The Tokenization of Everything Needs an Intermediary for Everything
What new risks does tokenization create, and who absorbs them?
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.