Is 2026 the Year of Tokenization?

After years of promises and pilot programs, tokenization finally appears to be going mainstream. 

With regulatory frameworks crystallizing, institutional infrastructure maturing and trading volumes surging, 2026 may mark the inflection point where tokenized assets move from experimental sideline to market force.

Regulatory green lights 

The shift in regulatory posture has been dramatic. SEC Chair Paul Atkins captured the moment succinctly: 

‘It's the way the world will be [in] not just 10 years but maybe as little as two years. The next step is coming with digital assets, digitalization and tokenization of the market.’

The SEC has now confirmed that its innovation exemption for crypto companies will launch in January 2026, allowing eligible firms to issue tokens without completing full registration processes. The framework provides temporary regulatory relief through a controlled sandbox, with strict safeguards including investor participation limits, risk warnings and regular reporting requirements.

Meanwhile, the CFTC has launched its pilot program for tokenized collateral in derivatives markets, allowing Bitcoin, Ether and USDC to be used as margin, a move aimed at providing greater regulatory clarity for digital asset use in traditional finance markets.

Further, the Office of the Comptroller of the Currency (OCC) has confirmed that banks can now act as intermediaries for Bitcoin and crypto transactions, removing a significant operational barrier. And  potential incoming Fed Chair Scott Bessent has declared that ‘the United States has entered the Golden Age of Crypto,’ signaling coordination across financial regulatory bodies that was unimaginable even a year ago.

President Donald Trump has committed to signing landmark crypto market structure legislation (the CLARITY Act) shortly, with major banks joining the conversation. Wells Fargo, Bank of America and Citigroup CEOs are scheduled to meet with US senators this week to discuss crypto market structure legislation, indicating that Wall Street's largest institutions are actively shaping the regulatory framework rather than resisting it.

The infrastructure is already here

The technical foundations supporting tokenization have quietly grown stronger over 2025. Global Digital Finance's industry sandbox demonstrated that tokenized money market fund units can be transferred across multiple heterogeneous distributed ledgers, including Ethereum, Canton, Polygon, Hedera, Stellar and Besu, as well as institutional cash networks like Fnality. Subsequent tests connected SWIFT messaging with tokenized collateral workflows, completing the full cycle from bilateral to triparty repo in under a minute.

Settlement times is one of the key improvements. Traditional money market funds require one to three days for settlement, while tokenized equivalents settle in seconds. This could well be a fundamental restructuring of how capital flows through financial markets.

Major custodians have developed institutional-grade frameworks for digital asset custody, addressing client asset segregation, key management, and operational controls. The Basel Committee's revised ‘Prudential Treatment of Cryptoasset Exposures’ clarifies that fully reserved and regulated tokenized assets should receive the same capital treatment as their non-tokenized counterparts, removing a major barrier to bank participation.

The numbers reflect growing institutional confidence. According to industry research, the market for tokenized assets expanded from $860 million in 2023 to over $2.3 billion by mid-2025. Stablecoin market capitalization reached approximately $256 billion, with projections suggesting $2 trillion by 2028.

Robinhood has already test-driven tokenized assets in the EU and signaled plans to expand. BlackRock, which has ambitions to become the largest cryptocurrency manager by 2030, continues doubling down on tokenization. Bank of America and Citi are exploring tokenized asset launches, including stablecoins.

The composition of US dollar stablecoin reserves provides another data point. By 2025, the total US Treasuries held by stablecoin issuers exceeded the holdings of Norway, Mexico and Australia, effectively making stablecoin issuers significant participants in sovereign debt markets.

Understanding tokenization

At its core, tokenization converts ownership rights of an asset, whether tangible or intangible, into digital tokens on a blockchain. These real-world assets (RWAs) can range from real estate and fine art to stocks, bonds and intellectual property.

The process involves several steps: identifying and legally formalizing the asset, creating digital tokens on a blockchain using smart contracts, distributing tokens to investors, and finally managing the underlying asset through regulated custodians. Oracle systems link real-world data back to smart contracts, enabling automated dividend payments, value updates, and compliance checks.

The distinction between cryptocurrencies and tokens matters. Cryptocurrencies like Bitcoin operate as native currencies on their own blockchains, serving primarily as mediums of exchange. Tokens are built on top of existing blockchains using smart contracts and represent diverse assets, rights, or services within that ecosystem.

Tokenization's advantages over traditional systems include:

• Fractional ownership – Makes high-value assets accessible to smaller investors. Real estate and expensive art can be divided into affordable tokens, expanding the investor base.

• Enhanced liquidity – Transforms traditionally illiquid assets. Tokenized real estate, private credit and infrastructure projects can trade on secondary markets 24/7, without time-consuming paperwork and intermediaries.

• Settlement speed – Drops from days to seconds, reducing counterparty risk and freeing capital for redeployment. Corporate treasurers can manage tokenized bonds or receivables and conduct peer-to-peer transactions with minimal friction.

• Transparency – Increases through blockchain's immutable, shared record of ownership and transactions, reducing fraud and simplifying audits.

• Automation – Through smart contracts reduces operational costs and human error in compliance checks, dividend payments and royalty distributions.

Tokenization is now being applied across asset classes:

• Real estate tokens – Enable fractional property investment and streamlined ownership transfers.

• Stocks and bonds – Exist as digital securities supporting 24/7 trading and faster settlement.

• BlackRock's tokenized money market funds – exemplify institutional adoption.

• Commodities – Including gold are being tokenized by institutions such as HSBC.

• Art and collectibles – Leverage NFTs to ensure verifiable scarcity and ownership.

• Private credit – Benefits from automated management and secondary trading capabilities.

The 24/7 trading structure provides competitive advantages over traditional equity venues, particularly in Asia and Europe where investor demand extends beyond US market hours. Nasdaq has also signaled that tokenized equities are a strategic priority.

Challenges remain 

The path forward isn't without obstacles. Regulatory frameworks, while improving, still vary across jurisdictions, creating uncertainty for cross-border transactions. Legal recognition of digital asset custody and blockchain records also differs by country, meaning tokenized assets may face inconsistent treatment.

Interoperability challenges are another problem as many tokenized assets exist on different blockchains or closed networks, potentially limiting liquidity. However, successful cross-platform transfers in industry sandboxes prove these are engineering problems rather than fundamental barriers.

Perhaps the biggest problem remains market confidence, which is critical for institutional participation. Large players need to be sure that tokens represent legitimate claims on underlying assets and that settlement is legally final. The Basel Committee's clarifications and evolving custody standards address these concerns, but widespread adoption requires continued regulatory coordination.

It’s worth noting that critics argue that blockchain may not be more efficient than existing electronic ledgers and trading systems and warn that rapid growth could introduce systemic risks.

2026: Convergence year?

However, multiple catalysts are aligning for 2026. The SEC's innovation exemption launches in January. Regulatory clarity from the GENIUS Act is providing the framework for stablecoin reserve and redemption requirements. And the CFTC's tokenized collateral framework establishes acceptance standards for tokenized Treasuries and money market funds as margin.

Infrastructure providers are expanding digital-native service capabilities, supporting smart contract operations and strengthening asset recovery mechanisms. Custody models continue to evolve, with institutional-grade frameworks addressing the unique requirements of distributed ledger assets while maintaining traditional principles of client asset protection.

Better still, universal standards and cross-platform settlement rails are emerging. Initiatives like Fnality and various central bank digital currency projects demonstrate that atomic, near-instant settlement can operate at scale.

Whether 2026 proves to be ‘the year of tokenization’ will ultimately depend on execution rather than enthusiasm. The regulatory frameworks are falling into place. The technical infrastructure has demonstrated viability at institutional scale. Trading volumes show genuine market demand rather than speculative froth.

What distinguishes this moment from previous waves of blockchain hype is the convergence of regulatory clarity, institutional infrastructure and demonstrated market traction. The question is no longer whether tokenization will reshape financial markets, but how quickly the transformation will occur and which institutions will lead it.

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