Wall Street goes on-chain: BlackRock, banks, and big tech race to tokenize finance

Over the past year, the institutional embrace of blockchain and tokenization has accelerated from cautious experimentation to bold, large-scale adoption, with financial giants like BlackRock, NASDAQ, and JP Morgan leading the charge. BlackRock’s Larry Fink has publicly declared tokenization a 'key secular theme,' while NASDAQ and the NYSE have filed with the SEC to list tokenized securities and build 24/7 on-chain trading platforms, signaling a fundamental shift in capital markets infrastructure. This momentum is echoed by the proliferation of tokenized money market funds, ETFs, and equities on public blockchains like Ethereum and Solana, as asset managers and banks race to modernize their offerings and avoid being left behind by more agile competitors.

This institutional pivot is not just about embracing new technology for technology’s sake—it’s driven by tangible benefits such as operational efficiency, enhanced liquidity, and democratized access to previously exclusive markets. Firms like Figure have demonstrated dramatic reductions in loan processing times and costs by issuing $12 billion in private credit on-chain, while Securitize and BlackRock have partnered to tokenize dividend-paying equities, enabling near real-time settlement and programmable asset management. At the same time, tokenization is opening up private equity, credit, and real estate to a broader base of accredited and, eventually, retail investors, with platforms like Pre Stocks, Apollo Private Credit, and Republic Mirror tokens breaking down historical barriers to entry.

Strategic partnerships and regulatory clarity are proving essential to this wave of adoption, as institutions seek compliant, scalable infrastructure and industry standards. Collaborations like Citi and Coinbase’s stablecoin payment network, SWIFT’s blockchain prototype with ConsenSys, and the UK banks’ tokenized sterling pilot with Quant Network exemplify how legacy financial institutions are leveraging crypto-native expertise to modernize payments, settlement, and asset issuance. Meanwhile, regulatory milestones such as the Clarity Act and OCC Interpretive Letters are catalyzing mergers, acquisitions, and the expansion of compliant tokenization platforms like Securitize, which now manages billions in tokenized assets and supports cross-chain interoperability.

The competitive landscape is rapidly consolidating around a handful of key players and platforms, with public blockchains like Ethereum and Solana emerging as the preferred rails for institutional tokenization due to their liquidity, technical robustness, and regulatory resilience. BlackRock’s endorsement of Ethereum as the 'most credible blockchain for real-world assets,' the launch of Solana ETFs by Bitwise, Grayscale, and Fidelity, and the migration of major banks from private to public chains all underscore this trend. As Steve McLaughlin predicts, the next two decades could see up to 80% of all asset classes tokenized, with institutions not displaced, but fundamentally transformed by the blockchain revolution.

Stablecoins have rapidly evolved from niche investment vehicles to foundational settlement layers underpinning the digital payment infrastructure of major financial institutions. By late 2025, regulatory clarity—accelerated by the Trump administration and the passage of the Genius Act—prompted legacy players like JP Morgan, Wells Fargo, Visa, and Mastercard to issue their own stablecoins, replacing slow, costly wire transfers with instant, low-cost transactions while maintaining existing banking relationships. This mainstream integration marks a decisive shift in traditional banking models, with stablecoins enabling faster, cheaper, and more efficient payment services and signaling a new era where digital assets and blockchain technology are no longer peripheral but core to institutional finance.

The proliferation of institution-specific stablecoins is reshaping the landscape, with thousands of variants expected to emerge—each interoperable through advanced settlement layers and AI-driven transaction management, rendering the brand of stablecoin increasingly irrelevant to end users. This trend is evidenced by initiatives like Sony’s proprietary stablecoin, UK banks’ tokenized sterling pilot with Quant Network, and the Canton Network’s multi-currency repo settlements involving Euroclear and LSEG. As these interoperable networks mature, stablecoins are facilitating 24/7, cross-border payments, compressing years of adoption into a single year, and challenging legacy systems such as SWIFT to modernize or risk obsolescence.

The integration of stablecoins into global payment infrastructure is driving a fundamental transformation in how money moves, with on-chain dollar volumes reaching $46 trillion in 2025 and projections of a $4 trillion stablecoin market by 2030. Payment giants like Visa and Western Union are expanding stablecoin networks to dozens of countries, while collaborations between crypto-native firms and traditional finance—such as Coinbase’s partnerships with Apollo Global Management and Citi—highlight the institutionalization and tokenization of credit and payment products. This shift is not just technological but economic, as stablecoins enable real-time, programmable, and borderless payments, aligning the 'physics of money' with the 'physics of the internet,' as Circle’s Jeremy Allaire aptly put it.

While stablecoins are disrupting traditional banking models, they are also catalyzing new forms of competition and collaboration. Banks are both challenging and embracing stablecoin legislation, with institutions like Bank of America and Citi preparing to launch their own stablecoins and crypto trading services—sometimes as a defensive regulatory moat. Meanwhile, innovations like Uphold’s retail tokenized US dollar deposit, which is FDIC insured and pays interest, and SoFiUSD’s reserve-backed model at the Federal Reserve, are addressing longstanding limitations of legacy stablecoins and offering new, attractive settlement layers for enterprises and global customers. This dynamic environment is fostering a pluralistic ecosystem where stablecoins, tokenized deposits, and CBDCs coexist, each serving distinct roles in the evolving digital payment infrastructure.

The past year has seen a dramatic regulatory transformation, with legislative milestones like the Genius Act and evolving SEC guidance providing the clarity that major institutions craved. This shift emboldened financial giants such as JP Morgan, Wells Fargo, Visa, and Mastercard to enter the stablecoin and tokenization arena, revolutionizing payment infrastructure by making transactions nearly instantaneous and drastically reducing costs. As one analyst put it, 'all the companies, big banks and institutions, they're all leaning in now,' a testament to how regulatory momentum has replaced fear with opportunity, even as some rules remain in flux.

The regulatory landscape is not only enabling innovation but also actively reshaping compliance practices and business models across finance. The SEC’s explicit support for tokenization, the Federal Reserve’s new rules for stablecoin issuers, and OCC guidance have allowed institutions like BlackRock, BNY Mellon, and SoFi Bank to launch compliant tokenized products, while platforms such as Coinbase and Hyperliquid pioneer regulated on-chain trading and derivatives. Compliance innovation is now powered by explainable AI and unified screening systems, reducing false positives by up to 90% and allowing firms to meet global regulatory expectations efficiently—transforming compliance from a barrier into a competitive advantage.

Despite progress, regulatory debates remain intense, particularly around stablecoin yields, DeFi oversight, and the fundamental shift in credit creation away from traditional banks. The collapse of the Clarity Act in early 2026, due to industry divisions and political hurdles, underscores the complexity of aligning interests between incumbents and innovators, with issues like stablecoin yield payments and DeFi accountability at the forefront. Yet, this slower, more deliberate legislative process may ultimately benefit the ecosystem by fostering thoughtful integration of crypto into capital markets, as revised drafts and global regulatory competition—such as China’s yield-bearing digital yuan—continue to shape the future of financial infrastructure.

Globally, regulatory clarity is catalyzing institutional adoption and cross-border innovation, with countries like India, Saudi Arabia, and Bermuda advancing tokenization initiatives and integrating blockchain into sovereign-grade infrastructure. The U.S. remains a regulatory bellwether, with its frameworks inspiring similar moves in Japan, Korea, and beyond, while major corporations and payment networks like Citigroup, Visa, and Western Union race to integrate stablecoins into remittance and settlement systems. As President Trump emphasized at Davos, maintaining leadership in crypto regulation is now a matter of national strategy, ensuring that the U.S. and its allies set the pace for compliant, borderless financial systems.

The integration of tokenized securities and real-world assets (RWAs) is rapidly moving from experimentation to institutional adoption, with major players like BlackRock, NASDAQ, and the NYSE spearheading initiatives to bring equities, credit, and real estate onto blockchain rails. Early efforts saw institutions leveraging private blockchains to streamline back-office operations and settlement processes—NASDAQ, for example, used private chains to tokenize ETFs, while the DTCC experimented with Ethereum-based protocols for operational efficiency. However, by late 2025 and early 2026, the momentum has shifted toward public blockchains, as evidenced by BlackRock's launch of tokenized Treasury-backed products on Ethereum and NASDAQ's SEC filings to list tokenized securities, signaling a pivotal transition from closed, permissioned systems to open, interoperable blockchain infrastructure.

Tokenization is fundamentally transforming access and liquidity for traditionally illiquid and opaque markets, such as private equities, credit, and real estate. Platforms like Pre Stocks, Republic, and Apollo Private Credit are democratizing these asset classes, while the growing backlog of 30,000 private companies waiting to go public underscores the urgent need for alternative liquidity solutions. Yet, as Carlos Domingo of Securitize cautions, tokenization enhances tradability but does not automatically guarantee liquidity—true market depth still depends on the underlying asset's nature, and operational and regulatory complexities, including KYC and compliance, remain significant hurdles for seamless on-chain asset movement.

Operational benefits of tokenized securities are increasingly tangible, with on-chain wrappers enabling 24/7 trading, instant settlement, and composability for new DeFi use cases such as lending and collateralization. Notably, private credit has emerged as the fastest-growing RWA segment, with tokenization reducing loan processing times from 40 to 10 days and slashing costs to 30% of industry averages. Major financial institutions like Euroclear, Euronext, and LSEG are now executing real-time, cross-border repo transactions with tokenized government bonds and cash, while cross-bank frameworks from DBS and J.P. Morgan allow tokenized deposits to move seamlessly across public and permissioned blockchains, further enhancing liquidity and operational efficiency.

Regulatory clarity is emerging as the linchpin for scaling tokenized securities and RWAs, with landmark developments such as the Clarity Act and SEC guidance enabling transfer agents and broker-dealers to operate on public blockchains. This regulatory momentum is paving the way for hybrid capital market models, where traditional and blockchain-native securities coexist, and for innovations like native on-chain equity issuance and programmable securities. As Securitize and other regulated platforms emphasize, ensuring that tokens represent true, direct ownership of underlying assets—rather than synthetic derivatives—is critical for market integrity, investor protection, and the ultimate migration of trillions in financial assets to blockchain-based infrastructure.

By late 2025, the operational focus for institutions moving into digital assets had shifted decisively from blockchain scalability to the far thornier issues of regulatory integration, product development, and the seamless wiring of cryptographic technologies into financial applications. As one analyst put it, 'We can do all the payment stuff cheaper than the current system can do,' but the real bottlenecks now lie in navigating regulatory questions and embedding public-private key infrastructure into a vast array of apps. This evolution is exemplified by projects like DBS and J.P. Morgan’s Kinexys, which are building cross-bank frameworks to enable tokenized deposits to move in real time across both permissioned and public blockchains, bypassing legacy systems like SWIFT and demanding entirely new, interoperable infrastructure.

As institutions scale their digital asset operations, security and risk management have become paramount, driving the adoption of blockchain architectures that prioritize privacy and authorization controls suitable for regulated environments. Franklin Templeton’s expansion of its Benji Technology Platform onto the Canton Network, leveraging the Daml protocol and Private Contract Stores, reflects a broader industry alignment on the need for confidentiality and compliance in cross-market activities. Meanwhile, the transition from legal to technical custody—where banks are now 'fully accountable and responsible for the custody of any digital asset'—has introduced a new discipline, requiring tailored strategies for different asset types, from Bitcoin to tokenized equities, and fueling demand for advanced custody solutions as institutional portfolios are projected to grow from 6% to over 15% digital assets within three years.

The rapid emergence of hybrid TradFi-DeFi models is reshaping market structure, as evidenced by regulated bank money—such as JPMD and DBS tokenized deposits—moving across public blockchain rails and integrating directly with core banking systems. This convergence is further illustrated by high-profile partnerships like Kraken and Deutsche Börse, which aim to bridge traditional securities and digital assets through compliant, institutional-grade infrastructure. However, these advances bring new operational complexities, from managing variable gas fees on Ethereum and Layer 2 networks (necessitating institutions to hold native tokens like ETH for transactions) to navigating the interoperability challenges that come with supporting a diverse array of digital asset types and transaction models.

By early 2026, the institutional finance landscape is marked by a decisive shift away from private permissioned blockchains toward hybrid and public models, with Ethereum and its Layer 2 solutions emerging as foundational infrastructure due to their resilience and regulatory credibility. Major initiatives—such as Euroclear, Euronext, and LSEG’s 24/7 on-chain repo transactions on the Canton Network—demonstrate progress in building always-on, interoperable capital markets infrastructure, while Swift’s shared ledger initiative and BlackRock’s endorsement of Ethereum highlight the industry's drive to unify fragmented compliance and risk management systems. These developments underscore the need for scalable, risk-calibrated, and AI-enhanced operational frameworks that can support the growing complexity and volume of institutional digital asset activity.

The convergence of traditional finance (TradFi) and decentralized finance (DeFi) is fundamentally altering the competitive landscape by introducing a spectrum of programmable digital money forms—stablecoins, tokenized deposits, and CBDCs—each tailored to distinct user segments and risk appetites. As outlined in 2025, stablecoins address the needs of cryptonative users seeking instant, borderless transactions, while tokenized deposits appeal to Fortune 500 companies that value the credit risk profile and service breadth of major banks. This hybridization signals a future where programmable finance and established banking services coexist, reshaping how value is stored, transferred, and managed across the financial ecosystem.