Tokenization won’t matter until it makes trillions

Early September, Nasdaq submitted a rule change at the SEC to allow tokenized stocks and exchange-traded products, or ETPs, to trade on its platform. At first glance, this seems like a breakthrough in the field of cryptocurrency: blockchain finally opens the doors of American listed markets. But the reality is that securities have been ‘digital’ for decades. The real innovation isn’t wrapping shares in blockchain; what matters is whether tokenization itself can make markets move faster, smarter and more efficiently. Can blockchain technology and tokenization make collateral more fluid, settlement smoother, and access interoperable between traditional and digital systems?

That’s the promise here: tokenization can actually improve the way these markets function, working for us as a tool to unlock previously unattainable features like intraday liquidity, programmable collateral, and seamless integration with stablecoins in ways that the old rails stuck in the T+1 rhythm cannot.

From paper to digital

For much of the 20th century, owning stock meant owning a paper certificate. By the end of the 1960s, Wall Street was drowning in slip-ups. The so-called “paperwork crisis” left the NYSE shortening its trading week, forcing a systematic rethink. Enter the Custodian Trust Company in 1973, whose solution to this problem was to lock certificates in a safe and replace them with electronic booking data. Its parent company, the Depository Trust & Clearing Corporation (DTCC), currently serves as the backbone of the U.S. financial markets, overseeing the clearing and settlement of nearly all securities transactions. Together they ensure that when someone buys a stock or bond, the transfer of ownership and cash is done correctly, safely and efficiently, without piles of paper certificates lying around.

London CRESTEurope Euroclearand that of Japan JASDEC followed suit in the late 80s and 90s. Immobilized certificates gave way to complete dematerialization. Today, however, securities are already born digital: their ownership is tracked, recorded and handled within centralized architectures. In this context, blockchain technology is not so much a revolution in the asset itself as a new way of recording 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 does not change the market. It transforms the ledger and opens up more possibilities for the capital markets, so people like us can ask: Can collateral assets move faster through the ledger? Can interest-bearing assets integrate seamlessly with stablecoins? Can markets achieve capital efficiencies that were impossible with older systems? What other value can this unlock?

Collateral mobility

The most attractive opportunity I have found for tokenization assets is found in collateral mobility. Collateral mobility – the rapid movement and use of assets between institutions – is an essential financial concept for margins, liquidity and risk management. Tokenization enhances this capability beyond traditional systems, as collateral assets can be transferred, reused, and programmatically moved on-chain without the bottlenecks of existing infrastructure. As financial markets become increasingly interconnected, the need for flexible token collateral management solutions becomes increasingly important.

We must remember that digital assets are still small potatoes. The global fixed income market is excellent $145.1 trillion in 2024. Government bonds, measured by issuance alone, were approx $22.3 trillion from the end of September — eight times larger than the market capitalization of all cryptocurrencies combined. So honestly, crypto enthusiasm in blockchain technology alone won’t have a decisive effect here. These traditional instruments are similar to cash, with repo, refinancing and margin solutions of these assets providing the foundation for short-term liquidity, where faster movement, reusable collateral and capital efficiency are key. This use case makes these instruments natural candidates for tokenization. The push for tokenization by crypto geeks is merely bridging the gap.

Stablecoins backed primarily by government bonds and yield-generating investments equivalent to cash are amplifying this shift as they are already becoming a tool for banks to reduce settlement costs and speed up transfers. In a recent report, EY writes projects stablecoins could make up 5-10% of global payments, worth $2.1 trillion to $4.2 trillion. Meanwhile, the CFTC is explore allowing stablecoins such as USDC (USDC) and Tether (USDT) to be used as collateral in the US derivatives markets. If approved, stablecoins would become mainstream collateral alongside government and high-grade bonds, reinforcing the need for infrastructure capable of mobilizing and transforming assets at scale.

Outlook: markets in motion

Looking ahead, the next five years will show whether tokenized collateral is a novelty or a game-changer. By 2026, the buzz will be palpable. Banks and asset managers appear eager to test tokenized bonds and stablecoins in selective workflows using a limited number of high-quality investment options. Stablecoins could come to complement traditional cash in clearing and settlement, especially in the derivatives markets. Early adopters using tokenized Treasuries and high-quality bonds will absorb modest capital inefficiencies, although tokenization will be largely limited to liquid, standardized products.

By 2030, this landscape could change dramatically. Tokenized bonds, funds and stablecoins could become mainstream collateral for institutions. Tokenized Treasuries and corporate bonds could represent a significant portion of the liquidity and remortgage markets. The widespread adoption of stablecoins by banks could enable faster, cheaper and more transparent settlement and collateral flows. In this environment, collateral transformation infrastructure—that is, the ability to move, reuse, and integrate tokenized assets with stablecoins and traditional securities—will become critical. The winners will be companies that not only master cryptography, but also master the operational choreography required for modern collateral management.

To me, these trends indicate more than technical academic dreaming. They are an operational necessity. Traders and market participants need to manage their capital efficiently by moving collateral seamlessly between tokenized securities, bonds and stablecoins. As markets increasingly adopt digital collateral, the real mastery will lie in the moat of robust systems: risk management, financing, transformation, movement and internalization of these collateral assets. Institutions that engage with these evolving frameworks early and make pilot programs routine practices will be better prepared to navigate the realities of tokenized collateral markets as they expand over the next decade.

So what

Nasdaq’s rule change marks a notable step in the ongoing digital evolution of the financial markets, but it’s just the beginning. Securities have been digital for decades, and tokenization alone adds little innovation unless it is combined 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. government bonds, corporate bonds, private credit, etc.) and integrating them with emerging digital instruments such as stablecoins – where infrastructure builders will play a key role. The future of finance isn’t just about managing assets on a blockchain ledger; it’s about making them fungible, interoperable and strategically useful across the 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 pursuit of strong capital efficiency is the silent, essential heartbeat of any serious financial enterprise. It promotes long-term sustainability, enables companies to navigate market cycles and strengthens a true competitive position.

Capital efficiency offers more than just operational convenience. It provides financial freedom, protects companies from sudden market shocks and provides flexibility in strategic decision-making. When resources are deployed optimally, a company controls its own destiny: offering better prices, achieving higher margins and strengthening its market position, thereby outperforming competitors who may be less efficient in their capital deployment. Tokenization is not just about digitizing assets; it’s about unlocking the mobility, interoperability and strategic utility of collateral that makes this efficiency tangible. Institutions that embrace this early will not only operate smarter; they will set the standard for how modern markets should function.