SEC (actor:sec): Sets the U.S. securities rules: DTC no-action relief, 2026-01-28 staff statement, Nasdaq approval and the 2026-09-17 Innovation Exemption.
CFTC (actor:cftc): Opened a tokenized collateral initiative (2025-09-23) and issued technology-neutral collateral guidance (2025-12-08) for derivatives.
Federal Reserve (actor:federal-reserve): With FDIC and OCC kept tokenized securities' capital treatment unchanged; Governor Cook sized the U.S. market at about US$25 billion.
BIS (actor:bis): Leading public architect: the unified-ledger blueprint (AER 2025, 2026) and Project Agora with eight central banks.
ECB (actor:ecb): Launched Pontes on 2026-09-21 to settle DLT trades in euro central bank money; Appia blueprint due 2028.
Bank of England (actor:bank-of-england): Runs the Digital Securities Sandbox with the FCA (16 firms) and targets RTGS synchronisation in 2028.
Canton Network (actor:canton-network): Public, privacy-oriented network used with private Besu for DTCC's July 2026 production trades and listed for its service launch.
Stellar network (actor:stellar-network): Announced DTC tokenization connection targeted for the first half of 2027; not used in the July trades.
Ethereum (asset:crypto-eth): Ethereum hosts major tokenized funds such as BlackRock's BUIDL (launched 2024-03-20); hosting assets is not proof of ETH value capture.
XRP Ledger (actor:xrp-ledger): Not named in DTCC's announced network roadmap (Canton, Besu, Stellar, Arc); any XRPL tokenization link needs separate evidence.
Tokenized Securities (theme:tokenized-securities): Sub-theme for tokenized shares, bonds and ETFs; the segment the SEC's 2025-2026 actions address.
Tokenized deposits (theme:tokenized-deposits): The BIS-preferred private money leg for tokenized settlement, tested in Project Agora.
U.S. Treasuries (market:us-treasuries): Main underlying asset so far: tokenized Treasury funds lead U.S. volume and Treasury repo was in DTCC's July trades.
Tokenized financial assets and settlement (indicator:tokenized-asset-volume): The measurable proxy for this theme; no official audited global total exists, so it rests on private data cited by officials.
Why it matters now
Tokenization moved from pilots into regulated production in 2025-2026, led by incumbents rather than crypto natives. SEC staff gave DTC no-action relief on 2025-12-11 for a three-year tokenization service. It covers Russell 1000 stocks, major index ETFs and Treasuries, with DTC's off-chain record remaining the official books. On 2026-07-15 DTCC ran production trades with more than 30 firms on Canton (public) and Besu (DTCC's private network): repo, collateral pledges, securities lending and CCP margin. The service was due to launch in October 2026; no launch confirmation was found as of 2026-10-19. The SEC approved Nasdaq trading of tokenized shares settled through DTC (2026-03-18) and on 2026-09-17 granted a five-year Innovation Exemption for trading venues in tokenized stocks. U.S. bank regulators said a tokenized security generally keeps the capital treatment of the original (2026-03-05). The CFTC issued guidance on tokenized collateral in derivatives (2025-12-08).
Central banks are shaping the money leg. The BIS argues in 2025 and 2026 that tokenization works best on a 'unified ledger' anchored in central bank money and tokenized bank deposits, and that stablecoins fall short on singleness. The ECB launched Pontes on 2026-09-21 to settle DLT trades in euro central bank money. The Bank of England targets a live RTGS synchronisation service for 2028 and HM Treasury plans a digital gilt (DIGIT) by Q1 2027. Inference (AA): the mechanism is capital efficiency. Money and collateral that can move and be recognised in minutes could let firms hold smaller buffers. If buffers do not shrink, speed alone saves little, a point AA's 2026-10-19 piece makes with DTCC's own figures.
Risks and open questions
Bull case: Regulators have moved from tolerance to rules. U.S. staff relief, an exchange approval, an exemption for tokenized-stock venues, unchanged bank capital treatment and CFTC collateral guidance all landed within a year. DTCC ran production trades in core workflows (repo, collateral, margin) with 30+ firms, and central banks in the euro area and UK are building central-bank-money settlement for tokenized assets. If DTCC's own projection that intraday funding costs could be cut in half holds even partly, the savings on a US$114 trillion custody base are large. The tokenized market is small (about US$25 billion in the U.S.) but grew fast, so the runway is long.
Bear case: The volume is tiny next to the markets it mirrors, and official figures rely on private data with no audited global total. Much of the plumbing is still pilot or target: DTCC's October launch is unconfirmed, DIGIT is due by Q1 2027, Stellar and Arc links in 2027, Pontes 24/7 by mid-2028, BoE synchronisation in 2028. DTC's preliminary service ascribes no collateral or settlement value to tokenized entitlements. Fragmented ledgers could lose existing netting and force more prefunding. The Fed warns that 24/7 tokens could speed runs. The SEC exemption is temporary and Congress has not passed market-structure law. Speed without smaller buffers saves little.
Falsifiers: - DTCC Tokenization Service does not launch by end-2026, or launch volumes stay at pilot scale through 2027. - Participants disclose no reduction in collateral buffers or intraday funding costs after a year of production use. - U.S. tokenized assets fail to grow from about US$25 billion in the next Fed or official update. - Pontes, Agora or BoE synchronisation slip beyond their stated 2026-2028 windows. - Bear case falsified if official data show tokenized assets in the hundreds of billions with on-chain cash legs in central bank money or tokenized deposits. - A material run or operational failure in a tokenized fund outside market hours would confirm the Fed's stated risk.
Value accrual gate: This is not a crypto asset node, but the gate still applies. Tokenization volume on a chain is not automatically value for that chain's native token. DTCC's July trades ran on Canton and a private Besu network; DTC keeps its official books off-chain; tokenized Treasuries and fund units are claims on issuers and custodians, not on the chain. A native token gains only if institutions must pay fees, post reserves or hold inventory in it, and if that demand is not netted away or replaced by stablecoins, tokenized deposits or central bank money. Each link must be shown separately with usage data, not inferred from a press release.
What to watch
DTCC Tokenization Service launch (DTCC target; no launch confirmation found as of 2026-10-19) (October 2026); Source: dtcc.com
DTCC Collateral AppChain go-live (Q4 2026); Source: dtcc.com
Federal Register publication of and public comments on the SEC Innovation Exemption order (no scheduled date); Source: sec.gov
UK pilot digital gilt (DIGIT) issuance on HSBC Orion (by Q1 2027); Source: gov.uk
DTC-tokenized assets available on Stellar; Arc (Circle) also listed for 2027 (first half of 2027); Source: dtcc.com
Project Agora real-value transactions (no scheduled date); Source: bis.org
Eurosystem Appia blueprint and Pontes 24/7 service (2028 (Pontes 24/7 by mid-2028)); Source: ecb.europa.eu
Bank of England live RTGS synchronisation service (2028); Source: bankofengland.co.uk
First participant disclosures of lower collateral buffers or intraday funding costs attributed to tokenized collateral (AA expectation, not a scheduled event) (2027); speculative, no scheduled source
AA inference
Inference (AA): tokenization is the graph's hub for the claim that financial plumbing is being rebuilt. The evidence so far says the rebuild is led by DTCC, exchanges, banks and central banks, inside existing law, on a mix of private and public ledgers. Value may therefore accrue first to incumbents, vendors and the firms whose funding costs fall, not to any public chain's native token. AA tracks three tests: live volume after DTCC's launch, disclosed reductions in collateral buffers or intraday funding cost, and which ledgers carry the cash leg (central bank money, tokenized deposits or stablecoins). The theme weakens if production volume stays at pilot scale through 2027 or if fragmented networks lose existing netting benefits.
Sources
The BIS (press release of 2025-06-24 on its Annual Economic Report 2025) proposes a tokenised unified ledger combining central bank reserves, commercial bank money and government bonds, says tokenisation 'can enhance efficiency and open new possibilities in cross-border payments, securities markets and beyond', and says stablecoins 'fall short' as sound money on singleness, elasticity and integrity. (Source: bis.org, accessed 2026-10-19)
The BIS 2026 Annual Economic Report press release (2026-06-23) says tokenisation, 'the digital representation of assets on programmable platforms', can be brought into the two-tier system, and that stablecoins in their current form fall short on key properties of money. (Source: bis.org, accessed 2026-10-19)
BIS AER 2026 chapter III describes tokenised deposits as digital representations of commercial bank money redeemable at par for central bank money, says a unified ledger could support a diversity of regulated private monies, and puts stablecoin market capitalisation at about US$320 billion at end-May 2026. It gives no figure for the size of the tokenised asset market. (Source: bis.org, accessed 2026-10-19)
BIS Project Agora (findings published 2026-05-27) found that tokenised central bank reserves and tokenised commercial bank deposits can settle multi-currency wholesale cross-border payments, with settlement finality achievable in all seven participating jurisdictions; it plans to move to real-value transactions with no date given. (Source: bis.org, accessed 2026-10-19)
Project Agora involves eight central banks and more than 40 financial institutions convened by the Institute of International Finance. (Source: bis.org, accessed 2026-10-19)
In a 2025-12-11 no-action letter, SEC Division of Trading and Markets staff allowed DTC's preliminary tokenization service: participants may have security entitlements recorded on approved ledgers via registered, OFAC-screened wallets; eligible securities are Russell 1000 stocks, major index ETFs and U.S. Treasury bills, notes and bonds; relief runs three years from launch, expected in the second half of 2026. (Source: sec.gov, accessed 2026-10-19)
Under the no-action letter, DTC's off-chain LedgerScan record 'would constitute DTC's official books and records', securities stay registered to Cede & Co., DTC does not prescribe a blockchain, and 'DTC would not ascribe to any Tokenized Entitlements any collateral value or settlement value'. (Source: sec.gov, accessed 2026-10-19)
SEC staff of three divisions said on 2026-01-28 that tokenized securities remain securities and the format 'does not affect application of the federal securities laws'; they split tokenized securities into issuer-sponsored and third-party (custodial or synthetic) types. (Source: sec.gov, accessed 2026-10-19)
On 2026-03-18 (Release 34-105047) the SEC approved Nasdaq's rule change SR-NASDAQ-2025-072 letting eligible securities trade in tokenized form while the DTC pilot is in effect, with DTC clearing and settling trades in token form and a fall-back to traditional settlement. (Source: sec.gov, accessed 2026-10-19)
On 2026-09-17 the SEC granted temporary, conditional exemptive relief (the Innovation Exemption) letting Tokenized Securities Venues trade tokenized NMS stock, with caps on symbols and volume, same-rights requirements, issuer notice and objection for third-party tokens, smart contracts on a public permissionless ledger, and expiry five years after publication; it solicits public comment. (Source: sec.gov, accessed 2026-10-19)
SEC Chairman Atkins said on 2026-09-17 that the Innovation Exemption is an interim measure that 'must be followed by durable rulemaking' and that issuers 'must have the opportunity to object' to their security trading on a TSV. (Source: sec.gov, accessed 2026-10-19)
The FDIC, Federal Reserve Board and OCC said on 2026-03-05 that an eligible tokenized security should generally keep the capital treatment of its non-tokenized form, because 'the technologies used to issue and transact in a security do not generally impact its capital treatment'. (Source: federalreserve.gov, accessed 2026-10-19)
Fed Governor Lisa Cook said on 2026-05-08 that tokenized assets in the U.S. more than doubled their market capitalization in the past year to around US$25 billion (Fed staff calculations from Allium Labs data), led by government bond funds, and that she does not see tokenization replacing traditional market infrastructure. (Source: federalreserve.gov, accessed 2026-10-19)
Governor Cook warned on 2026-05-08 that around-the-clock trading and settlement may speed up a run on a token issuer if disruptions outside normal market hours escalate. (Source: federalreserve.gov, accessed 2026-10-19)
CFTC Acting Chairman Pham launched a tokenized collateral and stablecoins initiative for derivatives markets on 2025-09-23, seeking public feedback. (Source: cftc.gov, accessed 2026-10-19)
On 2025-12-08 the CFTC announced a digital-assets collateral pilot (initially bitcoin, ether and USDC for FCMs) and staff guidance (Letter 25-39) that CFTC rules are technology-neutral for tokenized real-world assets such as Treasuries and money market funds used as collateral. (Source: cftc.gov, accessed 2026-10-19)
DTCC said on 2026-05-04 its tokenization service was being designed with more than 50 firms, with limited production trades planned for July 2026 and a planned launch in October 2026. (Source: dtcc.com, accessed 2026-10-19)
DTCC said on 2026-05-13 that its subsidiaries processed securities transactions valued at US$4.7 quadrillion in 2025 and its depository provided custody and asset servicing for securities valued at US$114 trillion; research with Finadium projected intraday funding costs 'could be cut in half'; its Collateral AppChain is expected to go live in Q4 2026. (Source: dtcc.com, accessed 2026-10-19)
DTCC and the Stellar Development Foundation said on 2026-05-27 they expect DTC-tokenized assets to be available on the Stellar network in the first half of 2027. (Source: dtcc.com, accessed 2026-10-19)
On 2026-07-15 DTCC processed production trades using DTC-tokenized assets with more than 30 firms on Besu (DTCC's private network) and Canton (a public network), covering collateral pledge, securities lending, Treasury repo DVP, equity DVP/DVD and CCP margin; the Tokenization Service was scheduled to launch in October 2026. (Source: dtcc.com, accessed 2026-10-19)
DTCC's Tokenization Service At-a-Glance (undated) lists 25 securities at launch (select Russell 1000 equities, ETFs and Treasuries) on Canton and Besu, with Stellar and Arc (Circle) anticipated in 2027 and on-chain netting and digital cash settlement on the roadmap. (Source: communications.dtcc.com, accessed 2026-10-19)
On 2026-09-16 DTCC's Fund/SERV added Ondo Finance's broker-dealer subsidiary Oasis Pro Markets as the first tokenization platform member; DTCC says Fund/SERV handles over 85% of U.S. mutual fund transaction activity. (Source: dtcc.com, accessed 2026-10-19)
The ECB launched Pontes, its DLT settlement link to TARGET Services, on 2026-09-21 and began preparatory work to invest a small portion of its own funds in tokenised securities settled through Pontes. (Source: ecb.europa.eu, accessed 2026-10-19)
The Eurosystem published its Appia roadmap on 2026-03-11; the roadmap is expected to conclude in 2028 with an ecosystem blueprint. (Source: ecb.europa.eu, accessed 2026-10-19)
The ECB Governing Council approved a dual-track DLT settlement plan on 2025-07-01: Pontes (short term) and Appia (long term), building on 2024 trials with 64 participants. (Source: ecb.europa.eu, accessed 2026-10-19)
ECB Executive Board member Piero Cipollone said on 2026-08-26 that tokenised traditional assets on public blockchains grew from EUR 4.7 billion (end Q1 2025) to EUR 23.3 billion (end Q1 2026), roughly fivefold, and remain small with limited liquidity; the footnote names no data source. He said a 24/7 Pontes service is targeted by mid-2028. (Source: ecb.europa.eu, accessed 2026-10-19)
The Bank of England and FCA set out a shared tokenisation vision on 2026-05-18; they are working with 16 firms on live issuance and settlement in the Digital Securities Sandbox, and the Bank targets a live RTGS synchronisation service for 2028. (Source: bankofengland.co.uk, accessed 2026-10-19)
HM Treasury said on 2026-07-16 (updated 2026-10-06) that the pilot Digital Gilt Instrument (DIGIT) issuance is due by Q1 2027 on HSBC Orion, HSBC's digital securities depository. (Source: gov.uk, accessed 2026-10-19)
The FSB said on 2024-10-22 that tokenisation 'does not currently pose a material risk to financial stability, mostly due to its small scale', and that comprehensive data on tokenisation activity is lacking. (Source: fsb.org, accessed 2026-10-19)
Franklin OnChain U.S. Government Money Fund (FOBXX) reported total net assets of US$843,835,815 at 2026-03-31 in its annual shareholder report filed on EDGAR. (Source: sec.gov, accessed 2026-10-19)
BlackRock launched its first tokenized fund, the USD Institutional Digital Liquidity Fund (BUIDL), on Ethereum on 2024-03-20 via Securitize; it invests in cash, U.S. Treasury bills and repo, with BNY Mellon as custodian. (Source: investors.securitize.io, accessed 2026-10-19)