Tokenization won’t matter until it makes trillions

In early September, Nasdaq filed a rule change with the SEC to allow tokenized stocks and exchange-traded products, or ETPs, to trade on its platform. At first glance, this appears to be a crypto breakthrough — blockchain is finally knocking down the door of U.S.-listed markets. But the reality is securities have been “digital” for decades. The real innovation isn’t wrapping stocks in blockchain; it’s whether tokenization itself can make markets move faster, smarter, and more efficiently. Can blockchain technology and tokenization make collateral more fluid, settlement frictionless, and access interoperable across traditional and digital systems? 

That’s the promise here: Tokenization can actually improve how these markets function, and work for us as a tool to unlock previously unachievable features such as intraday liquidity, programmable collateral, and seamless integration with stablecoins in ways the old rails stuck in the T+1 rhythm cannot.

From paper to digital

For much of the 20th century, owning a stock meant holding a paper certificate. By the late 1960s, Wall Street was drowning in slips. The so-called “paperwork crisis” left the NYSE so backlogged that it reduced its trading week, forcing a systematic rethink. Enter the Depository Trust Company in 1973, whose solution to this problem came in the form of locking certificates in a vault and replacing them with electronic book-entry records. Its parent, the Depository Trust & Clearing Corporation (DTCC), currently serves as the backbone of U.S. financial markets, overseeing clearing and settlement for nearly all securities trades. Together, they ensure that when someone buys a stock or a bond, the transfer of ownership and cash happens correctly, safely, and efficiently, without piles of paper certificates moving around. 

London’s CREST, Europe’s Euroclear, and Japan’s JASDEC followed suit in the late 80s and 90s. Immobilized certificates gave way to full dematerialization. Today, however, securities are already born digital: their ownership is tracked, recorded, and settled within centralized architectures. Blockchain technology, in this context, is less a revolution in the asset itself than a new way to record it. And to me, all blockchain breakthroughs are cosmetic unless they deliver real operational or financial improvements beyond what our current systems provide. 

Tokenization alone doesn’t transform the market. It transforms the ledger and opens up more capital markets possibilities so folks like us can start to wonder: can collateral assets move across the ledger faster? Can interest-bearing assets integrate seamlessly with stablecoins? Can markets achieve capital efficiencies that were impossible with legacy systems? What other value can this unlock?

Collateral mobility

The most compelling opportunity I’ve found for tokenization assets can be found in collateral mobility. Collateral mobility — moving and utilizing assets quickly across institutions — is an essential financial concept for margins, liquidity, and risk management. Tokenization amplifies this capability beyond traditional systems as collateral assets can be transferred, reused, and programmably moved on-chain without the bottlenecks of legacy infrastructure. As financial markets become increasingly interconnected, the need for agile token-enabled collateral management solutions is increasingly vital.

We have to remember that digital assets are still small potatoes. The global fixed income market outstanding is $145.1 trillion in 2024. Treasuries as measured in issuance alone were approximately $22.3 trillion as of end-September — eight times greater than the market cap of all of crypto combined. So, quite honestly, crypto enthusiasm in blockchain technology alone won’t move the needle here. These traditional instruments are cash-like, where repo, refinancing, and margin solutions of these assets form the bedrock of short-term liquidity, where faster movement, reusable collateral, and capital efficiency are key. This use case is what makes these instruments natural candidates for tokenization. The push towards tokenization by crypto-geeks merely bridges the gap. 

Stablecoins predominantly backed by Treasuries and yield-generating cash-equivalent investments are amplifying this shift as they are already becoming a tool for banks to cut settlement costs and accelerate transfers. In a recent report, EY projects stablecoins could account for 5-10% of global payments, representing $2.1T to $4.2T of value.  Meanwhile, the CFTC is exploring allowing stablecoins like USDC (USDC) and Tether (USDT) as collateral in U.S. derivatives markets. If approved, stablecoins would sit alongside Treasuries and high-grade bonds as mainstream collateral, cementing the need for infrastructure capable of mobilizing and transforming assets at scale.   

Looking ahead: Markets in motion

Looking ahead, the next five years will reveal whether tokenized collateral is a novelty or a game-changer. By 2026, the buzz will be palpable. Banks and asset managers seem keen to pilot tokenized bonds and stablecoins in selective workflows using a limited number of high-grade investment opportunities. Stablecoins could start to supplement traditional cash in clearing and settlement, especially in derivatives markets. Early adopters using tokenized Treasuries and high-grade bonds will capture modest capital inefficiencies, though tokenization will remain largely limited to liquid, standardized products. 

By 2030, this landscape could shift dramatically. Tokenized bonds, funds, and stablecoins may become mainstream collateral across institutions. Tokenized Treasuries and corporate bonds may represent a significant share of liquidity and rehypothecation markets. Banks’ fulsome adoption of stablecoins could enable faster, cheaper, and more transparent settlement and collateral flows. In this environment, infrastructure for collateral transformation, i.e., the ability to move, reuse, and integrate tokenized assets with stablecoins and traditional securities, will become critical. The winners will be firms that master not just crypto-fication, but the operational choreography required in modern collateral management. 

For me, these trends signal more than techie academic dreaming. They are an operational imperative. Traders and market participants must manage capital efficiently by seamlessly moving collateral between tokenized securities, bonds, and stablecoins. As markets increasingly adopt digital collateral, the true mastery will be in the moat of robust systems: risk management, financing, transformation, movement, and internalization of these collateral assets. Institutions that engage early with these evolving frameworks, turning pilot programs into routine practice, will be better prepared to navigate the realities of tokenized collateral markets as they scale over the next decade. 

So what

Nasdaq’s rule change marks a notable step in the ongoing digital evolution of financial markets, but it is just the beginning. Securities have been digital for decades, and tokenization alone adds little innovation unless paired with systems that allow collateral to be transformed, reused, and moved more efficiently. The real impact will come from unlocking the flexibility and efficiency of large asset pools (e.g., Treasuries, corporate bonds, private credit, etc.) and integrating them with emerging digital instruments like stablecoins — where infrastructure builders will be key. The future of finance isn’t simply about managing assets on a blockchain ledger; it’s about making them fungible, interoperable, and strategically usable across the whole financial system. 

This could very well be the next frontier of capital markets – where technology, risk management, and operational excellence converge. Crypto or not, the drive toward strong capital efficiency is the quiet, essential heartbeat of any serious financial enterprise. It fuels long-term sustainability, equips firms to navigate market cycles, and cements genuine competitive standing.

Capital efficiency grants more than operational ease. It offers financial freedom, shields firms against sudden market shocks, and grants flexibility in strategic decision-making. When resources are deployed optimally, a firm commands its own destiny: offering better pricing, capturing higher margins, and fortifying its market position, therefore outcompeting competitors who may be less efficient in their capital deployment. Tokenization isn’t simply about digitizing assets; it’s about unlocking the mobility, interoperability, and strategic utility of collateral that makes this efficiency tangible. Institutions that embrace it early won’t just operate smarter; they’ll set the standard for how modern markets should function.