DoorDash to offer stablecoin payouts with Tempo in push toward everyday crypto payments

DoorDash partners with Tempo to offer stablecoin payouts to drivers, joining Stripe and Coastal Bank in deploying stablecoin payment flows on the network. This marks a significant expansion of stablecoin adoption in mainstream gig economy payments.

https://www.theblock.co/post/398270/doordash-to-offer-stablecoin-payouts-with-tempo-in-push-toward-everyday-crypto-payments

Nium and Coinbase partner on global stablecoin settlement

B2B cross-border payments provider Nium teams up with Coinbase to enable USDC stablecoin payments across its platform. The partnership signals growing institutional adoption of stablecoins for international settlement.

https://www.finextra.com/newsarticle/47607/nium-and-coinbase-partner-on-global-stablecoin-settlement

How Mastercard plans to settle card payments with stablecoins

Mastercard is testing stablecoin settlement with SoFiUSD to accelerate card transaction clearing, bridging traditional finance and blockchain infrastructure for institutional payments.

https://cointelegraph.com/news/mastercard-stablecoin-settlement-sofiusd-explained

Three Major Japanese Financial Institutions Tap Canton to Bring Government Bonds On-Chain

Three major Japanese financial institutions are using Canton Network to bring government bonds on-chain, advancing institutional tokenization of sovereign debt securities.

https://thedefiant.io/news/tradfi-and-fintech/japanese-tradfi-firms-tap-canton-to-tokenize-government-bonds

OCBC’s Lion Global launches tokenized physical gold fund on public blockchain

OCBC’s Lion Global launches tokenized physical gold fund on public blockchain, expanding institutional real-world asset tokenization beyond traditional securities.

https://www.ledgerinsights.com/ocbcs-lion-global-launches-tokenized-physical-gold-fund-on-public-blockchain/

Regulation & Policy

OCC Issues Updated Model Risk Management Guidance

OCC issues updated model risk management guidance coordinated with Federal Reserve and FDIC, providing clearer frameworks for banks using AI and advanced analytics in risk assessment.

https://www.occ.gov/news-issuances/news-releases/2026/nr-occ-2026-29.html

Hong Kong allows secondary trading of tokenized products, initially focusing on money market funds

Hong Kong allows secondary trading of tokenized products starting with money market funds, creating regulatory framework for institutional tokenized asset markets.

https://www.thestandard.com.hk/finance/article/329792/Hong-Kong-allows-secondary-trading-of-tokenized-products-initially-focusing-on-money-market-funds

UK sets out plan to integrate payments rules covering stablecoins and tokenized deposits

UK Treasury proposes unifying payment rules for traditional services, stablecoins, and tokenized deposits during Fintech Week. The regulatory framework aims to integrate digital payment methods into existing financial infrastructure.

https://www.theblock.co/post/398244/uk-sets-out-plan-to-integrate-payments-rules-covering-stablecoins-and-tokenized-deposits

US senator urges delay of CLARITY Act Senate markup until May: Report

US Senator Thom Tillis urges delay of CLARITY Act Senate markup until May, citing need for more industry input. The postponement reflects ongoing tensions between banking and crypto sectors over stablecoin regulations.

https://cointelegraph.com/news/us-senator-asks-clarity-senate-markup-pushed-back-april

Research & Analysis

BIS says stablecoins act more like ETFs than money, warns of fragmentation without global rules: report

BIS warns that stablecoins function more like ETFs than actual money and calls for coordinated global regulation to prevent fragmentation across the $300 billion market.

https://www.theblock.co/post/398072/bis-says-stablecoins-act-more-like-etfs-than-money-warns-of-fragmentation-without-global-rules-report

Stablecoins: framing the debate

BIS General Manager Pablo Hernández de Cos addresses stablecoin regulatory challenges at Bank of Japan seminar, emphasizing need for international coordination on digital money frameworks.

https://www.bis.org/speeches/sp260420.htm

Piero Cipollone: Sparking the transformation of finance: tokenization and the role of central banks

ECB Executive Board member Piero Cipollone discusses tokenization’s transformative potential for finance and central banks’ role in shaping digital asset infrastructure.

https://www.ecb.europa.eu//press/key/date/2026/html/ecb.sp260415~868b59bca9.en.html

Stablecoins not a threat to banks in near term: Moody’s analyst

Moody’s analyst concludes stablecoins pose limited near-term threat to traditional banks due to yield restrictions and robust existing payment infrastructure in developed markets.

https://cointelegraph.com/news/stablecoins-not-a-threat-to-banking-sector-in-the-near-term-moody-s

Tokenized Money

Bank of Korea’s new chief vows to push CBDC, deposit tokens; leaves out stablecoins

Bank of Korea’s new Governor Shin Hyun-song prioritizes CBDCs and deposit tokens while notably excluding stablecoins from his inaugural policy address. The stance reflects his previous skeptical position on private stablecoins during his BIS tenure.

https://www.theblock.co/post/398223/bank-of-korea-new-chief-cbdc-deposit-tokens

Hong Kong awards first stablecoin licenses to HSBC and Standard Chartered

Hong Kong awards its first stablecoin licenses to HSBC and Standard Chartered, marking a milestone in the territory’s digital asset regulatory framework. The licenses enable major banks to issue regulated stablecoins in a key Asian financial center.

https://www.elliptic.co/blog/hong-kong-awards-first-stablecoin-licenses-to-hsbc-and-standard-chartered

These are not pilot programs. These are the institutions that run the plumbing of global finance, and they are rebuilding that plumbing on programmable rails.

I think this is the most important thing happening in banking right now, and I think most bank executives are missing it. Because the conversation inside most banks is still about products: should we tokenize bonds? Launch a stablecoin? Offer tokenized deposits? Those are reasonable questions. But they’re the wrong starting point. The starting point should be infrastructure.

The product trap

Anyone who approaches this as ‘which products are suitable for tokenization’ is likely to make a first principle error. I think the right framing is whether blockchain is a baseline infrastructure layer that cuts across the organization. Not a product. A platform.

When FIs treat tokenization as a product question, the pattern is looks very predictable. Someone in the innovation team runs a pilot. They tokenize a bond, or a repo transaction, or a fund share. The pilot works. There’s a press release. And then not much happens, because the pilot was a product, and products need infrastructure to scale, and the infrastructure doesn’t exist inside the institution yet. So the pilot sits in a sandbox, demonstrating what’s possible without changing how the FI actually operates.

That distinction matters for how FIs allocate capital, structure teams, and think about competitive positioning. Pains me to say this as proud product person, but we have to guard against product thinking leading to small budgets in innovation labs, isolated from the core business. If we have the end in mind, then infrastructure thinking leads to multi-year investment in core systems, organizational redesign, and strategic partnerships. One produces demos. The other produces capability.

McKinsey’s base case for tokenized financial assets (excluding stablecoins and CBDCs) is roughly $2 trillion by 2030. BCG’s estimate, using a broader scope that includes tokenized money, is $16 trillion. The gap between those numbers isn’t an analytical disagreement. It’s the difference between counting tokenization products and counting the infrastructure those products run on. The infrastructure number is an order of magnitude larger because infrastructure creates network effects that individual products can’t.

What’s actually being built

The reason I’m writing this now is that the infrastructure layer is forming fast, and I don’t think most bank executives appreciate how much has moved in the last twelve months.

Start with the pipes. DTCC, the backbone of US securities settlement, announced in December 2025 that it will tokenize DTC custodied US Treasury securities on the Canton Network using its ComposerX platform. An MVP is targeted for the first half of 2026, with plans to expand to a broader range of DTC-eligible assets based on client demand. This isn’t a pilot. This is the entity that settles virtually every US equity and fixed-income trade building tokenization into its core infrastructure.

SWIFT, which connects over 11,000 institutions in more than 200 countries, completed a multi-bank tokenized bond settlement trial in January 2026 with BNP Paribas, Intesa Sanpaolo, and SG Forge. It wasn’t a proof of concept. It was the first time SWIFT orchestrated tokenized asset transactions as a single coordinated process using both blockchain and traditional systems. SWIFT is now adding a blockchain based ledger to its infrastructure, designed in collaboration with over 30 banks, initially focused on real-time, 24/7 cross-border payments.

The exchanges are moving too. On March 18, 2026, the SEC approved Nasdaq’s framework for trading tokenized stocks and ETFs on blockchain rails alongside traditional shares. Russell 1000 stocks and major ETFs can now trade and settle as blockchain-based tokens, with the same tickers, prices, and investor rights. Nasdaq tapped Kraken to distribute stock tokens internationally. Six days later, NYSE announced a partnership with Securitize to build a 24/7 digital trading platform for tokenized equities, ETFs, and fixed income, with a pilot targeted for Q3 2026.

Goldman Sachs is spinning out its tokenization platform, GS DAP, as an independent company by mid 2026. The reasoning is telling: having the platform on Goldman’s balance sheet made it hard to get broad institutional adoption. Other banks didn’t want to run their infrastructure on a competitor’s platform. Making it independent and industry-owned removes that barrier. Tradeweb became the first strategic partner, integrating its trading and liquidity capabilities across fixed income. GS DAP runs on the Canton Network, which now supports over $6 trillion in on-chain assets across 600 institutions.

BNY, the world’s largest custodian with nearly $58 trillion in assets under custody, launched tokenized deposits in early 2026 for collateral and margin workflows. But the bigger story is how Carolyn Weinberg described their approach: mapping every post-trade step end-to-end and asking what can be reimagined. Not “which product should we tokenize?” but “how does the entire post-trade process work differently on programmable rails?”

That’s infrastructure thinking. And it’s happening at the institutions that move markets.

The network economics

Here’s why I think the product vs infrastructure distinction matters so much economically.

Products compete on features. A tokenized bond competes with other bonds on yield, credit quality, and liquidity. If your tokenized bond is slightly better than the next one, you get a slightly bigger market share. The economics are linear.

Infrastructure creates network effects. A shared settlement layer becomes more valuable as more participants join. A common tokenization standard becomes more useful as more assets conform to it. A coordinated compliance framework becomes more efficient as more institutions adopt it. The economics are exponential. That’s a fundamentally different business case, and it requires a fundamentally different investment thesis.

Look at what’s forming. The Canton Network connects 600 institutions with built in privacy controls and cross-ledger interoperability. The Cari Network (KeyBank, Huntington, First Horizon, M&T, Old National) is building tokenized deposit infrastructure on ZKsync anchored to Ethereum. The IBAT consortium is creating a shared network for community banks in Texas. Custodia and Vantage’s tokenized deposit infrastructure is being adopted by 600 banks through the Participate network. These aren’t really product launches. They’re infrastructure buildouts where the value comes from the network, not any single node.

The analogy I find myself coming back to is Visa. In 1958, Bank of America launched BankAmericard as a product, a single bank’s credit card mailed to 65,000 people in Fresno. It was a product for eight years. Then in 1966, BofA started licensing it to other banks. By 1970, the issuing banks took over entirely, forming a member owned consortium that Bank of America no longer controlled. It was rebranded as Visa in 1976. The product became infrastructure, and the infrastructure became the most valuable payments network on earth. No single bank could have built that alone. But once the shared rails existed, every bank that plugged in could offer its own products on top: credit cards, debit cards, rewards, corporate cards. The products differentiated. The infrastructure was shared.

Goldman spinning out GS DAP follows the same logic. A single bank’s tokenization platform, made independent and industry owned so it can become shared infrastructure. The Cari Network, the IBAT consortium, all of them are similar pattern of banks recognizing that the value is in the network, not any single node.

The banks still asking which product to tokenize are thinking about the card. The ones building shared infrastructure are thinking about the network.

The interoperability imperative

This is where I think the infrastructure argument gets most urgent, because the biggest risk in the current buildout is fragmentation.

Right now, tokenized assets live on different blockchains with different standards, different compliance frameworks, and different settlement mechanisms. A tokenized Treasury on Canton can’t easily interact with a tokenized deposit on Ethereum, which can’t easily settle against a stablecoin on Solana. That fragmentation is fine for pilots and proofs of concept. It’s a disaster for infrastructure.

SWIFT seems to understand this. Its interoperability trials weren’t about building a single blockchain. They were about connecting different blockchains through a common coordination layer, so that a bank using one network can transact with a bank using another. The January 2026 trial demonstrated exactly this: seamless exchange and settlement of tokenized bonds across blockchain platforms and traditional systems.

Canton’s architecture works the same way. It’s designed as a “network of networks” where institutions operate independent but interoperable ledgers. Each institution keeps its own data private. The Global Synchronizer enables atomic transactions across applications without sacrificing confidentiality. That’s why DTCC chose it for Treasury tokenization: it preserves the privacy and control that regulated institutions require while enabling the composability that makes programmable settlement useful.

The lesson here is that infrastructure without interoperability is just a more expensive silo. Banks that build tokenization capability in isolation, on proprietary systems that don’t connect to the broader ecosystem, will find themselves with a product, not a platform. And in a networked world, products that don’t connect become dead ends.

Treasury as the proving ground

I’ve written before about how programmable settlement changes the economic character of deposits. But treasury is where infrastructure thinking meets real money in the most immediate way.

Think about what corporate treasury looks like today. Cash sits in bank accounts earning whatever the bank offers, or in money market funds that settle T+1 or T+2. Collateral is managed through manual processes with end-of-day reconciliation. Intraday liquidity is expensive and hard to optimize because the systems that manage it are slow. FX settlement still carries Herstatt risk for cross-timezone trades. Repo markets close on weekends.

Now think about what treasury looks like on programmable infrastructure. Cash is a token that can be moved instantly, 24/7, to wherever it generates the highest risk-adjusted return. Collateral management is automated through smart contracts that rebalance positions in real time based on predefined rules. Intraday liquidity is optimized continuously because the infrastructure never stops. FX settlement is atomic, eliminating counterparty risk. Repo can happen at 2am on a Sunday.

Someone at Alpha Point made this case directly at the recent American Banker On-Chain event

“This is not about incremental efficiency. This is a substantial change on the balance sheet.”

They’re right. This isn’t 5% cost savings on post trade processing. This is a structural change in how treasury generates and deploys capital.

The tokenized Treasury market is now over $11 billion, up from $3.9 billion at the start of 2025. Circle’s USYC has overtaken BlackRock’s BUIDL as the largest tokenized Treasury product at $2.2 billion. Goldman announced 24/7 tokenized Treasury bond trading. DTCC is tokenizing DTC custodied Treasuries. The infrastructure for programmable treasury isn’t theoretical. It’s being built, and the banks that connect to it first will have a structural advantage in how they manage their own balance sheets and serve their institutional clients.

What this means for bank boards

I want to be specific about what infrastructure thinking actually changes at the decision making level, because this is where I see the biggest disconnect.

When a bank treats tokenization as a product, the budget sits with a business line. It’s measured on product P&L. It competes for funding against other product initiatives. The team is small, often in an innovation lab, and the rest of the bank doesn’t need to change how it operates. The board hears an update once a quarter and nods politely.

When a bank treats tokenization as infrastructure, the investment is actually enterprise wide. It touches technology, operations, compliance, treasury, custody, and client servicing. It requires organizational change with either a dedicated unit like JPMorgan’s Kinexys or U.S. Bank’s Digital Assets and Money Movement group, or a consortium model like Cari Network, or a strategic partnership with an infrastructure provider like Stablecore. The board isn’t hearing an update. The board is making a multi-year capital allocation decision about the bank’s operating model.

That’s a harder conversation. It requires more conviction, more coordination, and more willingness to invest before the returns are fully visible. But it’s the right conversation, because the infrastructure being built right now will determine which banks are at the center of the financial system in 2030 and which are at the periphery.

Global banking IT spending is projected to exceed $760 billion in 2025, rising at 9% annually. Seven in ten banks plan to increase infrastructure spending. I don’t doubt that banks are willing to invest in technology. I think the challenge is directing that investment in the right layer. Another core banking modernization that preserves the existing architecture is a product investment. Connecting to the programmable settlement infrastructure that DTCC, SWIFT, the exchanges, and the major custodians are building is an infrastructure investment. One maintains the status quo. The other positions the bank for what’s coming.

The banks building pipes

I’ve been writing about programmable money for a while now, and the thing that strikes me most about where we are in early 2026 is how fast the conversation has shifted from “should we?” to “how do we?” The regulatory environment is favorable. The technology works. The business case is clear.

But the execution models that are succeeding aren’t the ones chasing tokenization products. They’re the ones building, or connecting to, infrastructure. BNY mapping post trade end to end. Goldman making GS DAP industry neutral. DTCC putting Treasuries on Canton. SWIFT adding a blockchain ledger. Five regional banks forming Cari Network. The pattern is infrastructure first, products on top.

Every major technology transition in banking has followed this sequence. ATMs started as a product (cash dispensing) and became infrastructure (a shared network that changed how banks distributed services). Electronic trading started as a product (screen based execution) and became infrastructure (the backbone of modern capital markets). Internet banking started as a product (check your balance online) and became infrastructure (the platform for everything from payments to lending to wealth management). In every case, the banks that built or connected to the infrastructure early captured disproportionate value. The ones that treated the new technology as just another product offering lost ground to those that understood the shift.

Programmable money is following the same pattern. The product phase (tokenize a bond, run a pilot, issue a press release) is likely winding down. The infrastructure phase (rebuild the pipes, connect to shared networks, redesign operations) will start accelerating.

The question for every bank board is simple really: are you building products, or are you building pipes? Because in five years, the answer to that question will be obvious. And for some banks, it will probably be too late to change it.

References

Tokenization market size and projections

• McKinsey Estimates Tokenization Will Be Less Than $2 Trillion by 2030 — Ledger Insights

• Tokenized Funds: The Third Revolution in Asset Management Decoded — BCG

• Circle Overtakes BlackRock in Tokenized Treasuries as Market Hits Record $11 Billion — CoinDesk

• Tokenized U.S. Treasuries Hit $7.3B in 2025 — Yellow

DTCC and Canton Network

• DTCC and Digital Asset Partner to Tokenize DTC-Custodied U.S. Treasury Securities on the Canton Network — Canton Network

• DTCC, Canton, and the Next Phase of Tokenized Market Infrastructure — TRM Labs

• Wall Street Heavyweights Back Builder of Canton, a Network That Supports $6T On-Chain Assets — CoinDesk

• Digital Asset and Industry Working Group Complete Groundbreaking On-Chain US Treasury Financing on Canton Network — Tradeweb

SWIFT tokenization and interoperability

• SWIFT Completes Multi-Bank Tokenized Bond Settlement Trial — CCN

• Swift Takes Bold Steps to Unlock the Benefits of Digital Finance on a Global Scale — SWIFT

• Swift Completes Tokenized Asset Trial With BNP Paribas — PYMNTS

Exchange infrastructure

• SEC Approves Nasdaq’s Move to Allow Tokenized Securities Trading — CoinDesk

• Nasdaq Partners With Kraken to Distribute Tokenized Stocks Globally — CoinDesk

• NYSE Taps Securitize to Build Its 24/7 Tokenized Stock Trading Platform — Unchained

Goldman Sachs GS DAP

• Goldman Sachs Digital Assets to Spin-Out Technology Platform GS DAP — Goldman Sachs

• Goldman Sachs Focuses on Spinning Out Tokenization Platform — Markets Media

• Goldman Sachs Announces 24/7 Tokenized U.S. Treasury Bond Trading — AInvest

BNY digital assets

• BNY Launches Tokenized Deposits in Digital Assets Expansion — Bloomberg

• BNY Expands Digital Asset Platform with Launch of Innovative On-Chain Offering — BNY

• Financial System Modernization Trends and Insights 2026 — BNY

Bank infrastructure consortiums

• U.S. Regional Banks Building Tokenized Deposit Network on ZKsync (Cari Network) — CoinDesk

• Custodia’s Tokenized Deposit to Be Used in 600-Bank Network — American Banker

• IBAT Leads Push for Stablecoins and Tokenized Deposits — IBAT

Banking IT spending

• 70% of Banks Report Technology Infrastructure Spend to Increase in 2025 — Tech Channels

• Tech in Banking 2025: Transformation Starts with Smarter Tech Investment — BCG

• The State of Banking Technology in 2026: Why This Year Is Different — CCG Catalyst

Societe Generale unit adds MiCA-compliant stablecoin to MetaMask

Societe Generale’s digital unit integrated its MiCA-compliant USD stablecoin into MetaMask, expanding distribution to millions of crypto wallet users in one of the largest bank-backed digital currency initiatives to date.

https://www.theblock.co/post/397490/societe-generale-adds-stablecoin-metamask

Ripple, Kyobo Life Insurance partner to enable tokenized government bond settlement in South Korea

Ripple partnered with South Korea’s Kyobo Life Insurance to pilot tokenized government bond settlement, potentially reducing settlement cycles from two days to near real-time using blockchain infrastructure.

https://www.theblock.co/post/397491/ripple-kyobo-life-insurance

Major European SIX Group stock exchanges feeding data to Chainlink

SIX Group’s Swiss and Spanish stock exchanges began feeding equities market data on-chain via Chainlink, providing institutional-grade market data infrastructure for tokenized asset applications.

https://www.theblock.co/post/397450/major-european-six-group-stock-exchanges-feeding-data-to-chainlink

Visa deepens blockchain push with Tempo validator node launch

Visa launched a validator node on the Tempo blockchain to directly participate in transaction validation, deepening its infrastructure commitment to stablecoin settlement networks.

https://cointelegraph.com/news/visa-launches-validator-node-on-tempo-network-deepening-push-into-stablecoin-infrastructure

Regulation & Policy

Crypto, banks continue Senate bill spat with new proposal concerns: Report

Senator Thom Tillis plans to release draft language this week resolving the stablecoin yield dispute in the CLARITY Act, as both crypto firms and banks resist compromise proposals despite White House pressure.

https://cointelegraph.com/news/crypto-banks-continue-senate-bill-spat-with-new-proposal-concerns-report

Virginia updates law to hold unclaimed crypto in-kind for at least one year

Virginia enacted legislation requiring the state to hold unclaimed digital assets in their original form for at least one year before liquidation, providing stronger protections for dormant crypto holdings.

https://cointelegraph.com/news/virginia-updates-law-in-kind-crypto-custody-delay-liquidation-one-year

JPMorgan CFO warns stablecoins risk becoming ‘regulatory arbitrage’ play

JPMorgan’s CFO warned that stablecoin yield products risk becoming “regulatory arbitrage” vehicles that could undermine traditional banking regulations and deposit protections.

https://www.coindesk.com/business/2026/04/14/jpmorgan-cfo-warns-stablecoins-risk-becoming-regulatory-arbitrage-play

Research & Analysis

Michael S Barr: Brief remarks on stablecoins

Federal Reserve Vice Chair Michael Barr delivered key remarks on stablecoin risks and regulatory implementation challenges under the GENIUS Act, emphasizing the importance of proper oversight frameworks.

https://www.bis.org/review/r260408b.htm

Piero Cipollone: The digital euro - preparing for a potential launch

ECB Executive Board member Piero Cipollone outlined preparations for a potential digital euro launch, addressing implementation challenges and design considerations for the central bank digital currency.

https://www.bis.org/review/r260407e.htm

Tokenized Money

Bank of Korea governor nominee positive about won-denominated stablecoins

South Korea’s Bank of Korea governor nominee expressed support for won-denominated stablecoins, signaling potential regulatory openness to local currency digital assets alongside CBDC development.

https://www.reuters.com/world/asia-pacific/bank-korea-governor-nominee-positive-about-won-denominated-stablecoins-2026-04-14/

Those aren’t statistics about programmable money. They’re statistics about banks trying to do anything new. And programmable money is harder than most things banks have tried, because it touches payments, custody, settlement, compliance, treasury, client servicing, and risk management all at once. It’s not a product launch. It’s an operating model change.

The industry consensus right now is that the remaining barriers to programmable money are regulatory and technological. I think that’s wrong. Regulation is the most favorable in memory. The GENIUS Act is law, signed in July 2025, with the OCC already issuing proposed rules to implement it. The OCC has published multiple interpretive letters through the year confirming that banks can custody digital assets, execute transactions, participate in blockchain networks, and pay gas fees. The Basel Committee published third-party risk principles in December 2025. The technology providers are lining up.

The real barrier is execution. The actual operational capability to run programmable money safely inside existing constraints. I’ve spent the last 25 years watching the gap between strategy and implementation kill good ideas in banking. Not because the strategy was wrong. Not because the technology didn’t work. Because the organization, its processes and systems and culture, couldn’t absorb the change fast enough to make it real. And I think programmable money may be the widest version of that gap we’ve seen.

Where execution breaks down

Start with the systems. Over 75 percent of IT budgets at financial institutions go to maintaining what already exists. Celent’s 2025 data on corporate banking IT tells the same story: the vast majority of spend is mandatory, keeping the lights on or regulatory, and the share available for innovation is shrinking even as total IT spending rises.

The depth of the problem is easy to underestimate. Core banking systems are built on assumptions that programmable money violates. Batch processing cycles. End of day reconciliation. T+1 or T+2 settlement assumptions baked into ledger architecture. Currency fields that only accept three-letter ISO codes. At a recent conference, a bank exec from TD told a story about a corporate client asking how to define USDC in their ERP system. Nobody knew. The system wasn’t designed for a digital asset that isn’t a currency, isn’t a security, and doesn’t fit any existing classification.

That’s not a problem you solve with an API. It’s a data architecture problem, an accounting classification problem, and a process redesign problem, all rippling outward at once. How do you reconcile an onchain transaction with an offchain ledger? How do you account for a tokenized deposit that exists simultaneously as a bank liability and a blockchain token? How do you report it to regulators who haven’t standardized the format?

The banks making progress are mostly building alongside their legacy systems rather than trying to transform them. Sidecar architectures, middleware layers, separate digital asset platforms that connect back to the core through adapters. IDC projects that by 2028, 70 to 80 percent of banks will pursue sidecar strategies rather than core replacement. That’s pragmatic. It also tells you how deep the legacy problem runs.

Then there’s compliance. Banks in the US and Canada spend over $60 billion a year on AML compliance alone. The average bank allocates roughly $64 million annually to KYC and AML processes. Regulatory penalties for financial institutions totaled $3.8 billion in 2025. Every new activity, every new rail, every new asset type has to be integrated into a compliance infrastructure that is already stretched, already expensive, and already under scrutiny.

Now layer on programmable money. Stablecoins move 24/7 across borders in seconds. Tokenized deposits can transfer peer-to-peer on public blockchains. Smart contracts can execute transactions without anyone in the loop. Transaction monitoring needs to be real-time, not batch. Sanctions screening needs to happen before settlement, not after. Customer due diligence needs to account for wallet addresses, on-chain identities, and counterparties that may not exist in any traditional database.

Blockchain actually provides a better compliance substrate in certain respects. Every transaction is visible, timestamped, and immutable. Firms like Chainalysis and Elliptic can trace the entire history of a wallet. Programmable compliance, where sanctions screening and transfer restrictions are embedded directly in token contracts, is a growing capability. But getting there requires compliance staff who understand on-chain analytics, technology that can screen blockchain transactions in real time, and policies for questions that don’t have settled answers yet. What counts as a suspicious transaction on a blockchain? When does a wallet address trigger an OFAC obligation? How do you file a SAR for a smart contract interaction? This is solvable, and it’s being solved. But it isn’t free and it isn’t fast, and any bank that underestimates the compliance execution burden is going to have a bad conversation with their examiner.

The operational challenge that probably gets the least attention, though, is time. Programmable money doesn’t sleep. Blockchains run around the clock. Stablecoins settle at 3am on Sunday. Tokenized Treasury funds offer instant redemption day and night. I’ve written about how this changes the economic character of deposits. It also changes the operational character of a bank.

Banks are not built for always on. Settlement systems run during business hours. Treasury desks operate in shifts aligned with market hours. Risk monitoring has overnight gaps. IT maintenance windows assume downtime.

We already have a proof point for how hard this transition is. FedNow launched in July 2023 to enable real-time payments around the clock. Two years later, more than 1,500 financial institutions have joined, reaching about 40 percent of US demand deposit accounts, but still a fraction of roughly 10,000 eligible institutions. Most can only receive instant payments, not send them. Transaction volumes are growing fast ($245 billion in Q2 2025, up from $492 million a year earlier), but operational adoption is lagging well behind the technology.

And FedNow is just real-time payments. Programmable money goes further. If a bank offers tokenized deposits redeemable around the clock, it needs 24/7 liquidity management. If it participates in tokenized Treasury settlement, it needs 24/7 risk monitoring. If a corporate client’s smart contract triggers a payment at 2am Saturday, someone or something needs to be there to make sure it settles correctly, the AML screening happened, the liquidity was available, and the reconciliation is clean.

The T+1 settlement shift in May 2024 offered a preview. The industry prepared for months, and affirmation rates rose from 73 percent to 95 percent ahead of the deadline. But the preparation was enormous, and that was just compressing from T+2 to T+1, during business hours, for a well-understood asset class. Moving to around the clock settlement for tokenized assets is harder by an order of magnitude. The operational investment required is larger than most strategy presentations acknowledge.

All of this is downstream, though, of what I think is the binding constraint: talent. Sixty percent of Fortune 500 companies are now working on blockchain initiatives, according to Coinbase’s 2025 State of Crypto report. They’re all competing for the same small pool of people.

The gap isn’t blockchain developers. Banks can hire those, or partner with firms that have them. The gap is people who understand both worlds. People who can read a Solidity contract and a Basel III capital requirement and understand how they interact. Who can design a smart contract governance framework that satisfies the CTO and the chief risk officer. Who can translate between the language of DeFi and the language of bank regulation.

This talent barely exists because the two industries were built by people who chose opposite sides of a wall. Crypto attracted people who deliberately left traditional finance. Banking was built by people who have never deployed code to a blockchain. The intersection, where all the hardest execution decisions live, is tiny.

Rachel from Anchorage Digital made this point at the recent American Banker’s on-chain conference:

“If you want to move fast, partner with a digital native company and figure out where you want to build internally from there.”

That’s practical advice. But even with a partner, the bank needs internal capability to manage the partnership, evaluate the technology, understand the risks, and make governance decisions. You can outsource the engineering. You can’t outsource the judgment.

And then there’s the problem nobody wants to talk about: the org chart. Programmable money touches payments, treasury, custody, compliance, risk, technology, and client servicing simultaneously. In most banks, those are separate departments with separate budgets, separate leadership, separate incentives, and separate regulatory responsibilities. Getting them to work together on a shared initiative is a coordination problem that makes the technology look simple.

This is why U.S. Bank created a new organizational unit, Digital Assets and Money Movement, reporting to the chief digital officer. It’s why JPMorgan built Kinexys as a dedicated business unit with its own P&L spanning payments, assets, and data. It’s why Carolyn Weinberg at BNY described mapping every post-trade step end to end and reimagining it holistically, rather than letting each department optimize its piece.

Those are structural answers to a structural problem. But most banks, and especially mid-size and community banks, can’t create dedicated digital asset divisions. They have to execute within their existing structure, which means navigating crossvdepartmental politics, competing budget priorities, and leaders who see programmable money as someone else’s problem.

Anyone who approaches this as ‘which products are suitable for tokenization’ is likely to make a first principle error. The right framing is infrastructure, not product. But infrastructure projects require enterprise wide buy in. They require an executive sponsor who can force coordination across departments. They require, to be direct, power.

What’s actually working

I’ve painted a bit of a rough picture, and I want to be clear that banks are executing. Dozens of institutions are live or launching in 2026. This less about whether execution is possible, it’s more about which models work.

From what I can see, three are producing results.

The first is the dedicated unit. JPMorgan’s Kinexys, U.S. Bank’s Digital Assets and Money Movement organization, BNY’s Digital Asset Platform. These create protected space with dedicated leadership, budget, and talent, while maintaining integration points back to the core. This works for large institutions that can afford it. It doesn’t scale down.

The second is the consortium. The Cari Network (KeyBank, Huntington, First Horizon, M&T, Old National), the IBAT community bank consortium, the Texas Bankers Association pilot program, Custodia and Vantage’s integration with the 600 bank Participate network. These pool the execution burden across institutions, sharing infrastructure, compliance frameworks, and operational learning. This is particularly promising for community banks because it gives them access to capabilities they could never build alone.

The third is the partner model. Stablecore pre-integrating digital asset rails into core banking platforms. Anchorage offering white label stablecoin issuance. IO Builders providing tokenization middleware. TruStage building a credit union stablecoin. These let banks adopt programmable money without building deep internal engineering capability. They treat blockchain infrastructure the way banks already treat card processing or payments networks: as something they consume, not build.

Each approach has trade offs. Dedicated units require real investment and can become islands. Consortiums require governance across institutions with different priorities. Partner models create dependencies on third parties, which is exactly what the Basel Committee’s December 2025 principles were designed to address.

But they share something: they scope the problem to something manageable. None of them try to transform the entire bank at once. They pick a use case, build the operational muscle, and expand from there. Crawl, walk, run.

What this means

I’ve been arguing that programmable settlement is poised to reshape bank economics in ways that are structural, not cyclical. The settlement friction subsidy is eroding. Governance over programmable money is hard but tractable. Banks are moving, and the regulatory environment is supportive.

But here’s the thing about execution gaps: they don’t just slow things down. They sort the market. The banks that build operational capability early will be the ones that own the infrastructure layer for programmable money. The ones that wait for perfect conditions will find themselves consuming someone else’s rails, paying someone else’s fees, and depending on someone else’s compliance stack.

That’s the pattern we saw with card processing, with payments networks, with cloud infrastructure. The institutions that built operational capability around the infrastructure became the platforms. Everyone else became the customers.

The programmable money execution gap isn’t just a risk to manage. It’s the mechanism by which the next layer of financial infrastructure will get divided up. The banks that solve the execution problem won’t just survive the transition. They’ll own a piece of the plumbing. The ones that don’t will rent it.

That’s really not a technology question. It’s a power question. And I’m sure it’s being answered right now, by whoever is building operational capability while everyone else is still refining their strategy decks.

References

Bank digital transformation and productivity

• Why Most Digital Banking Transformations Fail — McKinsey

• How Banks Can Supercharge Technology Speed and Productivity — McKinsey

• Digital Banking: Speed, Scale, and the Agentic Arms Race — McKinsey

• Accenture Banking Top 10 Trends 2025

• Digital Transformation Failure Rate 2025 — MeltingSpot

Legacy systems and IT spending

• The True Cost of Legacy Systems: Banking IT Modernisation — Digital Bank Expert

• Core Banking Systems: How Legacy Systems Hold Banks Back — SBS

• Financial Institutions Face Rising IT Budgets — Celent (Retail Banker International)

• 10 Key Areas For Successful Core Banking Modernization — Oliver Wyman

Compliance costs and regulatory fines

• How Much Do Banks Spend on Compliance? 2025 Trends — Fourthline

• The Real Cost of AML Compliance — Lucinity

• Regulatory Penalties for Financial Institutions Skyrocket 417% in H1 2025 — Fenergo

• Global Financial Regulatory Penalties Fall 18% in 2025 — Fenergo

24/7 settlement and real-time payments

• FedNow Service: Two Years of Growth and Innovation — Federal Reserve

• Instant Payments Are a 2025 Priority for Financial Institutions — BAI

• FedNow Reaches 1,500 Banks as Instant Payments Grow — The Financial Brand

• Going Too Fast? Managing Instant Payment Risks — Federal Reserve Community Banking Connections

• Stablecoins Are Redefining Settlement. Are Banks Ready? — Red Compass Labs

T+1 settlement transition

• Securities Operations: Shortening the Standard Settlement Cycle — OCC

• T+1 Settlement: All You Need to Know — J.P. Morgan

• The Cross-Border Implications of T+1 Settlement — TD Securities

Blockchain talent and hiring

• Blockchain Talent Guide 2025: Trends, Skills & Salaries — Blockchain Staffing Ninja

• Crypto and Blockchain Jobs in 2026: Salaries, Compliance, and Hiring Trends — Fintech Careers

• Web3 Hiring Trends January 2026: The Talent Rush — CryptoRecruit

• Talent Shortage in the Blockchain and Crypto Industry — Priority Crypto

ERP and treasury integration

• How Stablecoins Could Fix the ERP-Bank Reconciliation Gap — Trovata

• Implementing Stablecoin Transactions in SAP ERP — JOWUA

• What Treasury and Payments Professionals Need to Know About Stablecoins After the GENIUS Act — AFP

Institutional execution models

• Kinexys — Bank-Led Blockchain Solutions — J.P. Morgan

• U.S. Bank Establishes New Digital Assets and Money Movement Organization — U.S. Bancorp

• How Banks Are Building Finance’s Digital Asset Backbone — Fintech Futures (Sibos 2025)

• U.S. Regional Banks Building Tokenized Deposit Network on ZKsync (Cari Network) — CoinDesk

• How Stablecore Is Pulling U.S. Community Banks onto Blockchain Rails — Disruption Banking

Former SEC, JPMorgan exec Brett Redfearn joins Securitize as president

Former SEC and JPMorgan executive Brett Redfearn joined Securitize as president, bringing regulatory expertise to the tokenization firm that controls roughly 70% of the U.S. market and works with BlackRock and Apollo. This appointment signals institutional confidence in tokenized securities infrastructure.

https://www.theblock.co/post/396875/former-sec-jpmorgan-exec-brett-redfearn-joins-securitize

Swiss banks to test possible uses for Swiss franc stablecoin

UBS partnered with five major Swiss banks to test use cases for a Swiss franc-pegged stablecoin in a regulatory sandbox, exploring blockchain-based settlement for traditional banking operations. This initiative demonstrates major European banks’ commitment to digital currency experimentation.

https://www.reuters.com/business/finance/swiss-banks-test-use-cases-swiss-franc-stablecoin-2026-04-08/

Circle Rolls Out Full Stack Stablecoin Settlement Platform for Banks and Payment Firms

Circle launched its CPN Managed Payments platform, allowing banks and payment firms to offer stablecoin settlement without directly managing digital assets infrastructure. This full stack solution addresses a key barrier to traditional finance adoption of blockchain based payments.

https://finance.yahoo.com/markets/crypto/articles/circle-rolls-full-stack-stablecoin-183300070.html

Regulation & Policy

Treasury Proposes Rule to Implement the GENIUS Act’s Requirements to Counter Illicit Finance

Treasury’s FinCEN proposed anti-money laundering rules for stablecoin issuers under the GENIUS Act, requiring bank-like compliance programs including transaction monitoring and blocking capabilities. This represents a major step toward comprehensive federal stablecoin regulation.

https://home.treasury.gov/news/press-releases/sb0435

Dubai clarifies token issuance rules for RWAs and stablecoins

Dubai’s financial regulator issued detailed guidance categorizing token launches into three buckets, with heightened disclosure and governance standards for stablecoins and real-world assets. This clarifies regulatory expectations for digital asset issuers in the emirate.

https://cointelegraph.com/news/dubai-vara-clarifies-token-issuance-rules

White House says stablecoin yield won’t hurt bank deposits

The White House Council of Economic Advisers concluded that banning stablecoin yield products would boost community bank lending by only 0.02%, undermining banking industry arguments against stablecoin competition. This analysis strengthens the case for allowing yield-bearing stablecoins.

https://www.whitehouse.gov/research/2026/04/effects-of-stablecoin-yield-prohibition-on-bank-lending/

Research & Analysis

FEDS Note: Stablecoins in 2025: Developments and Financial Stability Implications

Federal Reserve economists published analysis showing stablecoins grew 50% in market capitalization during 2025, with increased transaction volume and DeFi usage raising financial stability questions. The research examines implications for monetary policy and banking system stability.

https://www.federalreserve.gov/econres/notes/feds-notes/stablecoins-in-2025-developments-and-financial-stability-implications-20260408.html

Denis Beau: Stablecoins - what strategic choices for Europe?

Bank of France Deputy Governor Denis Beau outlined strategic choices for Europe’s stablecoin regulatory approach, emphasizing the need for clear frameworks that balance innovation with financial stability. His remarks signal continued European focus on comprehensive digital currency oversight.

https://www.bis.org/review/r260331b.htm

Stablecoin Trading Volume Could Skyrocket to $1.5 Quadrillion by 2035: Chainalysis

Chainalysis projects stablecoin trading volume could reach $1.5 quadrillion by 2035, driven by generational wealth transfer and point-of-sale adoption that could eclipse traditional payment networks. This forecast highlights stablecoins’ potential to fundamentally reshape global payments infrastructure.

https://decrypt.co/363685/stablecoin-trading-volume-skyrocket-1-5-quadrillion-2035-chainalysis

JPMorgan’s Jamie Dimon sees ‘new competitors’ from blockchain, stablecoins

JPMorgan CEO Jamie Dimon warns in his annual shareholder letter that new blockchain and stablecoin competitors are reshaping finance as the bank scales its own network.

https://www.jpmorganchase.com/ir/annual-report/2025/ar-ceo-letters

BitGo Prime Launches Financing Offering

BitGo Prime launches unified financing offering providing institutional clients with collateralized borrowing and lending capabilities integrated within its digital asset platform.

https://www.crowdfundinsider.com/2026/04/271045-bitgo-prime-launches-financing-offering

Tokenized Stocks Take Next Step With First On-Chain Vote for Galaxy Shareholders

Galaxy shareholders will participate in the first on-chain proxy voting for tokenized shares via Broadridge’s new blockchain-enabled corporate governance platform.

https://decrypt.co/363432/tokenized-stocks-first-on-chain-vote-galaxy-shareholders

Figure Technology’s tokenized credit platform could help double stock price: Bernstein

Bernstein suggests Figure Technology’s tokenized credit platform could double the company’s stock price as loan volumes surge despite recent market volatility.

https://cointelegraph.com/news/figure-stock-bernstein-loan-growth-tokenization-outlook

Research & Analysis

IMF charts cautious tokenization path amid US permissionless push

IMF’s Financial Counsellor publishes a note arguing tokenization represents a fundamental reconfiguration of trust, settlement and risk management in finance, not merely a technology upgrade.

https://www.ledgerinsights.com/imf-charts-cautious-tokenization-path-amid-us-permissionless-push

Who owns crypto in the euro area? Drivers of crypto adoption, payment use, and its interaction with fiat cash

ECB survey of 39,507 adults across 17 euro-area countries finds crypto-asset owners are typically younger, male, and financially active, with mixed preferences for both privacy and speed in payments.

https://www.ecb.europa.eu//pub/pdf/scpwps/ecb.wp3215~2034b1e0ae.en.pdf

Tokenized Money

Polymarket to Launch Stablecoin, Order Book Overhaul in Prediction Market Upgrade

Polymarket announces major platform overhaul including launch of its own stablecoin and rebuilt order book infrastructure to improve user experience and reduce external dependencies.

https://decrypt.co/363437/polymarket-launch-stablecoin-prediction-market-upgrade

Argentine banks testing JPMorgan’s JPM Coin to speed up settlements: Report

Argentine banks are testing JPMorgan’s JPM Coin to accelerate cross-border settlement times, marking expansion of the bank’s tokenized deposit solution in Latin America.

https://www.tradingview.com/news/cointelegraph:a80eca0af094b:0-argentine-banks-testing-jpmorgan-s-jpm-coin-to-speed-up-settlements-report/

LG CNS to lead next phase of Bank of Korea’s digital currency initiative

LG CNS selected to lead the next phase of Bank of Korea’s Project Hangang digital currency initiative, advancing the central bank’s tokenized deposit testing program.

https://www.koreatimes.co.kr/amp/business/companies/20260406/lg-cns-to-lead-next-phase-of-bank-of-koreas-digital-currency-initiative

I think that’s right. But I also think there’s a conversation that’s probably not happening loudly enough, and it’s the one that matters most for banks entering this space: governance.

Not governance in the abstract sense, not “we need another committee.” Governance in the operational sense: who controls the logic that moves money? Who can change it? What happens when it breaks? What does “it broke” even mean when the code executed exactly as written, but the outcome wasn’t what anyone intended?

In my experience, when banks get this wrong, it’s not the technology that fails. It’s the governance around the technology.

When policy lives in code

I don’t think the industry has fully internalized the shift that programmable money introduces.

In traditional banking, policy lives in documents. A lending policy says “don’t extend credit beyond X.” A treasury policy says “maintain liquidity reserves of Y.” A compliance policy says “file a SAR when you see Z.” Humans interpret these policies, apply judgment, and execute decisions. The gap between policy and execution is filled by people.

In a programmable system, policy lives in code. A smart contract doesn’t interpret a lending threshold, it enforces it. A tokenized deposit doesn’t wait for a treasury desk to assess liquidity, the redemption logic is baked into the contract. A compliance rule embedded in a token’s transfer function doesn’t require a human to flag a suspicious transaction, it either permits the transfer or it doesn’t.

This is powerful. It removes human error, compresses execution time, and creates an auditable record of every action. Of course, that’s the upside everyone talks about.

The downside is that the code becomes the single point of truth. If the logic is wrong, the system doesn’t produce a memo flagging the error for senior review. It executes the wrong thing, immediately, at scale, with finality.

Funny thing is that this isn’t hypothetical. The crypto ecosystem has spent the last five years producing an extraordinary, and extraordinarily expensive, dataset on what happens when programmable logic operates without adequate governance.

The $3.4 billion dataset

In 2025, crypto hacks and exploits resulted in over $3.4 billion in losses, according to Chainalysis, slightly above the $3.3 billion lost in 2024. A single incident, the Bybit breach in February 2025, accounted for $1.5 billion of that total. The FBI attributed it to North Korea’s Lazarus Group. They didn’t exploit a smart contract vulnerability in the traditional sense. They compromised the transaction approval process, the governance layer, by injecting malicious code into the signing interface of Safe{Wallet}, a widely used multi-signature wallet. The signers saw one thing on their screens. The contract executed another.

Multi-sig wallets exist specifically as a governance control, requiring multiple independent approvals before funds move. The technology worked exactly as designed. The governance around it, how signers verified what they were approving, failed completely. $1.5 billion moved in a single transaction because the human verification process was compromised while the cryptographic verification process was technically sound.

The Bybit hack is the most dramatic example, but it’s far from the only one. Halborn’s Top 100 DeFi Hacks report found that off-chain attacks, meaning compromised accounts, phished credentials, manipulated interfaces, accounted for 80.5% of stolen funds in 2024. Only 19% of hacked protocols used multi-sig wallets. Just 2.4% employed cold storage. The technology to prevent these losses existed, the governance to deploy and maintain it didn’t.

Across DeFi, access control vulnerabilities, not exotic cryptographic flaws but basic permission errors, accounted for $953 million in losses in 2024 alone, making them the number one cause of smart contract exploitation for the second consecutive year according to OWASP’s Smart Contract Top 10.

Access control. Permissions. Who can call which function. This is governance 101, and the programmable money ecosystem is still getting it wrong.

Why audits aren’t enough

The natural response from a bank risk officer hearing these numbers is no doubt “We’ll audit the smart contracts.” Fair enough. But the data on audits is also sobering.

Smart contract audits grew by over 40% in 2025, driven by regulatory pressure and institutional adoption. Yet audited protocols continue to be exploited. Euler Finance was reviewed by six different security firms, including Certora, Halborn, Solidified, ZK Labs, Sherlock, and Omniscia, before a $197 million flash loan exploit in March 2023. Sherlock, one of the auditors, acknowledged responsibility for missing the vulnerability and paid a $4.5 million claim. Ronin Bridge was exploited in August 2024, its second major breach, because a contract was deployed without the latest audit-recommended initialisation, leaving a critical parameter set to zero. The first Ronin breach, in 2022, cost $600 million.

The gap isn’t in the quality of audits, it’s in what audits cover. A smart contract audit reviews code correctness, so does this function do what it’s supposed to? What it doesn’t typically assess is business logic risk, operational process, governance over upgrades, or the interaction between the contract and everything around it. Euler’s auditors reviewed the code. The exploit targeted a business logic flaw that only manifested through a specific sequence of flash loan transactions that the auditors hadn’t modelled.

This is the equivalent of a bank conducting a thorough credit risk review of a loan portfolio while ignoring the operational risk of how loans are originated and serviced. The analysis is rigorous within its scope. The scope is too narrow.

For banks entering the programmable money space, the lesson isn’t “don’t trust audits.” It’s that audits are a necessary component of a governance framework, not a substitute for one. The OCC’s July 2025 joint statement with the Fed and FDIC on crypto-asset safekeeping makes this explicit: banks must demonstrate “effective governance and subject-matter expertise across all levels of the enterprise.” That’s not a line item on an audit report. That’s an organizational capability.

You can’t patch what’s immutable

Smart contracts on public blockchains are, by default, immutable. Once deployed, the code can’t be changed. This is a feature for trust, and a disaster for operational management. Banks can’t operate with code they can’t fix.

So most institutional implementations use upgradeable proxy patterns, where the contract’s logic can be swapped out by an authorized party. This solves one problem and creates another: who authorizes upgrades? What’s the testing and approval process? What happens if an upgrade introduces a new vulnerability?

The Ronin Bridge exploit happened precisely because an upgrade was deployed without proper initialization. The upgrade mechanism, the governance mechanism, was the attack surface. Same technology, different context, catastrophic outcome.

When the data feed lies, the contract doesn’t care

Many smart contracts depend on external data feeds: asset prices, interest rates, reference data, all provided by oracles. If the oracle delivers bad data, the contract executes faithfully on wrong information. Oracle manipulation caused $52 million in losses across 37 incidents in 2024, and attacks surged 31% year over year.

For a bank running tokenized repo or automated collateral management, an oracle failure isn’t an IT incident. It’s a potential balance sheet event. Who selects the oracles? What’s the fallback if a feed fails? How do you reconcile a smart contract’s on-chain state with your offchain books when the oracle data was wrong for 45 minutes?

Traditional settlement systems have reconciliation breaks all the time, and there are entire teams dedicated to resolving them. Programmable settlement with atomic finality doesn’t give you the same grace period.

The cascading failure nobody modeled

The FSB flagged this one most explicitly in its October 2024 report on tokenization risks. Programmability and composability, the ability for one smart contract to interact with another,

Your contract talks to another contract, which talks to another contract, and a failure three layers down cascades back to you in ways nobody modelled. Cross-chain bridges, which connect different blockchains, account for 40% of all Web3 hacks and over $2.8 billion in cumulative losses, precisely because they create complex interdependencies across systems with different security assumptions.

The FSB put it directly: roles that traditional finance separates, issuance, custody, secondary trading, can be “blurred and intermingled in tokenized systems.” That blurring is a governance gap.

Who actually controls the protocol?

In DeFi, protocol governance is typically managed through token holder voting. In July 2024, a group called the Golden Boys pushed through a Compound DAO proposal directing $24 million in COMP tokens to a vault they controlled. The proposal passed 682,191 to 633,636, with voter turnout of just 4–5% of total token supply. In April 2025, a GreenField DAO attacker flash borrowed 9 million governance tokens, passed a malicious proposal, and drained $31 million from the treasury in a single block.

Banks obviously won’t be running DAOs. But they will be participating in multi-party tokenized platforms, shared ledgers, consortium networks, industry utilities, where governance decisions about protocol rules, upgrade schedules, and risk parameters affect every participant. Who votes? How are changes approved? What’s the dispute resolution process when a smart contract executes correctly but produces an outcome one party considers unfair? The technology doesn’t answer these questions.

Banks have the muscle. They haven’t pointed it at the right problems yet.

Banks are actually very good at governance. Operational risk management, three lines of defence, model risk governance, vendor risk management, business continuity planning. These are mature disciplines. The Basel framework, the OCC’s supervisory expectations, the UK’s operational resilience regime. The scaffolding exists.

In December 2025, the Basel Committee published its Principles for the Sound Management of Third Party Risk, explicitly addressing the growing dependence on technology vendors and fintech firms. The framework covers the full lifecycle of third-party arrangements: rigorous governance by the board and senior management, maintenance of a comprehensive risk management framework aligned with operational risk and resilience standards, and heightened expectations for critical services. The EU’s Digital Operational Resilience Act, DORA, went live in January 2025, requiring documented ICT risk frameworks, incident reporting within hours, regular resilience testing, and formal oversight of technology vendors.

These frameworks weren’t designed for programmable money. But the principles translate directly. The problem is that most banks haven’t yet mapped them onto the specific risks that smart contracts and tokenized systems introduce.

There’s a historical parallel worth considering. When banks started trading derivatives in the 1980s and 1990s, they didn’t have governance frameworks for the instruments. They had governance frameworks for risk. The work was in the mapping: applying what they knew about counterparty exposure, netting, and portfolio risk to a new instrument class. The same thing happened with algorithmic trading, and again with cloud migration. The governance wasn’t built from scratch. It was translated.

Programmable money is the same kind of translation problem. But the speed makes it harder. Consider the CrowdStrike outage in July 2024. A single content-configuration update from a cybersecurity vendor disabled 8.5 million Windows systems worldwide, including bank payment platforms and ATM networks. The root cause wasn’t a sophisticated attack, it was a failed quality-assurance process at a critical third-party vendor. The OCC subsequently found that half of the largest US banks lack a strong grasp of operational risks.

Now imagine that kind of concentration risk in programmable money infrastructure. A shared smart contract library used by multiple tokenized deposit systems. An oracle provider feeding data to every bank’s automated collateral management. A blockchain network where a consensus failure halts settlement for all participants simultaneously. The operational risk isn’t new in kind, it’s new in speed and scope. When code executes in milliseconds and settlement is atomic, the window between “something went wrong” and “irreversible loss” is essentially zero.

What running this safely actually takes

I don’t think the answer can be to slow down. I’ve written before about how the settlement friction subsidy that funds cheap deposits is eroding whether banks participate or not. But I do think the industry needs to be more honest about what safe adoption requires.

Smart contract risk needs its own governance framework, separate from but integrated with existing operational risk. It needs to cover code development, testing, audit, deployment, upgrade authority, monitoring, and incident response. The Basel Committee’s third-party risk principles provide a starting point, but smart contracts aren’t just third-party services. They’re automated decision-making systems that execute with finality. I’m increasingly convinced that model risk management, specifically the Fed’s SR 11-7 guidance, is a closer analogue than traditional vendor risk. A smart contract is, functionally, a model: it takes inputs, applies logic, and produces outputs that drive financial outcomes. It should be governed accordingly.

Resilience testing needs to include smart contract failure scenarios. Not just “what if the blockchain goes down,” which is the easy scenario. What if an oracle feeds stale data for an hour? What if a token’s transfer function blocks a legitimate transaction? What if a contract upgrade introduces an unintended interaction with another contract in the same ecosystem? DORA already requires threat-led penetration testing for critical systems. Programmable money systems should be held to the same standard, and the scenarios need to be designed by people who understand both the technology and the business logic it’s encoding.

The industry needs shared standards for governance of multi-party tokenised platforms. When banks join consortium networks, and they will because the economics of shared infrastructure are compelling, they need frameworks that address upgrade authority, dispute resolution, liability allocation, and incident coordination. This is a legal and operational design problem, and it needs to be solved before the platforms scale, not after.

And banks need people who can work across both domains. People who can read a Solidity contract and a Basel III capital requirement and understand how they interact. This talent barely exists today, and it’s the tightest constraint on safe adoption.

Banks are moving anyway

This is genuinely, structurally hard. The governance frameworks banks have built over decades, battle tested through financial crises, refined across three lines of defence, don’t map cleanly onto smart contracts and tokenized systems. Nobody has a complete answer. Not the regulators, not the consultants, not the technology vendors.

But banks are moving anyway. I think that matters more than having the perfect framework.

JPMorgan’s Kinexys has processed over $2 trillion in notional value on a permissioned network with centralised governance, controlling the participants, the upgrade process, who can call which function. That’s not a shortcut. It’s a legitimate design choice that manages risk by limiting scope, and it’s proving the economics work at scale.

Citi moved its tokenized cash service from pilot to live production in late 2024, processing multimillion dollar transactions for institutional clients across US dollars, euros, sterling, and Singapore and Hong Kong dollars. HSBC is already running tokenized deposits in Singapore, Hong Kong, the UK and Luxembourg, with US and UAE rollouts planned for the first half of 2026. BNY launched a tokenized deposit service in early 2026, with Baillie Gifford, Circle, Citadel Securities, Galaxy, Ripple, Invesco and WisdomTree among the early participants. Goldman Sachs built a tokenization platform, partnered with BNY to enable the first tokenized MMF subscriptions in the US, and is now spinning the platform out as an independent entity so it can scale across the industry.

And it’s not just the G-SIBs. In March 2025, Custodia Bank and Vantage Bank issued America’s first bank-issued stablecoin on a permissionless blockchain, Ethereum mainnet, using ERC-20 tokens backed by tokenized demand deposits. They walked through the full lifecycle: mint, transfer into self-custody, business to business transaction outside the banking system, transfer back, redemption into dollars. They did it while complying with BSA/AML/OFAC requirements, which meant building documentation, policies and procedures from scratch. Nobody had done it before.

Five regional banks, KeyBank, Huntington, First Horizon, M&T, and Old National, have joined the Cari Network to move tokenized deposits on ZKsync infrastructure anchored to Ethereum, with a pilot rollout planned for Q3 2026. The Independent Bankers Association of Texas launched a consortium of community banks building a shared tokenized deposit network. The Texas Bankers Association is offering pilot access to member banks through its Innovation Magnet programme. U.S. Bank created an entirely new organisational unit, Digital Assets and Money Movement, to build stablecoin issuance, crypto custody, and tokenization capabilities.

Meanwhile, infrastructure providers like Stablecore are pre-integrating digital asset rails into existing core banking platforms, so community banks can launch stablecoin payments and tokenized deposits without internal engineering teams. TruStage, the financial services arm of the credit union movement, announced a fully reserved stablecoin for credit unions, with a pilot launch in the first half of 2026.

None of these institutions waited for perfect governance. They started with what they could control, permissioned networks, known counterparties, existing regulatory relationships, and began building the operational muscle for programmable money in a contained environment. Kinexys didn’t launch with public-chain composability risk. Custodia didn’t try to solve oracle dependency in its first transaction. Cari Network chose a private Layer 2 anchored to Ethereum, not raw mainnet deployment. Each of these is a deliberate design choice that scopes the governance problem to something manageable.

The harder question, and I think this is the one that’s going to define the next few years, is what happens as the ecosystem moves further onto public infrastructure. The tokenized Treasury market, the instant redemption MMFs, the stablecoin settlement layer, much of that lives on Ethereum, Solana, Avalanche. Public chains introduce every governance problem I’ve described: upgrade authority is diffuse, oracle dependency is real, composability is the whole point, and there’s no single party you can hold accountable when something goes wrong. The Basel Committee’s third-party risk principles weren’t designed for systems where the “third party” is a decentralized network with no legal entity behind it. DORA sets the right expectations for resilience testing, but the specific failure scenarios for public-chain programmable money haven’t been codified anywhere.

I don’t have a clean answer for that. I’m not sure anyone does just now. But I think the banks that are moving now, building governance for the permissioned end, learning what breaks, developing the institutional muscle, are the ones that will be best positioned when the public-chain question can no longer be deferred. The crypto ecosystem’s $3.4 billion a year in governance failures has produced a detailed map of what goes wrong: access control, upgrade authority, oracle dependency, composability risk, multi-party governance. These are known problems with known shapes. Banks have the institutional discipline to address them. What they haven’t had, until recently, is enough operational experience with the technology to know which of their existing frameworks apply and which need to be rebuilt.

That’s what’s being built right now. Not perfectly, not completely, but the pace is accelerating. The frameworks always get built in motion. That’s how derivatives governance worked. That’s how algo trading oversight worked. That’s how cloud migration worked.

The ones that treat programmable money as a technology problem with a governance appendix will learn the same lesson DeFi has been teaching at $3.4 billion a year.

References

Crypto losses and security data

• Crypto Hacks Hit $3.4 Billion in 2025 — Chainalysis (The Block)

• Crypto Losses of $1.7 Billion Already Surpass 2024 Total — Immunefi (Decrypt)

• The Top 100 DeFi Hacks Report 2025 — Halborn

• Year in Review: The Biggest DeFi Hacks of 2025 — Halborn

• Smart Contract Security Risks and Audits Statistics 2025 — CoinLaw

• 2026 Software Security Report: Audited Applications Account for Only 10.8% of Exploit Losses (PRWeb)

Specific incidents

• FBI Confirms North Korea Responsible for $1.5 Billion Bybit Hack — IC3/FBI

• The Bybit Hack — In-Depth Technical Analysis — NCC Group

• The Bybit Heist and the Future of U.S. Crypto Regulation — CSIS

• Explained: The Ronin Network Hack (August 2024) — Halborn

• $24 Million Compound Finance Proposal Passed by Whale Over DAO Objections — The Block

• Key Takeaways from the Golden Boys’ Attack on Compound DAO — Cointelegraph

• Smart Contract Oracle Manipulation: The $8.8M Data Poisoning (Medium)

• Euler Finance Flash Loan Attack Explained — Chainalysis

• Euler Finance Attack: How It Happened, and What Can Be Learned — Cointelegraph

OWASP and vulnerability classification

• OWASP Smart Contract Top 10: 2026 — OWASP Foundation

• OWASP SC Top 10 (2025) Breakdown — Resonance Security

Regulatory and governance frameworks

• Principles for the Sound Management of Third-Party Risk — Basel Committee (December 2025)

• Basel Committee Approves Final Principles on Third-Party Risks — BIS Press Release (November 2025)

• Federal Banking Regulators Issue Guidance on Risk Management for Crypto-Asset Safekeeping (July 2025) — Greenberg Traurig

• OCC Confirms Bank Authority to Engage in Riskless Principal Crypto-Asset Transactions (December 2025)

• The State of Play in Banking and Digital Assets — Sidley Austin (January 2026)

• Digital Operational Resilience Act (DORA) Explained — InnReg

Financial stability and systemic risk

• The Financial Stability Implications of Tokenisation — FSB (October 2024)

• FSB Finds Significant Gaps in Implementation of Crypto Recommendations (October 2025)

• The Rise of Tokenised Money Market Funds — BIS Bulletin No. 115

• Tokenisation in the Context of Money — BIS CPMI

Institutional adoption and bank initiatives

• JPMorgan’s Tokenized Dollars Are Quietly Rewiring Wall Street — CoinDesk

• Kinexys — Bank-Led Blockchain Solutions — J.P. Morgan

• Citi Is Laying Plans for Crypto Supremacy — American Banker

• Citi Targets 2026 Launch for Crypto Custody Service — CNBC

• HSBC to Roll Out Tokenized Deposits for U.S., UAE Clients in 2026

• BNY Launches Tokenized Deposits in Digital Assets Expansion — Bloomberg

• BNY and Goldman Sachs Launch Tokenized Money Market Funds Solution — Goldman Sachs

• Goldman Sachs Focuses on Spinning Out Tokenization Platform — Markets Media

• Custodia Bank and Vantage Bank Issue America’s First Bank-Issued Stablecoin on a Permissionless Blockchain — PR Newswire

• Custodia’s Tokenized Deposit to Be Used in 600-Bank Network — American Banker

• U.S. Regional Banks Building Tokenized Deposit Network on ZKsync (Cari Network) — CoinDesk

• US Banks Build Tokenized Deposit Network to Guard Their Turf — Bloomberg

• IBAT Leads Push for Stablecoins and Tokenized Deposits — Independent Bankers Association of Texas

• TBA to Offer Pilot Access for Tokenized Deposit Capabilities — Texas Bankers Association

• U.S. Bank Establishes New Digital Assets and Money Movement Organization — U.S. Bancorp

• How Stablecore Is Pulling U.S. Community Banks onto Blockchain Rails — Disruption Banking

• TruStage Launches Stablecoin for Credit Unions

• Audited, Tested, and Still Broken: Smart Contract Hacks of 2025 — Coinmonks

DeFi governance failures

• How DAOs Failed to Deliver on Their Original Promise — Antonio Lopez (March 2026)

• Emerging Smart Contract Vulnerabilities in 2025: Flash Loans, Cross-Chain Bridges, and Governance Exploits (Medium)

• Compound’s $24M DAO Heist: How Governance Theater Enabled the Golden Boys — Medium

Operational risk and CrowdStrike

• CrowdStrike Outage: The Impact on Banks and Payments — Juniper Research

• Key Implications of the CrowdStrike Outage — International Banker

• What Banks Can Learn From the CrowdStrike Outage — RMA

BitGo launches stablecoin minting and redemption for institutions

BitGo launches institutional stablecoin minting and redemption platform targeting market makers, liquidity providers, banks, exchanges, and asset managers as demand grows for enterprise-grade infrastructure.

https://www.theblock.co/post/396152/bitgo-stablecoin-minting-redemption-institutions

Kulipa raises $6.2m for stablecoin-native card issuing infrastructure platform

Paris-based Kulipa raised $6.2 million in seed funding for its stablecoin-native card issuing infrastructure platform. The funding signals growing institutional investment in stablecoin payment rails for everyday commerce.

https://www.finextra.com/newsarticle/47529/kulipa-raises-62m-for-stablecoin-native-card-issuing-infrastructure-platform

Ripple Launches Treasury Management System with Native Digital Asset Capabilities

Ripple launches treasury management system allowing CFOs to manage fiat and digital assets in a single platform, integrating native digital asset capabilities for corporate treasury operations.

https://decrypt.co/363002/ripple-launches-treasury-management-system-with-native-digital-asset-capabilities

Beyond T-bills: OpenEden introduces tokenized high-yield corporate bond

OpenEden introduces tokenized high-yield corporate bond product, expanding beyond Treasury bills as institutional appetite grows for diversified tokenized fixed income offerings.

https://www.coindesk.com/business/2026/04/02/beyond-t-bills-openeden-introduces-tokenized-high-yield-corporate-bond

Regulation & Policy

Treasury outlines state v. federal stablecoin oversight balance

U.S. Treasury releases first proposed rule under the GENIUS Act, establishing state-federal framework for stablecoin oversight with guardrails against regulatory arbitrage. Opens 60-day public comment period for smaller issuers under $10B.

https://www.americanbanker.com/news/treasury-outlines-state-v-federal-stablecoin-oversight-balance

Barr, Brief Remarks on Stablecoins

Fed Governor Barr delivers speech warning of stablecoin risks to financial stability, citing ‘long and painful history of private money’ and emphasizing need for strong federal oversight including anti-money laundering controls.

https://www.federalreserve.gov/newsevents/speech/barr20260331a.htm

Coinbase CLO Grewal says Clarity Act ‘very close’ to reaching deal on stablecoin yield

Coinbase CLO Paul Grewal says lawmakers are ‘very close’ to reaching compromise on stablecoin yield provisions in the Clarity Act, dismissing banking industry concerns about deposit flight as final negotiations continue.

https://www.theblock.co/post/396170/coinbase-clo-grewal-clarity-act-very-close

Hong Kong misses March target for first stablecoin licenses

Hong Kong authorities miss March target for issuing first stablecoin licenses, pushing applicants to refine application details before granting approvals under the new regulatory framework.

https://www.theblock.co/post/396057/hong-kong-misses-march-target-first-stablecoin-licenses

Research & Analysis

Stablecoin Market to Hit $2 Trillion in 2028 Even as Velocity Doubles: Standard Chartered

Standard Chartered forecasts stablecoin market will reach $2 trillion by 2028 despite doubled velocity driven by USDC’s expanding use cases in traditional finance and AI payments, signaling institutional adoption momentum.

https://decrypt.co/362882/stablecoin-market-2-trillion-2028-velocity-doubles-standard-chartered

Liquidity, not novelty, determines tokenization’s value

Analysis argues that liquidity, not novelty, determines tokenization’s value, with high-demand assets enabling continuous settlement and network effects. The research suggests programmability on dollars and bonds compresses financial frictions where trillions already flow.

https://cointelegraph.com/news/liquidity-determines-tokenization-value

BIS, IMF researchers find stablecoins already impact traditional FX rates

BIS and IMF researchers found that stablecoins already impact traditional foreign exchange rates, demonstrating their growing influence on global financial markets. This research validates concerns about stablecoins’ systemic importance to monetary policy transmission.

https://www.ledgerinsights.com/bis-imf-researchers-find-stablecoins-already-impact-traditional-fx-rates/

Swift to run live tokenized deposit payments on blockchain MVP in 2026

Swift announces plans for live tokenized deposit payments on blockchain MVP in 2026, advancing institutional settlement infrastructure for on-chain banking operations.

https://www.ledgerinsights.com/swift-to-run-live-tokenized-deposit-payments-on-blockchain-mvp-in-2026/

Forex startup OpenFX raises $94 million to expand stablecoin powered cross-border payments

Foreign exchange startup OpenFX raises $94 million to expand stablecoin-powered cross-border payment infrastructure, targeting institutional FX market inefficiencies.

https://www.coindesk.com/business/2026/03/31/forex-startup-openfx-raises-usd94-million-to-expand-stablecoin-powered-cross-border-payments

South Korea’s KB Card taps Avalanche for ‘hybrid’ stablecoin credit card

South Korea’s KB Card partners with Avalanche to develop hybrid stablecoin credit card system, enabling customers to use digital assets on existing payment infrastructure.

https://www.theblock.co/post/395846/kb-card-taps-avalanche-stablecoin

Regulation & Policy

Eurosystem sets out comprehensive strategy for future of European payments

ECB publishes comprehensive payments strategy for the Eurosystem addressing digitalization and distributed ledger technology, setting dual-track approach for upgrading current systems while preparing for tokenized future.

https://www.ecb.europa.eu//press/pr/date/2026/html/ecb.pr260331~04561d8476.en.html

Chairman Selig Announces Formation of New Innovation Task Force

CFTC Chairman announces formation of new Innovation Task Force to address emerging financial technologies and market structure developments in derivatives markets.

https://www.cftc.gov/PressRoom/PressReleases/9201-26

Research & Analysis

Payment Stablecoins and Cross Border Payments: Benefits and Implications for Monetary Policy Implementation

Federal Reserve publishes detailed analysis of how payment stablecoins affect cross-border payments and monetary policy implementation under the new regulatory framework. The research examines implications for central bank operations and financial stability.

https://www.federalreserve.gov/econres/notes/feds-notes/payment-stablecoins-and-cross-border-payments-benefits-and-implications-for-monetary-policy-20260330.html

‘Unstable velocity’: Standard Chartered says stablecoin usage rising faster than expected as new use cases emerge

Standard Chartered maintains $2 trillion stablecoin market forecast by 2028 despite accelerating turnover from AI payments and traditional finance adoption, noting potential demand caps from increased velocity.

https://www.theblock.co/post/395867/unstable-velocity-standard-chartered-says-stablecoin-usage-rising-faster-than-expected-as-new-use-cases-emerge

Faster settlement may make for poorer markets

Analysis warns that atomic settlement’s instant capital requirements per trade could reduce market efficiency by eliminating netting benefits while concentrating power among liquidity coordinators.

https://cointelegraph.com/news/faster-settlement-poorer-markets

Tokenized Money

Piero Cipollone: The digital euro: preparing for a potential launch

ECB Executive Board member delivers keynote on digital euro preparations, outlining potential launch framework for Europe’s central bank digital currency initiative.

https://www.ecb.europa.eu//press/key/date/2026/html/ecb.sp260324~66f71f7577.en.html

That distinction matters, because the banking industry’s current fight is about what happens around the edges of it. The ABA and all 52 state bankers associations have written to Congress arguing that exchanges like Coinbase are circumventing the spirit of the law by paying yield on stablecoin balances held on their platforms. The issuers aren’t paying it, the exchanges are. ICBA is pushing the same line, framing it explicitly as a deposit protection issue, community banks make 60% of US small business loans under $1 million, and that lending capacity depends on stable deposit funding. The banking lobby wants the loophole closed, and they may well succeed.

I just don’t think it solves the problem. Even if you close every yield loophole, the structural threat to bank funding models isn’t yield on stablecoins, it’s the elimination of the friction that makes deposits cheap in the first place.

That’s what this article is about.

The settlement friction subsidy

Here’s how bank funding actually works, stripped to its essentials. Cash sits in accounts. It moves slowly, during business hours, through batch queues, between payment cycles. That slowness isn’t a bug. For banks, it’s a feature. Every hour money sits idle in a non-interest bearing account, the bank earns a subsidy. It funds loans at zero cost with capital that’s going nowhere.

This is the foundation of net interest margin.

At the end of 2021, non-interest bearing deposits accounted for roughly 30% of all bank deposits in the US. That’s nearly a third of total funding that costs the bank nothing. Since then, the share has fallen to around 23% as depositors shifted to interest-bearing alternatives in a higher rate environment. The industry’s NIM recovered to 3.39% in Q4 2025, the highest since 2019, but that recovery was driven primarily by funding costs falling faster than asset yields after the Fed’s rate cuts. The underlying deposit mix has shifted permanently.

And that shift happened before programmable settlement entered the picture.

The 1980s rhyme

We’ve seen a version of this before. In the late 1970s, Regulation Q capped the interest banks could pay on savings accounts at 5.25%, while market rates were north of 12%. Money market mutual funds exploited that gap. By 1980, MMFs held $77 billion in assets, about 3.5% of total bank and thrift deposits. The banking industry fought back, lobbied for the Garn-St. Germain Act in 1982, got permission to offer Money Market Deposit Accounts, and eventually saw Reg Q eliminated entirely by 1986.

Banks adapted. Deposits didn’t disappear. Congress gave banks permission to offer Money Market Deposit Accounts, and the industry competed aggressively for funding. Some didn’t survive the transition, the S&L crisis wiped out over a thousand institutions, many of which couldn’t absorb the higher cost of deposits. The survivors consolidated, expanded into new lending categories, and eventually rebuilt margins. But MMFs didn’t vanish when the regulatory gap closed. They kept growing, because they had structural cost advantages that survived deregulation. Today they hold over $6 trillion.

The lesson from the 1980s isn’t that disintermediation kills banks. It doesn’t. Banks are resilient and adaptive. The lesson is that once capital learns it has options, it doesn’t forget. The cost of retaining deposits went up permanently, and the industry had to restructure around that reality. Some banks thrived. Many didn’t.

I think stablecoins and programmable settlement are about to replay that dynamic but at a different layer of the stack.

What programmable settlement actually changes

The MMF fight was about yield. Depositors wanted better returns, and they found them outside the banking system. The stablecoin fight looks similar on the surface, which is why the banking lobby is focused on closing yield loopholes at exchanges.

But the deeper shift isn’t about yield. It’s about velocity.

When a corporate treasurer can move capital in minutes rather than days, the economic character of a deposit changes. Capital that used to sit in a non-interest bearing account waiting for a batch cycle can now rotate intraday, into a tokenized Treasury, a tokenized money market fund, a short-duration yield instrument, and return to the payment rail before the next obligation clears.

This isn’t theoretical. BlackRock’s BUIDL fund, a tokenized money market instrument, surpassed $2.5 billion in AUM within two years of launching, making it one of the fastest growing institutional products in recent memory. The broader tokenized US Treasury market grew from $3.9 billion at the start of 2025 to over $9 billion by November. That’s a 127% increase in under a year. WisdomTree’s tokenized money market fund grew from $112 million to $730 million over the same period, and in February 2026 received first of its kind SEC exemptive relief to trade 24/7 against USDC with instant blockchain settlement.

The infrastructure for intraday capital rotation isn’t coming. It’s here.

And the stablecoin market itself, now approaching $300 billion in market cap, with a record $33 trillion in transfer volume in 2025 alone, provides the settlement layer that makes this rotation frictionless.

How this actually works

To understand the threat, you need to understand the plumbing.

Banks already offer sweep accounts, typically end of day processes that move excess cash into money market funds and bring it back the next morning. Treasurers have used them for decades. But sweeps are bank managed, batch processed, and limited to a narrow set of bank affiliated instruments. The bank controls where the money goes, and it comes back automatically. The deposit relationship stays intact.

Tokenized money market funds change this in ways that matter.

Take BlackRock’s BUIDL fund, the largest tokenized money market instrument. An institutional investor can subscribe by wiring dollars to the fund. They receive BUIDL tokens representing shares in a portfolio of short term US Treasuries yielding 4-5%. When they need cash, they don’t wait for a T+1 redemption. They send their BUIDL tokens to a Circle smart contract that atomically, in the same transaction, returns the equivalent value in USDC. That happens 24/7, in seconds, on a blockchain. Circle acts as the liquidity bridge, fronting its own USDC reserves and redeeming the underlying Treasuries through traditional settlement channels afterwards.

This is the critical mechanism. The BIS flagged it explicitly in its November 2025 bulletin: instant stablecoin redemption facilities create “the potential for shocks to propagate between the TMMF and stablecoin markets,” but they also make tokenized funds functionally as liquid as cash from the investor’s perspective.

Now think about what this means for a corporate treasurer sitting on $50 million in a non-interest bearing operating account.

Today, most of that money sits idle between payment cycles. The treasurer tolerates this because the alternatives are slow as selling a traditional money market fund takes T+1, wiring money takes hours, and the effort of active treasury management isn’t worth it for intraday time horizons. The bank funds loans against that idle balance at zero cost.

Now give that treasurer access to BUIDL, or WisdomTree’s tokenized MMF, or any of the growing number of tokenized yield instruments with instant stablecoin redemption. The math changes. They keep $10 million in the bank for immediate obligations. The other $40 million goes into tokenized Treasuries earning 4-5%.

That $40 million is no longer a deposit. It’s gone from the bank’s balance sheet. Genuinely gone.

When the treasurer needs cash, say for a supplier payment, a payroll run, a margin call then they redeem BUIDL to USDC in seconds and either convert to fiat or use the stablecoin directly. The money might return to the original bank. Or it might go to a different bank. Or it might stay as USDC and never touch a bank account at all.

This isn’t a sweep account. In a sweep, the bank manages the process, chooses the instruments, and the money comes home every morning. In this model, the treasurer controls the flow. The bank is bypassed entirely during the yield-earning phase. And the instant redemption facility means there’s no liquidity penalty for keeping capital outside the banking system, you can get it back in the time it takes to confirm a blockchain transaction.

The BIS put it plainly:

What’s new is that tokenized MMFs now offer both, higher yield and instant liquidity. The convenience gap that kept money in bank accounts is closing.

This is why the exchange yield debate misses the structural point. Close the loophole, ban exchanges from paying interest on stablecoin balances but it doesn’t change this dynamic. The yield isn’t coming from the stablecoin. It’s coming from tokenized Treasuries that the treasurer can enter and exit in seconds, using stablecoins as the on-ramp and off-ramp. No exchange yield required. No stablecoin interest required. Just fast enough settlement that capital doesn’t need to be idle.

Treasury management shifts from a liquidity problem to a return optimisation problem.

Who’s already moving

A 2026 Ripple survey found that 72% of finance leaders now consider digital assets essential to competitiveness — not optional, not experimental, essential. More telling: 74% of those finance leaders described stablecoins as tools for cash flow management, not just payments. That’s the language of treasurers, not crypto enthusiasts.

The EY-Parthenon survey from mid-2025 found that 13% of financial institutions and corporates were already using stablecoins, with 54% of non-users expecting to adopt within 6 to 12 months. Even accounting for survey optimism, that’s a steep adoption curve.

And this isn’t just a large-cap phenomenon. Community banks and credit unions are being approached by infrastructure providers offering plug and play stablecoin capabilities through existing core banking platforms. The middleware layer is maturing fast.

The corporate treasurers who figure this out first will be the best, most sophisticated clients at every bank. They’re the ones managing the largest operating balances, exactly the deposits banks can least afford to see become transient.

The NIM compression we should be modeling

Most bank analysts model NIM risk as a function of the rate environment. If rates fall, funding costs drop but so do asset yields. If rates rise, there’s a lag effect. The models are sophisticated and well understood.

What they don’t model is a change in the behavior of deposits at a given rate level.

If 10-15% of non-interest bearing deposits, which is currently around 23% of total deposits at US banks, start behaving like intraday capital that rotates through yield instruments, the effective cost of that funding goes from zero to something. Not because the bank is paying interest on those deposits, but because the capital is no longer reliably idle. The bank can no longer count on it for stable funding.

That changes liquidity ratios. It changes the assumptions underpinning loan pricing. It changes the economics of maturity transformation.

And unlike the MMF shift of the 1980s, which played out over a decade, programmable settlement compresses the timeline. The infrastructure is already live. The regulatory framework is being finalized. The corporate treasurers are paying attention.

The price of keeping deposits

Here’s where I think the conversation needs to land, and it’s simpler and harder than any technology debate.

Banks exist to take deposits and make loans. That’s the engine of credit creation. It’s how small businesses get funded, how mortgages get written, how the economy grows. ICBA’s point about community banks making 60% of US small business loans under $1 million isn’t lobbying rhetoric, it’s a description of how the real economy works. Those loans are funded by deposits. Cheap, stable, idle deposits.

When a corporate treasurer can earn 4-5% in a tokenized Treasury and get back to cash in seconds, a non-interest bearing deposit account isn’t a convenience anymore. It’s a cost. The treasurer knows exactly what they’re giving up by leaving money in the bank, and they can now act on that knowledge in real time.

So what does the bank do? It pays.

Not because of a regulation. Not because of a rate cycle. Because the alternative is losing the deposit entirely. The treasurer doesn’t care whether the bank has its own blockchain or uses someone else’s. They don’t care about tokenized deposits versus stablecoins versus programmable rails. They care about yield. If the bank isn’t offering a competitive return, the money walks and now it can walk in seconds.

We already know what this looks like. During the 2022-2023 rate hiking cycle, when the Fed raised rates by 525 basis points, deposit betas rose faster than in any cycle since before the financial crisis, reaching 0.4 within one year, compared to three years in the prior 2015-2019 cycle. Banks had to raise rates aggressively to retain deposits, and even after the last rate hike, cumulative deposit betas kept rising through 2024 as competition intensified. Community banks saw their cost of funds jump by 66 to 94 basis points in a single quarter. By the end of 2023, 19% of community bank assets were funded by wholesale sources, the highest level since 2017, because retail deposit competition had become too expensive.

That was just the rate environment doing its work. Now add instant access tokenized yield instruments into the mix.

What this does to lending

In December 2025, the Federal Reserve published a research note that modeled exactly this scenario. The paper, “Banks in the Age of Stablecoins,” examined what happens to bank lending when deposits migrate to stablecoins and the money doesn’t recycle back into the banking system.

The key finding:

The range comes from the deposit to lending multiplier, the empirical relationship between deposit levels and loan provision, estimated at 0.6 to 1.26 across the academic literature.

The Fed modeled three adoption scenarios. In the low case, the lending contraction ranges from $65 to $141 billion. In the moderate case, $190 to $408 billion. In the high case, which assumes stablecoin issuers gain access to Federal Reserve master accounts, the contraction reaches $600 billion to $1.26 trillion.

And here’s why the “recycling” question matters so much. When a deposit converts to a stablecoin, where do the reserves go? If they go back into bank deposits, the funding stays in the system and lending capacity is preserved. But look at Tether’s reserve composition as of mid-2025: 64% US Treasuries, 10% repos, 14% money market funds, and just 3.7% bank deposits. The vast majority of stablecoin reserves sit outside the banking system. The money doesn’t come back.

This is the mechanism that the yield loophole debate misses entirely. It doesn’t matter whether the stablecoin itself pays interest. What matters is that when a deposit leaves a bank to become a stablecoin, only a tiny fraction of that value returns as a bank deposit. The rest goes into Treasuries and money markets. The bank loses the funding. The lending capacity disappears.

The 1980s replay

When money market funds gave depositors a better alternative in the 1980s, banks didn’t lose all their deposits. They lost their pricing power. They had to raise deposit rates, offer MMDAs, and compete on yield for funding that used to be free. Some banks adapted and thrived. Over a thousand S&Ls didn’t survive the transition. The survivors consolidated, found new lending categories, and rebuilt margins over a decade. But the industry was permanently restructured around a higher cost of funding.

Programmable settlement is setting up the same dynamic, only faster. The instruments are better, tokenized Treasuries with instant stablecoin redemption versus traditional MMFs with T+1 settlement. The access is broader, any treasurer with a wallet, not just those with brokerage accounts. The timeline is compressed as the infrastructure is already live. And the recycling problem is worse, MMF assets at least circulated partially through the banking system, while stablecoin reserves flow predominantly into Treasuries and repos.

Close every yield loophole. Shut down exchange rewards programs. It won’t change the underlying math. When capital can move instantly into yield bearing instruments and back, banks will have to pay to keep it. The deposits might stay. But they won’t be cheap. And the loans they fund won’t be either.

That’s the end of idle money. And the Fed’s own research tells us what it costs: for every hundred billion that doesn’t come back, sixty to a hundred and twenty six billion in lending disappears with it.

References

Legislation and regulatory sources

• GENIUS Act — Full text, S.1582, 119th Congress

• The Stablecoin Yield Debate — Congressional Research Service

• OCC Proposed Rules to Implement GENIUS Act — Sullivan & Cromwell

• Stablecoins and the GENIUS Act: An Overview — Federal Reserve Bank of Richmond

Banking lobby and deposit protection

• ABA and 52 State Bankers Associations Urge Congress to Close Stablecoin Interest Loophole

• ICBA Urges Congress to Preserve Access to Credit by Extending Prohibition on Yield-Bearing Stablecoins

• ABA Banking Journal: Uphold Genius Act Prohibition on Stablecoin Interest Payments

Deposit trends, bank performance, and lending impact

• FDIC Quarterly Banking Profile — Q4 2025

• Bank Deposits Migrate into Interest-Bearing Accounts — BauerFinancial

• Bank Deposit Rates Haven’t Kept Pace — Federal Reserve Bank of Kansas City

• Bank Deposit Growth to Remain Sluggish Through 2025 — OCC

• Banks in the Age of Stablecoins — Federal Reserve FEDS Notes, December 2025 (Jessie Jiaxu Wang et al.)

• Higher Deposit Costs Continue to Challenge Banks — Federal Reserve Bank of St. Louis, September 2024

• Deposit Betas: Up, Up, and Away? — Federal Reserve Bank of New York, Liberty Street Economics, April 2023

Money market fund history and Regulation Q

• Interest Rate Controls (Regulation Q) — Federal Reserve History

• Money Market Mutual Funds — Federal Reserve History

• Depository Institutions Deregulation and Monetary Control Act of 1980 — Federal Reserve History

• Disintermediation Marches On — Federal Reserve Bank of Chicago

Tokenized money market funds — mechanics and risks

• The Rise of Tokenised Money Market Funds — BIS Bulletin No. 115

• The Financial Stability Implications of Tokenized Investment Funds — Federal Reserve Bank of New York

• Circle Announces USDC Smart Contract for Transfers by BlackRock’s BUIDL Fund Investors — BusinessWire

• Tokenised Money Market Funds: The Digital Revolution of Cash Management — AIMA

• Tokenized Money Market Funds 101: Liquidity Meets Yield — Circle

Tokenized assets and stablecoin market data

• Stablecoin Transactions Rose to Record $33 Trillion in 2025 — Bloomberg

• BlackRock’s $2.5 Billion Tokenized Money Market Fund — Fortune

• The Emergence of Tokenized Investment Funds — Federal Reserve Bank of New York

• RWA.xyz — Tokenized U.S. Treasuries Dashboard

• SEC Grants WisdomTree Exemptive Relief for 24/7 Trading — The Block

• WisdomTree 24/7 Trading and Instant Settlement — BusinessWire

Institutional adoption surveys

• EY-Parthenon Stablecoin Survey — Cost Savings and Speed Drive Adoption

• Ripple Survey: 72% of Finance Leaders Say Digital Assets Now Essential — CryptoTimes

Franklin Templeton taps Ondo Finance to tokenize five equities and gold ETFs

Franklin Templeton partners with Ondo Finance to tokenize five equity and gold ETFs, targeting crypto-native investors who prefer accessing traditional investments through digital wallets rather than conventional brokerage accounts.

https://www.theblock.co/post/395150/franklin-templeton-taps-ondo-finance-to-tokenize-five-equities-and-gold-etfs

BitGo teams with ZKsync to build tokenized deposit infrastructure to bring banks onchain

BitGo teams with ZKsync to build tokenized deposit infrastructure specifically designed to bring traditional banks onchain, targeting institutional adoption of blockchain-based banking services.

https://www.coindesk.com/business/2026/03/25/bitgo-teams-with-zksync-to-build-tokenized-deposit-infrastructure-to-bring-banks-onchain

Regulation & Policy

Stablecoin yield language unloved by banks and crypto alike

Draft legislative language for stablecoin yield circulating among stakeholders includes extensive exceptions to yield bans, failing to satisfy both traditional banks and crypto firms as negotiations continue on market structure legislation.

https://www.americanbanker.com/news/stablecoin-yield-language-unloved-by-banks-and-crypto-alike

US lawmakers hash out tokenized securities concerns in latest hearing

US lawmakers examine tokenized securities regulations in congressional hearing, with industry executives advocating that existing investor protection frameworks should apply to blockchain-based securities.

https://cointelegraph.com/news/us-lawmakers-tokenized-securities-concerns

Delaware Moves to Establish State Framework for Stablecoin Issuers

Delaware proposes comprehensive stablecoin licensing framework as part of first major banking code overhaul since 1981, positioning the state to attract digital asset firms with regulatory clarity.

https://decrypt.co/362254/delaware-establish-state-framework-stablecoin-issuers

ECB board member calls for digital euro

ECB board member calls for digital euro implementation to support European tokenization, arguing that interoperability and central bank settlement are essential for scaled adoption.

https://www.finextra.com/newsarticle/47489/ecb-board-member-calls-for-digital-euro

Chairman Selig Announces Formation of New Innovation Task Force

CFTC Chairman announces formation of new Innovation Task Force to address crypto, AI, and prediction markets, signaling expanded regulatory focus on digital asset derivatives and emerging technologies.

https://www.cftc.gov/PressRoom/PressReleases/9201-26

Research & Analysis

Tether’s Landmark Fundraise on Hold as Crypto Giant Seeks Audit

Tether Holdings pauses plans to raise up to $20 billion while awaiting results of its first full financial audit, a critical step that could revive one of the most anticipated fundraisings in digital assets.

https://www.bloomberg.com/news/articles/2026-03-24/tether-s-landmark-fundraise-on-hold-as-crypto-giant-seeks-audit

Piero Cipollone: The digital euro: preparing for a potential launch

ECB Executive Board member Piero Cipollone outlines preparations for a potential digital euro launch, emphasizing the need for central bank money as the settlement anchor for tokenized financial markets.

https://www.ecb.europa.eu//press/key/date/2026/html/ecb.sp260324~66f71f7577.en.html

Australia’s central bank backs tokenization as pilot finds $16.7B upside

Reserve Bank of Australia finds tokenization could generate $16.7 billion in annual benefits, with central bank backing tokenized finance as potentially “revolutionary” for financial infrastructure efficiency.

https://cointelegraph.com/news/australian-central-bank-backs-rwa-tokenisation-explores-digital-finance-sandbox

Tokenized Money

BMO, UK’s Monument Bank join the tokenized deposit train

Bank of Montreal and UK’s Monument Bank launched tokenized deposit initiatives, with BMO introducing a cash platform and Monument partnering with Midnight Foundation for retail deposit tokenization on public blockchain.

https://www.americanbanker.com/payments/news/bmo-u-k-based-monument-announce-tokenized-deposits

Murex and Quant embed tokenised deposits into capital markets infrastructure

Murex and Quant forge a strategic partnership to embed institutional-grade tokenized deposits into core trading, risk, and post-trade capital markets workflows, bridging traditional finance infrastructure with digital assets.

https://www.finextra.com/pressarticle/109293/murex-and-quant-embed-tokenised-deposits-into-capital-markets-infrastructure

Major financial institutions accelerate tokenization efforts as NYSE partners with Securitize for 24/7 digital trading and Invesco takes over a $900M tokenized Treasury fund.

March 24, 2026

Market Moves

Wall Street’s Crypto Ties Deepen as NYSE Taps Securitize for Tokenized Securities

The New York Stock Exchange selected Securitize as its digital transfer agent for a new 24/7 tokenized securities trading platform. This represents a major step toward bringing traditional securities onto blockchain infrastructure with continuous trading capabilities.

https://decrypt.co/362185/wall-streets-crypto-ties-deepen-nyse-securitize-tokenized-securities

Invesco joins tokenization race as it takes over Superstate’s $900 million onchain fund

Invesco will take over management of Superstate’s $900 million tokenized Treasury fund (USTB), marking the asset manager’s entry into the $12 billion tokenized Treasuries market. The move signals growing institutional adoption of blockchain-based fund structures.

https://www.coindesk.com/business/2026/03/24/invesco-joins-tokenization-race-as-it-takes-over-superstate-s-usd900-million-onchain-fund

Fund services giant Apex to tokenize Bitcoin mining note on Coinbase’s Base platform

Fund services giant Apex Group will tokenize a Bitcoin mining note on Coinbase’s Base platform, giving eligible non-US investors exposure to hashrate-linked returns. This represents institutional infrastructure expanding into cryptocurrency mining exposure products.

https://www.coindesk.com/business/2026/03/24/fund-services-giant-apex-to-tokenize-bitcoin-mining-note-on-coinbase-s-base-platform

Q2 partners with Stablecore to bring stablecoins and tokenized deposits to community banks and credit unions

Digital banking platform Q2 Holdings is integrating Stablecore’s digital asset infrastructure into its Innovation Studio, giving banks and credit unions a turnkey path to offer stablecoins, tokenized deposits, and digital asset accounts within their existing regulated environments.

https://www.businesswire.com/news/home/20260324576805/en/Q2-Announces-Partnership-With-Stablecore-to-Provide-Banks-and-Credit-Unions-With-Stablecoins-and-Digital-Asset-Capabilities

BMO Introduces Tokenized Cash and Deposit Platform with CME Group and Google Cloud

Bank of Montreal launched a tokenized cash and deposit platform built with CME Group and Google Cloud, enabling 24/7 dollar movement on blockchain rails. This marks a major Canadian bank’s direct entry into tokenized deposit infrastructure.

https://www.prnewswire.com/news-releases/bmo-introduces-tokenized-cash-and-deposit-platform-with-cme-group-and-google-cloud-302723324.html

Regulation & Policy

Stablecoin yield in crypto Clarity Act won’t allow rewards on balances, latest text says

The latest draft of the crypto Clarity Act would prohibit stablecoin issuers from paying yield rewards on customer balances, representing a significant compromise in ongoing Congressional negotiations. The restriction aims to distinguish stablecoins from investment products while advancing regulatory clarity.

https://www.coindesk.com/policy/2026/03/23/stablecoin-yield-in-crypto-clarity-act-won-t-allow-rewards-on-balances-latest-text-says

ECB says stablecoins, tokenized deposits need central bank money to scale

ECB Executive Board member Piero Cipollone stated that stablecoins and tokenized deposits need central bank money as a settlement anchor to scale Europe’s digital asset markets effectively. This signals the central bank’s vision for integrating private digital money with official monetary infrastructure.

https://cointelegraph.com/news/ecb-stablecoins-tokenized-deposits-central-bank-money

Research & Analysis

BlackRock is betting billions that tokenized funds will do for Wall Street what the internet did to mail

BlackRock CEO Larry Fink’s annual letter compared tokenization’s current stage to the internet in 1996, arguing that blockchain-based fund structures will transform Wall Street’s infrastructure over time. The world’s largest asset manager is positioning tokenization as the next major financial evolution.

https://www.blackrock.com/corporate/literature/presentation/larry-fink-annual-chairmans-letter.pdf

FSB flags dollar stablecoins as bigger risk for emerging markets in annual report

The Financial Stability Board warned that US dollar-denominated stablecoins may expose emerging economies to external macro shocks and financial stability risks. The assessment highlights regulatory concerns about stablecoin adoption in developing markets with weaker monetary systems.

https://cointelegraph.com/news/fsb-dollar-stablecoins-risk-emerging-markets

Tokenized Money

Tether Says It Will Be Audited By Big Four Accounting Firm—But Won’t Say Which One

Tether announced it has hired a Big Four accounting firm for its first independent audit of $192 billion in stablecoin reserves, though it declined to name the auditor. This move could support USDT’s potential approval under proposed US stablecoin legislation.

https://decrypt.co/362187/tether-audited-big-four-accounting-firm-wont-say-which-one

The Tokenization of Everything Needs an Intermediary for Everything

Most of the tokenization conversation focuses on what gets disintermediated. That treats banks as friction to be engineered away. It also misses the more interesting structural question of what new risks does tokenization create, and who absorbs them?

The pitch is familiar by now. Any asset - real estate, private credit, treasuries - can be represented as a token on a blockchain and traded continuously. When settlement collapses from days to seconds. The entire apparatus of clearinghouses, transfer agents, and custodian banks starts to look like expensive overhead from a previous era.

There’s real substance behind the pitch. Franklin Templeton has deployed over $900 million across multiple blockchain networks through its Benji platform, which was the first SEC approved digital native money market fund. Broadridge’s distributed ledger repo platform processes tens of billions in daily trades. These aren’t pilots. They’re production systems operating at institutional scale.

But the pitch has a structural blind spot. Tokenization makes assets digitally mobile. It does not make them liquid.

The Liquidity Problem That Tokenization Can’t Engineer Away

A tokenized position in a commercial real estate fund doesn’t become liquid because it moved onchain. The building is still the building. The rent still comes monthly. The exit still takes quarters. The token is a more efficient wrapper, but the thing inside the wrapper hasn’t changed.

This isn’t a theoretical concern. The BIS addressed it directly in its analysis of tokenized money market funds, an asset class that has grown from $770 million to nearly $9 billion. These funds offer investors instant, T+0 redemption. But the government securities and commercial paper they hold still settle on traditional T+1 timelines at best.

Under normal conditions, that timing mismatch is manageable. Fund operators maintain prefunded settlement balances to cover the gap. Under stress, it’s a different story. A sudden wave of redemptions can exhaust those balances faster than the underlying portfolio can be liquidated because the portfolio literally cannot settle fast enough to keep up with the redemption promises the token makes.

And tokenization introduces a dynamic that traditional funds never had to contend with: radical transparency. On a public blockchain, redemptions are visible to every participant in real time. In traditional finance, information asymmetry actually served a stabilizing function - not every depositor knew what other depositors were doing, and that friction bought time. Onchain, that buffer vanishes. When stress hits, every market participant can watch the outflows as they happen. Transparency becomes a coordination device for panic.

The BIS also flagged a compounding risk. Investors increasingly use tokenized money market fund shares as collateral to borrow stablecoins, then redeploy that capital. A practice known as looping. In a stress scenario, forced liquidation of the collateral triggers redemptions in the fund, which triggers further collateral calls, which triggers further redemptions. The feedback loop is mechanical and fast.

None of this means tokenization is flawed. It means that making an asset digitally tradeable and making it genuinely liquid are two fundamentally different things. The first is an engineering problem. The second is a risk absorption problem.

How Financial Markets Have Solved This Before

Every major asset class has faced this exact tension when scaling: how do you give end users the experience of liquidity when the underlying assets are fundamentally illiquid?

The answer, in every case, has been the same. You don’t make the illiquid thing liquid. You create an intermediary that absorbs a specific risk, and that risk absorption is what makes the market function.

Fannie Mae solved it for mortgages. Before the GSEs, banks originated 30 year loans and sat on them. Capital was trapped on balance sheets. Markets were local and shallow. There was no secondary market because no investor wanted to underwrite the credit risk of individual borrowers spread across thousands of local banks.

Fannie created that secondary market by absorbing the credit risk. It purchased mortgages from originators, pooled them, and issued mortgage backed securities with a government backed guarantee against default. The investors who bought those securities didn’t need to evaluate individual borrower creditworthiness. Fannie had taken that off the table. What remained was duration risk and interest rate risk, which institutional investors could price and manage. By warehousing one category of risk, Fannie unlocked the market’s ability to trade around the others.

The FDIC performs the same function for deposits, though the mechanism looks different. Fractional reserve banking is, by construction, a liquidity mismatch. Banks owe depositors on demand and lend long term. The system works because the FDIC’s credit guarantee gives depositors no reason to test it. Remove that guarantee, and rational depositors run. As SVB demonstrated when $42 billion in uninsured deposits left in a single day.

The common thread across both models is precise. Liquid markets for illiquid assets don’t emerge on their own. They require a third party willing to warehouse a specific risk that the system can’t price away. In both cases, that warehoused risk is credit. And in both cases, the intermediary that absorbed it became structurally essential to the market it enabled.

The Early Prototypes Already Exist

The intermediation layer for tokenized finance hasn’t been built yet. But the prototypes are visible if you know where to look, and they’re coming from traditional banking infrastructure, not crypto.

The National Bank InterDeposit Company (NBID) is a bank owned and bank managed deposit network. Its technology backbone, ModernFi, provides the routing infrastructure that allows banks and credit unions to manage balance sheet liquidity dynamically. When a depositor places funds that exceed the $250,000 FDIC insurance cap, the network’s algorithms fragment and route those deposits across hundreds of participating community and regional banks. No single placement exceeds the statutory limit at any individual institution. The depositor gets full insurance coverage. The receiving banks get stable funding.

This is sophisticated liquidity intermediation dressed in boring clothing. The network provides pass-through FDIC insurance, essentially credit comfort, so that large institutional depositors leave their reserves within the community banking system rather than concentrating them at the largest banks or fleeing to treasuries. It stabilizes funding for smaller institutions and manages the liquidity mismatch that would otherwise make those deposits flighty and unreliable.

The architecture maps directly onto what tokenized asset markets will need. Replace “deposits exceeding the FDIC cap” with “tokenized RWA positions exceeding the liquidity capacity of any single market maker.” Replace “routing across hundreds of banks” with “distributing redemption exposure across a network of liquidity providers.” Replace “pass through FDIC insurance” with “credit guarantees on the underlying asset pool that give token holders confidence to stay put during volatility.”

The structural logic is identical. Pool the exposure, distribute it across a network, and provide the credit comfort that prevents the liquidity mismatch from becoming a run.

Broadridge’s intraday repo platform hints at another piece of the puzzle - the plumbing for realtime liquidity management. Instead of waiting for a traditional T+1 settlement cycle to liquidate a Treasury position, an asset manager can use an intraday repo facility to secure cash funding for durations as short as minutes. The cost is calculated dynamically, applying an interest rate for every minute the loan remains open. It’s significantly cheaper than overnight repo or Federal Reserve daylight overdraft fees, and it’s already operating at enterprise scale.

The intraday repo market and the deposit network model address different parts of the same problem. Intraday repo handles the mechanical timing mismatch, bridging the gap between instant digital settlement and slower real world asset liquidation. Deposit style networks handle the structural risk management by absorbing and distributing credit exposure so that the system doesn’t crack under concentrated stress.

Tokenized finance will need both.

The Regulatory Ground Has Shifted

For years, the absence of regulatory clarity was the legitimate reason for institutional caution. That excuse is largely gone, though not entirely.

Between mid 2025 and early 2026, three foundational pieces of infrastructure either landed or advanced significantly.

The GENIUS Act, enacted in July 2025, established the first comprehensive federal framework for payment stablecoins. This matters for tokenized markets because stablecoins serve as the cash leg of atomic settlement, the mechanism by which a tokenized asset and its payment settle simultaneously. If the cash leg isn’t regulated, trustworthy, and liquid, atomic settlement doesn’t work at institutional scale. The GENIUS Act requires strict 1:1 reserve backing with high quality liquid assets, mandates monthly public attestations and annual audits, and prohibits stablecoins from paying interest or yield thus preserving their legal status as a payment instrument rather than an investment contract. The OCC followed up in February 2026 with detailed supervisory mechanics, including a minimum capital floor for issuers and specific redemption timelines with stress triggered safety valves.

The CLARITY Act addresses the other half of the problem, the jurisdictional clarity over digital assets themselves. It passed the House in July 2025 with broad bipartisan support, 294-134, and divides oversight cleanly: the CFTC gets spot markets for digital commodities, the SEC retains authority over tokenized securities. The Senate Agriculture Committee advanced its portion in January 2026. But the bill has stalled in the Senate Banking Committee, caught up in a fight over stablecoin yield provisions and, more recently, drawn into a broader legislative trade involving community bank deregulation. As of mid March, negotiators describe the substantive policy as largely resolved. The remaining friction is political packaging and calendar pressure ahead of the 2026 midterms. The bill’s passage isn’t guaranteed, but the direction of travel is clear: the jurisdictional ambiguity that paralyzed institutional digital asset strategy for years is being resolved, whether through this bill or through the SEC and CFTC acting in parallel on their own authority.

And in December 2025, New York enacted the 2022 UCC Amendments on Emerging Technologies, creating Article 12 of the Uniform Commercial Code. This is arguably the most consequential development for bank executives, even though it received the least attention. Article 12 establishes “Controllable Electronic Records” as a recognized category of commercial property. It defines cryptographic control as the legal equivalent of physical possession. And it grants “take-free” protection to qualifying purchasers. Essentially meaning a buyer who acquires a tokenized asset for value, in good faith, takes it free of prior claims.

For banking, the critical implication is collateral. A security interest in a digital asset perfected by cryptographic control now achieves legal priority over one perfected by a traditional UCC-1 filing. Tokenized assets can serve as first priority collateral in secured lending, recognized by New York courts. Given New York’s dominance in financial law, this creates a de facto national standard.

Where This Leads

The tokenization industry has spent years focused on the asset leg and how to represent things onchain. That work is largely done. The regulatory framework to support it is now substantially in place, with the remaining gaps narrowing on a legislative timeline measured in months rather than years.

What’s missing is the intermediation layer that makes the system safe at scale. The entities that pool tokenized asset exposure, distribute it across networks, absorb credit risk, manage intraday liquidity, and provide the structural guarantees that prevent a transparent, instant settlement system from eating itself during stress.

Every previous cycle in financial history tells the same story. The institutions that warehouse the risk the new system can’t eliminate become the load bearing walls of the architecture that follows. Mortgages needed Fannie. Deposits needed the FDIC. Tokenized finance needs its equivalent.

That’s a banking function. It always has been.

Mastercard to Buy Stablecoin Startup BVNK for Up to $1.8 Billion

Mastercard will acquire stablecoin infrastructure startup BVNK for up to $1.8 billion, positioning the payments giant to capitalize on growing institutional demand for digital dollar settlement rails.

https://www.bloomberg.com/news/articles/2026-03-17/mastercard-to-buy-stablecoin-startup-bvnk-for-up-to-1-8-billion

Ironlight raises $21 million to expand regulated marketplace for tokenized securities

Ironlight raises $21 million Series A to expand its FINRA-approved alternative trading system supporting both traditional and tokenized securities trading. The funding will help scale regulated marketplace infrastructure for institutional digital asset adoption.

https://www.theblock.co/post/393770/ironlight-raises-21-million-expand-regulated-marketplace-tokenized-securities

Exclusive: PayPal expands stablecoin access to 68 more countries

PayPal expanded its PYUSD stablecoin access to 68 additional countries, significantly broadening the reach of its dollar-denominated digital currency for global payments.

https://fortune.com/2026/03/17/paypal-expands-pyusd-stablecoin-access-to-68-more-countries/

AI’s Money Bots Are Here and Everyone Wants to Handle Their Cash

AI agents are emerging as stablecoins’ potential killer app, with payment companies racing to provide banking services for autonomous commerce systems that need programmable money for 24/7 transactions.

https://www.bloomberg.com/news/articles/2026-03-17/the-race-to-bank-ai-agents-in-new-era-of-commerce-is-heating-up

Regulation & Policy

SEC’s Hester Peirce encourages firms exploring tokenization to ‘come in and talk to us’

SEC Commissioner Hester Peirce encourages firms exploring tokenization to engage directly with regulators, emphasizing the agency’s role as disclosure-focused rather than merit-based. Her comments signal potential regulatory openness to tokenized asset innovation.

https://www.theblock.co/post/393803/sec-hester-peirce-encourages-firms-tokenization-come-in-talk-to-us

How Florida’s Stablecoin Bill Mirrors ‘Big Brother’ Tools Outlawed Under Ron DeSantis’ CDBC Ban

Florida’s stablecoin bill advances despite Governor DeSantis’s CBDC opposition, creating regulatory framework for private digital dollars. The legislation mirrors federal surveillance capabilities while banning government-issued digital currency.

https://decrypt.co/361074/florida-stablecoin-bill-mirrors-big-brother-tools-ron-desantis-cdbc-ban

Research & Analysis

Once, cash learned to ‘fly,’ today money needs to learn to ‘think’

American Banker explores programmable money as the next evolution beyond paper currency, drawing parallels to China’s historical shift from metal to paper money. The analysis positions tokenization as a similarly transformative monetary innovation.

https://www.americanbanker.com/opinion/once-cash-learned-to-fly-today-money-needs-to-learn-to-think

Tokenized Money

Cari picks ZKsync’s Prividium as US regional banks join stablecoin race

Cari Network selects ZKsync’s Prividium stack to build bank-governed tokenized deposit platform for US regional banks. The initiative gives community lenders stablecoin-style payment rails while maintaining traditional banking oversight.

https://cointelegraph.com/news/cari-picks-zksync-prividium-regional-banks

That number is the gravitational force reshaping American banking. And it raises a question that the tokenization community has been circling for years without quite landing on. Could tokenized financial infrastructure be the thing that finally levels this playing field?

The short answer is probably not for most banks. But the longer answer is more interesting, and more uncomfortable, than either the optimists or the skeptics tend to acknowledge.

The Melting Ice Cube Problem

The regional bank predicament is often misunderstood. It’s not a crisis. It’s something even worse… a slow bleed that doesn’t demand urgent action until it’s too late.

In any given year, maybe 5% of consumer banking relationships are actually in motion with people switching accounts, new entrants joining the system. The largest banks are capturing an outsized share of those new relationships, perhaps 30% to 50% of the flow. But because the addressable pool is small, the gap shows up as just a 1-2% annual growth differential. JP Morgan grows consumer deposits at 5-6%. The average regional bank grows at 2-3%, essentially just holding its existing base and capturing a bit of inflation.

The comparison to traditional asset management is apt. AUM across the industry is still higher than it was a decade ago, but the ability to generate organic flows has been fundamentally impaired. The regionals aren’t dying. They’re running a melting ice cube. Still large, still functioning, but with a trajectory that only goes one direction if nothing changes.

Regional banks can be fast followers on technology. They can watch the mega banks test eight features in their app and copy the one that sticks. But this guarantees you’re always six months behind, always one step back. And the vendor ecosystem, the FIS, Fiserv and Jack Henrys that rent core infrastructure to smaller banks, keeps them alive but doesn’t prioritize their competitive differentiation. Every banker knows they’re running on someone else’s product roadmap.

So when someone proposes that tokenization might be the answer, the instinct from anyone who has actually sat in a regional bank’s technology steering committee is yeah sure, and we still haven’t finished migrating off Windows XP.

That instinct is mostly right. But it’s worth examining where it might be wrong.

What Tokenization Could Change — In Theory

Strip away the hype, and there are three areas where tokenized infrastructure could restructure the cost curves that currently favor scale.

Settlement and clearing. A midsize bank today pays to access the same settlement infrastructure as JP Morgan, but it processes a fraction of the volume. The fixed costs of connecting to payment rails, managing correspondent banking relationships, and reconciling across systems are largely the same whether you’re processing $50 billion or $500 billion a month. Tokenized settlement has the potential to collapse these layers. If the ledger is the settlement, the cost of clearing doesn’t scale with the complexity of your back office. It scales with your transaction volume, which is a more democratic cost structure.

Product manufacturing. When a $3 trillion bank decides to enter private credit alongside its traditional lending book, it can build custom infrastructure, hire specialized teams, and absorb the startup costs across a massive balance sheet. A $30 billion regional faces the same regulatory complexity but can’t spread the investment. If a private credit fund or syndicated loan exists as a standardized tokenized instrument with programmable compliance built in, the marginal cost of offering it drops. The regional bank doesn’t need to build the factory. It needs to connect to one.

Distribution infrastructure. Tokenized protocols are inherently open. If the rails are shared, differentiation shifts from who built the best pipes to who offers the best advice, the best relationship, the best local knowledge. That’s a game regional banks should be able to win.

That’s the theory. But here’s the problem.

The Challenge of Getting There From Here

The average community or midsize regional bank is running on a core system that was architected in the 1990s. Their IT teams are small. Their change management capacity is limited. Their boards are not staffed with people who understand distributed ledger technology, and quite frankly, they shouldn’t be, because that’s not where their fiduciary attention needs to be focused.

These institutions struggle to implement real-time payments. They are years behind on open banking APIs. Many still run batch processing overnight. Asking them to adopt tokenized settlement infrastructure isn’t just ambitious, it fundamentally misunderstands how institutional change works in community banking. You don’t leapfrog from batch processing to programmable money. You migrate to real-time payments, then modernize your core, then maybe, just maybe, you’re in a position to think about tokenized instruments. That’s a five to ten year journey, and it assumes leadership continuity, board support, and vendor cooperation that most banks don’t have.

There’s also the talent problem. The people who understand both banking regulation and blockchain architecture are rare and expensive. They’re working at JP Morgan, or at crypto native firms, or at fintechs. They’re not moving to a $15 billion asset bank in the Midwest, no matter how compelling the mission statement.

And then there’s the vendor question. The core banking vendors that serve the majority of US banks, Fiserv, Jack Henry, FIS etc, have been cautious about tokenization for understandable reasons. Their business model is built on long term contracts with incremental feature rollouts. They have no incentive to enable a technology layer that could disintermediate them. Until the vendor ecosystem moves, the 3,000+ banks that depend on it are largely stuck.

So Who Actually Benefits?

If we’re honest about the operational constraints, then the tokenization landscape in US banking probably shakes out into three tiers.

The top 20 banks like the PNCs, US Bancorps, Truists, etc, have the scale, the technology budgets, and the organizational capacity to run pilots and build toward tokenized infrastructure. Some already are. These are the institutions that might genuinely close a portion of the scale gap with the mega banks, particularly in capital markets and treasury services. But these banks also have the most to lose from disruption to existing revenue streams, which makes them cautious adopters.

The 4,000 community and small regional banks aren’t going to build tokenized infrastructure. Their realistic path is the same as it’s always been: renting. They’ll plug into tokenized systems that someone else builds, the same way they rent core banking today. The question is whether tokenization vendors build products for them at price points that work, and whether the economics of serving small banks on new rails are any better than the economics of serving them on old ones. History suggests the answer is: not obviously.

The biggest beneficiaries might actually be non-banks. If you’re Apollo or Blackstone and you’re already building tokenized fund structures, the regional bank isn’t your competitor, it’s more likely your distribution channel. Private credit balances have roughly doubled since pre-COVID while bank C&I lending has grown only about 30%. Tokenization could accelerate that shift, not reverse it. The regional bank gets to offer its clients access to tokenized products, but the economics flow to whoever manufactured the instrument. That’s a different story from “tokenization levels the playing field.” It might just change who the regional bank is dependent on, from Fiserv to Blackstone.

The Regulatory Window Is Real, But Narrow

One thing the optimists get right is that the current regulatory environment is unusually open to experimentation. The Basel III endgame package is expected to keep capital requirements roughly flat. The SEC’s posture on digital assets has shifted. The OCC has signaled openness to banks engaging with blockchain based systems.

But none of this is permanent. Administrations change. Personnel change. The six times debt to EBITDA limit that kept banks out of software and enterprise lending for years was a personnel decision, not a statutory one. The same is true for whatever openness currently exists toward tokenized infrastructure.

For the banks that can move, that top tier with real technology capacity, the window matters. For everyone else, the window is largely irrelevant because they don’t have the organizational velocity to exploit it before it closes.

Where This Actually Lands

The honest version of the tokenization thesis for banking isn’t “this levels the playing field.” It’s something more nuanced and a bit less comfortable.

For a small number of large regional banks, tokenized infrastructure creates a genuine opportunity to compete more effectively in capital markets, treasury services, and structured product distribution. Not to match JP Morgan, but to close from 60 cents on the dollar to maybe 75.

For the vast majority of US banks, tokenization is going to be something that happens to them, not something they do. They’ll access tokenized products through vendors or non-bank partners. They’ll distribute instruments they didn’t manufacture on rails they don’t control. Their margins on those products will be thin, and the value will accrue to whoever owns the infrastructure layer.

And for non-banks like the private credit firms, the alternative asset managers, the fintechs, tokenization is a distribution play. It’s a way to reach the $15 billion bank’s client base without building a branch network or a deposit franchise. The regional bank becomes the last mile, the trusted face. Valuable, but not where the economics concentrate.

There’s an old adage in banking that whatever grows the fastest tends to be the problem. It’s worth keeping that in mind before assuming tokenization will be the exception to every other technology cycle that promised to democratize finance and ended up concentrating it further.

The regional bank’s core advantages, the local knowledge, relationship depth, community trust, are real. But technology has never been the thing that made those advantages valuable. What made them valuable was that they were hard to replicate at scale. The question tokenization raises is whether the infrastructure makes it easier for someone else to replicate what regional banks do.

That’s the question that should be keeping regional bank boards up at night.

Wells Fargo files trademark for WFUSD, hinting at potential bank stablecoin

Wells Fargo files trademark for ‘WFUSD’, suggesting the major U.S. bank is preparing to launch its own stablecoin for payments and trading services.

https://crypto.news/wells-fargo-files-trademark-for-wfusd/

Singapore based MetaComp raises $35 million in funding backed by Alibaba

Singapore based MetaComp raises $35 million from Alibaba to bridge traditional payment rails with stablecoin settlement infrastructure, signaling growing enterprise adoption.

https://www.theblock.co/post/393509/metacomp-raises-35-million-alibaba

Crypto accounting startup Cryptio lands $45M as institutions move onchain

Crypto accounting startup Cryptio secures $45 million as institutions increasingly move onchain, driving demand for digital asset reconciliation and audit systems.

https://cointelegraph.com/news/cryptio-raises-45m-crypto-accounting-tokenized-finance

Regulation & Policy

FDIC Moves to Exclude Stablecoins From Deposit Insurance

FDIC Chairman clarifies that stablecoins will not receive deposit insurance coverage under the GENIUS Act, even through indirect ‘pass-through’ arrangements with banks.

https://www.pymnts.com/news/regulation/2026/fdic-plans-to-block-stablecoins-from-pass-through-insurance/

Senate Overwhelmingly Passes CBDC Ban Attached to Bipartisan Housing Bill

U.S. Senate overwhelmingly passes housing bill with CBDC ban amendment, prohibiting Federal Reserve digital currency issuance through 2030, though House passage remains uncertain.

https://decrypt.co/360905/senate-overwhelmingly-passes-cbdc-ban-bipartisan-housing-bill

HSBC, Standard Chartered to be first recipients of Hong Kong stablecoin licenses: reports

HSBC and Standard Chartered are set to become Hong Kong’s first licensed stablecoin issuers, giving two major note-issuing banks central roles in the city’s digital asset hub strategy.

https://www.theblock.co/post/393502/hsbc-standard-chartered-hong-kong-stablecoin

SEC working on ‘narrower’ exemption for tokenized securities: Hester Peirce

SEC Commissioner Hester Peirce calls for narrower exemptions for tokenized securities on a rule-by-rule basis rather than blanket approaches, as the agency works on targeted relief.

https://www.theblock.co/post/393487/sec-narrower-exemption-tokenized-securities

Research & Analysis

With Billions to Spend, Tether Finds New Allies in Washington

Bloomberg profiles Tether’s $122 billion Treasury holdings and Washington influence campaign, highlighting the stablecoin issuer’s strategic positioning for long-term U.S. operations.

https://www.bloomberg.com/features/2026-tether-usa-crypto-ambitions

European watchdog has eye on tokenisation as adoption set to soar

European Securities and Markets Authority warns of tokenization risks as momentum builds through interoperability frameworks and regulatory clarity, requiring enhanced oversight.

https://www.thetradenews.com/european-watchdog-has-eye-on-tokenisation-as-adoption-set-to-soar

Tokenized Money

Metaplanet Deepens Bitcoin Strategy With $25M Investment Plan, New Venture Arm

Metaplanet launches venture capital and asset management subsidiaries while backing Japan’s first licensed yen stablecoin, deepening its digital asset infrastructure strategy.

https://decrypt.co/360812/metaplanet-bitcoin-strategy-new-venture-arm-investment-plan

Nasdaq Moves Closer to ‘Always On’ With Tokenization Plan

Nasdaq partners with Kraken to develop tokenized stock infrastructure, enabling 24/7 equity trading and connecting traditional markets to blockchain networks for institutional clients.

https://www.bloomberg.com/news/newsletters/2026-03-10/nasdaq-moves-closer-to-always-on-with-tokenization-plan

Eugene Ludwig courts banks for stablecoin alternative

Former Clinton administration official Eugene Ludwig’s firm Cari lines up five banks to support tokenized deposits for real-time payments as a stablecoin alternative. The initiative represents traditional banks’ effort to compete with stablecoin payment rails while maintaining regulatory compliance.

https://www.americanbanker.com/payments/news/clinton-alum-eugene-ludwig-courts-banks-for-stablecoin-alternative

Societe Generale-FORGE launches EURCV stablecoin on Stellar

Societe Generale’s digital asset arm FORGE launches MiCA-compliant euro-backed stablecoin EURCV on Stellar network as part of multichain strategy. The expansion demonstrates European banks’ growing embrace of regulated digital asset infrastructure.

https://cointelegraph.com/news/socgen-forge-deploys-mica-compliant-euro-stablecoin-eurcv-on-stellar-network

Global insurance broker Aon tests stablecoin payments with Coinbase, Paxos

Global insurance broker Aon pilots stablecoin payments with Coinbase and Paxos for premium settlements, demonstrating institutional adoption of digital payment rails.

https://www.coindesk.com/business/2026/03/09/global-insurance-broker-aon-tests-stablecoin-payments-with-coinbase-paxos

Regulation & Policy

OCC Unveils Proposed Rulemaking To Implement The GENIUS Act: A New Era For U.S. Stablecoin Oversight

The OCC unveiled proposed rulemaking to implement the GENIUS Act, establishing the first US framework for payment stablecoin issuers. This represents a major step toward comprehensive federal oversight of dollar-backed digital currencies.

https://www.mondaq.com/unitedstates/fintech/1754892/occ-unveils-proposed-rulemaking-to-implement-the-genius-act-a-new-era-for-us-stablecoin-oversight

Senators try to unlock stalled crypto Clarity Act with compromise on stablecoin yield

US senators propose compromise on stablecoin yield restrictions to advance the stalled CLARITY Act, with negotiations intensifying between crypto industry and banking lobby.

https://www.coindesk.com/policy/2026/03/10/senators-try-to-unlock-stalled-crypto-clarity-act-with-compromise-on-stablecoin-yield

Bank of England open to revising stablecoin rules, Breeden says

Bank of England signals openness to revising stablecoin regulations as policymakers reassess digital currency frameworks amid growing institutional adoption.

https://www.reuters.com/business/finance/bank-england-open-revising-stablecoin-rules-breeden-says-2026-03-11/

US banking agencies guide capital treatment of tokenized securities

US banking agencies issued guidance on capital treatment for tokenized securities, providing regulatory clarity for banks holding blockchain-based financial instruments. The guidance helps banks understand risk-weighting requirements for digital asset exposures.

https://www.nortonrosefulbright.com/en/knowledge/publications/355195de/us-banking-agencies-issue-guidance-on-capital-treatment-of-tokenized-securities

Research & Analysis

Stablecoin boom could eat into traditional banks’ profits, warn Jefferies analysts

Jefferies analysts warn that the stablecoin boom could erode traditional banks’ profit margins as digital currencies increasingly compete with deposit-based business models.

https://www.coindesk.com/business/2026/03/10/stablecoin-boom-could-eat-into-traditional-banks-profits-warn-jefferies-analysts

Public vs. Private Payment Platforms: Market Impacts and Optimal Policy

Bank of Canada published research comparing public versus private payment platforms in two-sided markets, analyzing competition between CBDCs and private platforms. The paper provides insights into optimal policy design for digital currency ecosystems.

https://www.bankofcanada.ca/2026/03/staff-working-paper-2026-10

Stablecoins are starting to reshape payments and banking, Macquarie says

Macquarie analysts reported that stablecoins are beginning to reshape payments and banking infrastructure, with institutional adoption accelerating across traditional financial services. The analysis highlights stablecoins’ growing role in settlement and treasury operations.

https://www.coindesk.com/business/2026/03/10/stablecoins-are-starting-to-reshape-payments-and-banking-macquarie-says

Tokenized Real-World Assets Hit $25 Billion, Nearly Quadrupling in a Year

Tokenized real-world assets hit $25 billion market cap, nearly quadrupling in value over the past year driven by institutional adoption. The growth demonstrates accelerating institutional interest in bringing traditional assets onto blockchain infrastructure.

https://www.blockhead.co/2026/03/09/tokenized-real-world-assets-hit-25-billion-nearly-quadrupling-in-a-year/

Market Moves

Zerohash is latest crypto firm to apply for a trust charter

Digital asset company Zerohash applied for a national trust bank charter from the OCC, joining other crypto firms seeking traditional banking licenses to serve institutional clients like Morgan Stanley.

https://www.americanbanker.com/news/zerohash-is-latest-crypto-firm-to-apply-for-a-trust-charter

Stablecoin Payments Firm KAST Raises $80 Million in Funding

KAST, a stablecoin payments firm founded by a former Circle executive, raised $80 million in Series A funding to expand globally, demonstrating continued institutional investor appetite for digital payment infrastructure.

https://www.bloomberg.com/news/articles/2026-03-09/stablecoin-payments-firm-kast-raises-80-million-in-funding

Nasdaq to connect European trading venues to Seturion tokenized asset platform

Nasdaq will connect its European trading venues to Boerse Stuttgart’s Seturion tokenized asset platform, marking a significant step toward transforming Europe’s fragmented settlement landscape with blockchain technology.

https://www.finextra.com/newsarticle/47407/nasdaq-to-connect-european-trading-venues-to-seturion-tokenized-asset-platform

ClearToken arrives on the Canton Network

FCA-authorized digital financial market infrastructure provider ClearToken deployed three digital asset platforms on Canton Network, expanding regulated tokenized settlement capabilities for institutional clients.

https://www.finextra.com/pressarticle/109089/cleartoken-arrives-on-the-canton-network

Nasdaq Partners With Kraken in Plan for 24/7 Tokenized Stock Trading

Nasdaq partnered with Kraken to develop a platform for 24/7 tokenized stock trading, potentially revolutionizing equity markets by enabling round-the-clock settlement outside traditional market hours.

https://www.wsj.com/finance/stocks/nasdaq-partners-with-kraken-in-tokenization-push-135e8112?gaa_at=eafs&gaa_n=AWEtsqc0zzQ5w19LyDdOuLAr3K1Obe9Ox_-L8u19RtyU-w4cUnIv15joSEQ5&gaa_ts=69aec475&gaa_sig=CizW8UoZMZRAyWTgg8_sQbAIbxMRYtkW3MJbfp5qt1MEGwbFnIwlERx0dnmSFpOWj1sQ_l6iFqtUmpbqmJEbmg%3D%3D

Regulation & Policy

Fed, FDIC and OCC clarify capital rules for tokenized securities

Federal banking agencies clarify that tokenized securities should receive the same capital treatment as traditional securities, removing a key regulatory uncertainty for bank adoption.

https://www.wealthprofessional.ca/news/industry-news/fed-fdic-and-occ-clarify-capital-rules-for-tokenized-securities/391792

House Republicans insist on a permanent CBDC ban, threaten Housing Bill

House Republicans demand permanent CBDC ban provisions in housing legislation, escalating political opposition to potential U.S. central bank digital currency development.

https://cryptorank.io/news/feed/a7635-house-republicans-cbdc-ban-housing-bill

Clarity Act will benefit banks more than crypto, former CFTC chair says

Former CFTC chair Christopher Giancarlo argues that crypto regulatory clarity legislation would benefit traditional banks more than crypto firms by enabling institutional participation.

https://www.coindesk.com/policy/2026/03/09/clarity-act-will-benefit-banks-more-than-crypto-former-cftc-chair-says

Research & Analysis

A Crypto Coin Is Gobbling Up U.S. Treasuries

New York Times analysis reveals stablecoins are becoming major purchasers of U.S. Treasuries, with implications for monetary policy and financial system stability.

https://www.nytimes.com/2026/03/08/business/stablecoins-crypto-treasuries-risks.html

Tokenization’s move to Wall Street needs more than issuance | Opinion

Industry analysis suggests tokenization’s Wall Street adoption requires comprehensive infrastructure beyond just asset issuance, highlighting gaps in settlement, custody, and regulatory frameworks.

https://crypto.news/tokenizations-wall-street-needs-more-than-issuance

Wall Street Is Moving On-Chain—And Stablecoins Are Becoming the Settlement Rail

Wall Street’s migration to on-chain operations increasingly relies on stablecoins as the primary settlement rail, fundamentally reshaping traditional capital markets infrastructure.

https://www.ccn.com/news/crypto/wall-street-onchain-stablecoins-settlement-rail

I think the distinction matters enormously. If tokenization is a product, you adopt it on your timeline. You form a working group, hire a consultant, run a pilot in 2028. If tokenization is infrastructure, it doesn’t wait for your roadmap. It reprices your deposit franchise, disintermediates your settlement revenue, and commoditizes your lending relationships. Whether you’re ready or not.

Most banks are planning for the first version. They’re going to experience the second.

Here are three things they’re not seeing.

Blind Spot #1: Atomic Settlement Kills Your Revenue Model

When banks encounter atomic settlement in their tokenization education, it’ll often show up as a bullet point about “reducing counterparty risk” in securities settlement. Then I’m sure everyone moves on. I doubt many bankers are taking the time to model the P&L impact.

They really should. Atomic settlement doesn’t just reduce risk. It eliminates the settlement window that has generated bank revenue for decades. When cash and securities both exist as tokens on the same ledger, a smart contract executes simultaneous delivery and payment. No float. No T+1 delay. No overnight batch processing. The transaction completes instantly or reverts as if it never happened.

This is not theoretical. Broadridge’s Distributed Ledger Repo platform processed $365 billion in average daily volume in January 2026, a 508% year over year increase. JPMorgan’s Kinexys processed over $1.5 trillion in tokenized transactions in 2025. DTCC received SEC authorization in December 2025 to tokenize custodied assets, launching in the second half of this year. Fnality raised $136 million in September 2025 to build institutional onchain settlement infrastructure, backed by Bank of America, Citi, and DTCC.

Now think about what this does to a typical commercial bank’s income statement. Settlement float income is likely gone. Correspondent banking spreads on cross-border payments that take 3 to 5 days and cost 2 to 7%, compressed to minutes at under 2%. Back office processing that McKinsey and Accenture estimate DLT could cut by 50%, I expect those savings accrue to the market, not to the bank. Netting services that banks orchestrate among customers will be obsolete when every trade settles atomically, one by one.

The BIS’s 2025 Annual Economic Report describes a “next-generation monetary and financial system” built on tokenized unified ledgers. The New York Fed’s research notes that onchain transactions settle with “objective cryptographic guarantees” that replace subjective trust in intermediaries.

That intermediary role, the trusted counterparty standing between two parties who can’t yet trust each other directly, has been the gravitational center of commercial banking for centuries. It is extraordinarily valuable. And it is precisely what atomic settlement makes optional.

Blind Spot #2: The Yield Awakening Will Empty Deposit Franchises

Here’s the question that everybody in banking should be asking: When a corporate treasurer can allocate every idle dollar across a spectrum of yield bearing tokenized instruments, things like T-bills, money market funds, short duration credit, and structured products, calibrated to their risk appetite, with instant settlement, 24/7, why would a single dollar remain in a non-interest bearing demand deposit account?

The concept of “idle cash” is a product of friction. Corporate treasurers have always known they were leaving yield on the table. They accepted it because moving money was slow, expensive, and operationally burdensome. Sweeps ran overnight. Money market fund subscriptions settled T+1. Optimizing across instruments meant coordinating multiple custodians, each with their own settlement windows and minimum thresholds.

Tokenization will likely eliminate all of that. When every asset class, from treasuries, money market funds, commercial paper, to real estate debt, can exist as a token on the same ledger, a treasurer can build a continuously optimized portfolio of yield-bearing positions and rebalance in real-time based on cash flow needs. The operating account becomes a waystation, not a resting place. Capital passes through on its way to productive deployment.

The thing is, this infrastructure is already live. BlackRock’s BUIDL fund holds $2.5 billion in tokenized Treasury assets. Franklin Templeton launched a blockchain native institutional money market share class in January 2026. Ondo Finance has $1.4 billion in tokenized Treasuries with 24/7 subscriptions and redemptions across multiple chains. BNY and Goldman Sachs announced a joint initiative in late 2025 to build tokenized money market fund infrastructure with BlackRock, Fidelity, and Federated Hermes. And these are just the first-generation products. The range of tokenized yield instruments available to a corporate treasurer will only expand from here.

Run the math on a single commercial client. A $100 million corporate treasury balance earns roughly $250,000 per year at a typical demand deposit rate. That same capital, deployed across a risk appropriate mix of tokenized instruments, could earn $3 to 5 million. No CFO can justify that gap to a board. And no relationship banker, however skilled, can talk a sophisticated treasury operation out of that kind of annual drag indefinitely.

The New York Fed documented “the rise in deposit flightiness” in 2025, finding that corporate deposits have become significantly more rate-sensitive. This is the early signal of a structural shift. When every dollar can be productively deployed at all times, deposits stop being stable funding sources and become transient working capital flows, they become brief stops between yield-generating positions.

And here’s the irreversibility problem: once corporate treasurers build the infrastructure to continuously optimize across tokenized instruments, they never go back to parking cash in demand deposits. The concept of idle balances simply ceases to make sense. This is a one way door.

This doesn’t mean deposits disappear overnight. But it does mean the cost of retaining them rises structurally, permanently, and I suspect faster than most banks have modeled. The deposit franchise has always been the most valuable asset a bank owns. Its value was built on the assumption that moving money was hard enough that customers would tolerate low yields for the convenience of keeping it in one place. When that assumption breaks, what’s left?

Blind Spot #3: Onchain Collateral Is a 2026 Problem, Not a Next Decade One

It feels like most bank roadmap places onchain collateral in the final phase. “Allow digital assets to back credit facilities and loans” is positioned as the aspirational endgame, something to consider after the working group has met for three years.

The market has a different timeline.

JPMorgan’s Tokenized Collateral Network is live, processing transactions with tokenized money market fund shares as collateral across multiple buy side firms. Broadridge has incorporated JPM Coin for atomic settlement of both cash and securities legs of repo transactions. DTCC launched a platform for tokenized real-time collateral management in April 2025. Figure Technologies received the first AAA-rated blockchain securitization from S&P and Moody’s and plans to tokenize $5 billion in real estate. The CFTC recommended tokenized money market funds as eligible collateral. The Federal Reserve clarified in early 2026 that eligible tokenized securities receive the same capital treatment as their non-tokenized counterparts.

A Nasdaq survey found that 52% of global financial institutions expect to actively manage live tokenized collateral by end of 2026.

The Futures Industry Association published a landmark report on “collateral velocity” -- the concept that when collateral is tokenized, the same asset can be posted, moved, released, and reposted across counterparties in real-time rather than over multi-day settlement cycles. A DTCC pilot demonstrated that 50,000 collateral transactions costing approximately $75,000 to process traditionally could be executed for just over $1 on blockchain.

For CRE-heavy lenders, and many regional banks are exactly that, this feels existential. When commercial real estate can be tokenized and posted as smart contract managed collateral that any lender can verify in real-time, the relationship based lending model becomes a commodity. Credit approval collapses from days to hours. Collateral monitoring becomes continuous rather than periodic. Borrowers gain the ability to shop collateral across lenders instantly.

The banks that dominate CRE lending today have built that position on deep local knowledge, borrower relationships, and appraisal expertise. Those are real advantages. But when collateral itself becomes programmable, transparent, and portable, the question shifts from “who knows this borrower best?” to “who can price this collateral fastest?” That’s a fundamentally different competitive game, and the timeline for playing it is probably not the next decade.

What Gets This Right

The thread connecting all three blind spots is a framing problem. If banks are asking “how do we participate in tokenization?” That’s a reasonable question, but it’s the wrong first question. The right first question is “what happens to our existing economics when settlement is instant, yield is transparent, and collateral is programmable?”

The answer, in every case, is that the frictions banks currently monetize, settlement timing, deposit inertia, and collateral opacity, get compressed or eliminated. That’s not a reason to panic. It’s a reason to do the math.

Some banks have started to get this right. I’d bet JPMorgan didn’t build Kinexys because blockchain seemed interesting. They built it because they modeled a world in which settlement float disappears and decided they’d rather own the new infrastructure than be displaced by it. That’s the strategic posture that matters, not enthusiasm about the technology, but clarity about what happens to your business if you stand still.

For most regional and midsize banks, the honest answer is uncomfortable. Their deposit franchises are structurally more vulnerable to yield competition than maybe they want to acknowledge. Their settlement dependent revenue is more exposed than their annual strategy documents reflect. Their collateral management capabilities are further behind the market than their roadmaps suggest.

None of this means these banks can’t navigate the transition. Many of them have genuine advantages, regulatory relationships, local market knowledge, client trust built over decades, that will matter enormously in a tokenized world. But those advantages only compound if banks understand what’s actually changing. And what’s actually changing is not really about the technology. It’s about the economics.

The banks that come through this well won’t just be the ones that adopted tokenization first. They’ll be the ones that understood, early, that their existing business model was built on frictions that tokenization removes and rebuilt their strategy around what remains when those frictions are gone.

Sources

Broadridge, “Broadridge’s DLR Platform Achieves 508% Year-Over-Year Growth in January,” January 2026.

JPMorgan Chase, “Kinexys by J.P. Morgan: Digital Payments and Blockchain Solutions.”

DTCC / SEC, “No-Action Letter for Tokenization of DTC-Custodied Securities Pilot,” December 2025.

CoinDesk, “Fnality Raises $136M to Expand Blockchain Payment Systems for Banks,” September 2025.

McKinsey & Company, “The Stable Door Opens: How Tokenized Cash Enables Next-Gen Payments,” 2025.

Bank for International Settlements, Annual Economic Report 2025, Chapter III: “The Future Monetary and Financial System.”

Federal Reserve Bank of New York, “Stablecoins vs. Tokenized Deposits: The Narrow Banking Debate Revisited,” Staff Report No. 1179, 2025.

CoinDesk, “BlackRock’s $2.5 Billion Tokenized Fund Gets Listed as Collateral on Binance, Expands to BNB Chain,” November 2025.

Business Wire, “Franklin Templeton Prepares Institutional Money Market Funds for Tokenized Finance,” January 2026.

The Street, “Ondo Finance Becomes Largest Provider of Tokenized Treasuries and Stocks,” July 2025.

Goldman Sachs, “BNY and Goldman Sachs Launch Tokenized Money Market Funds Solution,” November 2025.

Federal Reserve Bank of New York, Liberty Street Economics, “The Rise in Deposit Flightiness and Its Implications for Financial Stability,” July 2025.

Securities Finance Times, “JPMorgan Tokenized Collateral Network: Live Transactions with Institutional Buy-Side Firms,” 2025.

DTCC, “DTCC Announces New Platform for Tokenized Real-Time Collateral Management,” April 2025.

Business Wire, “Figure Technology Solutions Achieves Industry First with S&P AAA Ratings for Blockchain Assets,” June 2025.

CFTC, “Global Markets Advisory Committee Recommendation on Tokenized Money Market Funds as Eligible Collateral,” 2025.

Federal Reserve, “Guidance on Capital Treatment of Eligible Tokenized Securities,” March 2026.

Nasdaq, “Making the Case for Tokenized Collateral,” 2025.

Futures Industry Association, “Accelerating the Velocity of Collateral,” June 2025.

Nedbank and Crypto.com Partner to Transform African Payments

Nedbank partners with Crypto.com to develop digital payment solutions across Africa, expanding institutional crypto adoption in emerging markets.

https://news.bitcoin.com/nedbank-and-crypto-com-partner-to-transform-african-payments

Western Union Partners (WU) with Crossmint to Launch USD Stablecoin on Solana

Western Union launches USD stablecoin on Solana blockchain through partnership with Crossmint, bringing traditional remittance services onto digital rails.

https://finviz.com/news/332488/western-union-partners-wu-with-crossmint-to-launch-usd-stablecoin-on-solana

tx Launches RWA Tokenization Infrastructure and Marketplace Across US and Global Markets

TX launches real-world asset tokenization infrastructure and marketplace across US and global markets, providing institutional-grade RWA platform.

https://www.manilatimes.net/2026/03/06/tmt-newswire/globenewswire/tx-launches-rwa-tokenization-infrastructure-and-marketplace-across-us-and-global-markets/2294961

Regulation & Policy

First US state level stablecoin bill passes in Florida

Florida becomes first US state to pass comprehensive stablecoin regulatory framework, establishing state-level licensing and compliance requirements for stablecoin issuers.

https://www.theblock.co/post/392733/first-us-state-level-stablecoin-bill-passes-in-florida

Free market MEP: current stablecoin regulation is ‘a joke’ for mainstream use

European MEP criticizes current EU stablecoin regulation as inadequate for mainstream adoption, highlighting regulatory gaps in institutional use cases.

https://www.ledgerinsights.com/free-market-mep-current-stablecoin-regulation-is-a-joke-for-mainstream-use

Russia Could Beat the US to Stablecoin Rules as New Bill Advances While GENIUS Act Stalls

Russia advances new stablecoin legislation while US GENIUS Act faces delays, potentially giving Russia first-mover advantage in comprehensive stablecoin regulation.

https://www.ccn.com/news/crypto/russia-beat-us-stablecoin-rules-new-bill-advances-genius-act

Research & Analysis

Tokenized Securities Move Closer to Mainstream Finance After New Guidance

New regulatory guidance moves tokenized securities closer to mainstream finance adoption, providing clearer compliance pathways for institutional issuers.

https://www.pymnts.com/bank-regulation/2026/tokenized-securities-move-closer-mainstream-finance-after-new-guidance

Tokenized Money

Bank of Canada tests tokenized bonds on blockchain in Project Samara

Bank of Canada tests tokenized bonds on blockchain through Project Samara, piloting digital government securities settlement with major financial institutions.

https://www.tradingview.com/news/invezz:7c2b8650f094b:0-bank-of-canada-tests-tokenized-bonds-on-blockchain-in-project-samara

Crypto News Today: Bank of Japan Tests Blockchain Settlement as Cardano Eyes $0.43 and Pepeto Approaches 537x

Bank of Japan conducts blockchain settlement testing, exploring digital infrastructure for institutional payment and clearing systems.

https://www.openpr.com/news/4416123/crypto-news-today-bank-of-japan-tests-blockchain-settlement-as