For years, tokenization was an awkward corner of capital markets conversations: technically interesting, commercially promising, but frustratingly abstract. The idea was simple enough: take real assets like government bonds, private credit funds or stocks, represent them on a blockchain and make them easier to move, settle and hold. What was harder to demonstrate was what all this actually did for investors.
That question is now answered, and May 2026 is a reasonable place to mark the shift.
On May 4, the Depository Trust & Clearing Corporation (DTCC) announced that its DTC Tokenization Service is targeting limited production of tokenized security transactions in July 2026, with a broader rollout planned for October. The DTCC is not a crypto startup. It is the organization that currently handles the clearing and settlement of most U.S. equity and fixed income transactions. When the existing post-trade infrastructure comes into action tokenized assets to regulated production workflows, the narrative changes from “Can we release this?” to “What can investors actually do with it?”
Phase 1 was about issuing tokenized assets. Phase 2 is about making these assets usable.
The Return Stack: When Assets Start Performing More Than One Job
One of the clearest early examples of Stage 2 utility is collateral mobility: the ability to continue earning returns on an asset while simultaneously using that asset to support trading activity.
On April 28, Standard Chartered, BlackRock and OKX launched a framework for qualified investors to use BlackRock’s BUIDL fund – a tokenized short-term US Treasury bond product – as collateral for trading on OKX. The mechanics are important here. Under the traditional model, an investor is faced with a simple trade-off: whether to hold a yield-bearing instrument and earn income, or convert it into cash or stable coins trade. Capital is productive or liquid, but managing both at the same time requires juggling different positions.
Tokenized Treasury products create a third option. A qualified investor can hold a yield-bearing instrument, pledge it as collateral and deploy that asset in the market without liquidating the underlying position. The asset is not simply in a portfolio that generates a coupon. It becomes a working tool.
This is what some analysts are starting to call the “yield stack”: a single asset that generates returns, supports collateral requirements, and enables market access at the same time. It’s worth being precise about the current scope of this: the BUIDL collateral framework is aimed at institutional and qualified investors, not retail participants. The sanitary ware exists for a specific segment of the market. But the principle is fixed and the infrastructure tends to expand over time.
Wallet-native fund ownership: the brokerage as interface
The second major Phase 2 development concerns the way investors hold their fund exposure. The conventional ETF structure includes several layers: the ETF sponsor, a transfer agent, a clearing infrastructure, a custodian, a brokerage account and a market maker. This is largely invisible to the end investor; the experience feels simple. But each layer adds friction, cost and dependency.
The regulatory and product discussion surrounding tokenized ETF share classes has accelerated in 2026. In late 2025, the SEC approved Dimensional Fund Advisors to Add ETF share classes up to 13 investment funds, and broader applications around ETF share class structures have become a key area of regulatory focus. The trend is toward more flexible, portable fund ownership – although tokenized ETF products for the mass market have not yet been adopted.
If tokenized ETF share classes receive broader regulatory approval, the structural implication is significant. Ownership of funds becomes more portable. Instead of an ETF existing only in an investment account, a tokenized representation of that fund exposure could theoretically be held in a wallet, moved across platforms, used in collateral workflows, or integrated into automated portfolio tools.
The disruptive point is not that ETFs are disappearing. It is that the role of the investment account is shifting: from functioning as a kind of safe to functioning more like an interface layer. Other interfaces become possible.
Clarity about regulations: from experimental to investable
None of the above developments matter on a large scale without a clearer legal framework. Tokenized assets currently occupy an ambiguous space. A tokenized private credit fund can be economically similar to a security, technically represented on a blockchain and used operationally as collateral – sometimes all three at once. The existing regulations were not written with that combination in mind.
The CLARITY Act The debate in the US Congress is directly relevant here. Specifically, Section 505 of the Senate Banking Committee amendment addresses how tokenized securities and real-world assets should be classified and treated. Some market participants have expressed concerns that parts of the approach could impose restrictions that delay rather than enable adoption. The bill remains part of an active legislative process, so its final form and practical implications have not yet been settled.
However, the broader regulatory trajectory appears to be moving away from the first wave question: “Is this tokenized asset legal?” – towards the second wave question: “How should this asset be classified, protected and included in a portfolio?” That’s a more productive conversation. Regulation, carefully implemented, does not eliminate the potential of tokenization. It turns a speculative area of experimentation into a category that institutional and ultimately private allocators can consider investable.
Hybrid assets – instruments that combine the economic characteristics of securities with blockchain native utility – are likely to require hybrid rules: investor protection at the security level in addition to the programmability that makes tokenization worthwhile in the first place.
The portfolio convergence argument
The longer-term implication of phase 2 is portfolio convergence. Historically, retail investors had access to a simplified menu: public stocks, government bonds, ETFs and cash. Private lending, structured products and collateralized strategies have largely been the preserve of family offices, endowments and institutional allocators. The limitation was not only regulations, but also access infrastructure. These products were difficult to retain, difficult to transfer, and difficult to integrate into standard portfolio tools.
Tokenization compresses that access gap. Consider an illustrative allocation model (presented here as a structural example, not as investment advice):
|
Public shares |
50% |
Tokenized ETF or index exposure |
|
Private credit |
20% |
Tokenized private credit funds |
|
Gold |
10% |
Instruments with gold back on the chain |
|
Liquid alternatives |
20% |
Tokenized market neutral or structured return strategies |
This type of multi-sleeve structure, combining public and private market exposure with collateralized instruments, has been a standard approach for larger institutional portfolios for years. The potential contribution of tokenization is to make the building blocks accessible and interoperable at a lower minimum investment threshold.
That said, broader access comes with real tradeoffs that should not be overlooked. Greater portfolio complexity means a greater risk of liquidity mismatches, especially for private credits or alternative bond loans that may not be redeemable in the short term. It means more responsibility for custody decisions because ownership of portfolios shifts some of the operational burden to the investor. And it means more due diligence requirements, as the range of available products will include structures with significantly different risk profiles that will coexist.
The old access model was restrictive, but also simplified decision-making. The shift does not automatically produce better results; it provides more options, making it easier to understand how to distribute.
What phase 2 actually means
The first wave of tokenization demonstrated that real-world assets can be put on-chain. The second wave shows that they can do something useful once they get there.
The DTCC’s move to a production tokenized scheme brings with it legitimacy and existing market infrastructure. The collateral framework from BlackRock, Standard Chartered and OKX shows a practical yield stack use case in use. The regulatory conversations surrounding ETF share classes and the CLARITY Act point toward a clearer legal framework for hybrid assets.
Taken together, these developments suggest that tokenization is no longer primarily a story about asset issuance. It’s moving closer to a portfolio operating system: a layer of infrastructure that allows different types of assets to be held, moved, pledged, and combined in ways that were previously difficult or impossible for most investors.
The pace will depend heavily on regulatory outcomes, institutional adoption and whether the infrastructure proves reliable under real market conditions. Phase 2 has started. The results have not yet been written.