Tokenization Is Not What It Seems

Methodology

I chose to examine financial institutions that have been vocal about tokenization and are playing a large role in this transformative technology. Much of my research was through reading architecture documentation, disclosure, and sifting through X. Supply and AUM figures for tokenized funds diverge between sources, so I attached a date and a source to every figure.

Introduction

In October 2026, the Depository Trust Company will let its participants elect to have eligible securities recorded in tokenized form. The eligible set includes the Russell 1000 constituents, ETFs tracking major indices, and US Treasury bills, bonds and notes. [1] Those who opt-in will be allowed to have their security entitlements recorded on distributed ledger technology in parallel with DTC’s existing centralised ledger. [2] On the surface, it seems that the tokenization unlock aligns exactly with the bitcoin ethos. However, the institution that custodies over $114 trillion in U.S. securities [3] will continue to maintain ownership over these assets. They adopt the rails that allow faster settlement times at a fraction of the cost, while maintaining control. The DTC is essentially issuing a wrapper around its own book entries and keeping the book. Institutions have adopted blockchain’s standards, vocabulary and rails while declining its substrate of permissionless settlement, finality, and possession.

Historical Context

Money as we know it is a novel function. The core purpose throughout history has been to store value across time, move value across space, and facilitate exchange. Sound money has been traditionally defined through scarcity, allowing people to think about the long-term, save, and invest more for the future. This way, citizens are encouraged to build civilizations, be productive, and defer gratification. Society under sound money is generally more peaceful and abundant compared to time periods without it. It can be understood that money, resistant to manipulation, leads to prosperity. [4]

Gold is one of the most prominent forms of sound money, being relatively resistant to inflation and being resistant to manipulation. The gold supply grows roughly 1.5-2% annually through mining, [5] but a gold printer does not exist. There is no counterparty, no issuer, and it is impossible to chemically produce/destroy gold. However, as the world becomes more digital, its physical nature has become a limitation in salability.

In 17th-century London, merchants deposited gold with goldsmiths, who possessed secure vaults. In return, goldsmiths issued paper claims redeemable for physical gold on demand. It seemed far safer and more convenient to trade paper receipts directly rather than retrieve heavy metal for every transaction. Goldsmiths then noticed that depositors rarely withdrew all their gold at once, so they started issuing claims on the paper circulated, leading to an increase in money supply. The creation of the receipt brought efficiency to exchange but also introduced counterparty risk. We have seen this risk throughout time with bank runs and insolvencies.

Flash forward to the paperwork crisis in the late 1960s, where NYSE volume outgrew the physical handling of stock certificates. Back offices drowned in paper and exchanges were forced to cut trading hours so clerks could catch up. Possession had failed operationally at scale, so the solution was to immobilize all of the certificates in a central depository and to transfer ownership by book entry. By 1999, the Depository Trust Company and the National Securities Clearing Corporation had merged into the Depository Trust and Clearing Corporation (DTCC). [6]

Ownership has been a manufactured falsehood ever since. People claiming to own shares of a company actually hold a contractual claim against the participant, who holds an entitlement against the depository, who owns a registered title. [7] Brokers hold a position on DTC’s books, not the actual asset. [8] This system is showing no signs of changing anytime soon, despite the marketing language of blockchain technology. DTC is the settlement backbone of American capital markets and a custodian of over $114 trillion in U.S. securities. While this structure is likely to remain in place for the foreseeable future, the system is due for an overhaul. Today, when you buy a stock, your broker sends the order, DTC updates a database, and settlement takes a day. It’s far too clunky and time consuming for our digital world.

Current Adoption

Stablecoins have dominated market adoption of blockchain technology by institutions over the last few years. With the GENIUS Act signed into federal law in 2025, [9] the United States has national rules for payment stablecoins for the first time ever. This has laid the foundation for a financial infrastructure leveraging this innovation.

In a tokenized financial system, a new settlement asset must align with the design. In the current market, that role is filled by stablecoins and tokenized Treasury funds, which act as the instrument other tokens are priced in and redeemed into. This becomes the base layer of the new financial infrastructure.

A few companies are in charge of holding and distributing this settlement asset. Circle’s USDC reserves sit largely in the Circle Reserve Fund, managed by BlackRock and custodied at BNY Mellon. [10] BlackRock’s BUIDL runs the same shape, with Securitize as transfer agent, BNY holding the Treasuries, and BlackRock managing the portfolio. [11] Franklin Templeton’s BENJI, launched in 2021 as the first US-registered mutual fund to use a public blockchain, does the same thing with its own transfer agent. [12] Four entities sit behind every one of these products: an issuer, a manager, a custodian, and a transfer agent who maintains the official register of who owns what. The token sits on top of all four. It is the only layer that is consumer-facing and moves at blockchain speed.

Tying the receipt dilemma to modern times, in March 2023 Silicon Valley Bank went into receivership holding $3.3 billion of USDC’s cash reserves (~8% of the total at the time). USDC traded as low as $0.87 over the weekend and recovered within 72 hours, once regulators guaranteed all SVB deposits. [13] Nothing onchain broke, as blocks were produced, the contract executed, transfers cleared, and holders kept full cryptographic control of their tokens the entire time. What determined whether a holder got their dollar back was a receivership decision made in Washington over a weekend. Circle’s response was to move away from commercial banks and consolidate further into the BlackRock-managed fund. [14]

Financial infrastructure is composed of many complex layers with different government organizations, exchanges, and funds. Looking closer, the DTC’s service is built on the ComposerX platform, which supports ERC-20 and ERC-3643 across approved networks, acting as a programmable overlay around existing book-entry positions. When a participant transfers a tokenized entitlement between registered wallets, that onchain transaction instructs DTC to update its official centralised ledger. [15] ERC-3643 is a permissioned standard with transfer restrictions and recovery controls compiled into the token. The onchain movement is an instruction to a source of truth offchain. This allows the DTC to make corrections, removing the inherent finality of true blockchain transactions.

The current structure of the financial system runs on netting. In 2022, netting through NSCC’s continuous net settlement system reduced the value of settlement obligations by roughly 98%, from about $519 trillion down to about $9 trillion. [16] True finality means gross settlement, where every trade settles individually at full value and must be funded at the moment it happens. Moving models would switch a two-day credit exposure for a permanent intraday liquidity requirement roughly fifty times larger. DTC cannot offer finality without dismantling the mechanism that makes the market liquid in the first place. So it keeps the netted book as the source of truth and puts the token on top as an instruction layer. Many institutions rely on the lending industry in order to profit and bring home value to shareholders. Moving the actual asset for every transaction would destroy a lot of business models.

Looking at a company like Robinhood, the opposite holds true. Robinhood Chain mainnet launched on 1 July 2026, [17] with Stock Tokens that cover more than 200 US-listed equities and ETFs for European users existing as composable ERC-20s. These are not 1:1 backed share claims, but derivatives contracts with Robinhood Europe that provide exposure to an underlying asset without legal ownership rights. [18] Essentially, holders of tokenized equities aren’t owners, but they maintain the same exposure as owners.

If someone were to buy into a fund like BUIDL, BENJI and USYC, they own a claim on a manager. We see the wrapper here first hand as the token confers the share, the share confers the claim, and custody runs to BNY.

Every institution in this paper touches the EVM. DTCC’s AppChain is an Ethereum-compatible permissioned chain based on Hyperledger Besu, [19] Robinhood built its own L2, and JPMorgan issues on Base. [20] In a tokenized system under DTC, new stock becomes a token, the transfer happens on-chain, and settlement is instant. Every bank and custodian plugging into them will be forced to build Ethereum-compatible infrastructure.

Across all of these cases, the same four properties are offered in place of ownership: portable, programmable, self-custodiable, and 24/7 tradable. Ownership is not a priority for institutions because they know individuals will never maintain sovereign ownership in a fiat system. Self-custody has transformed into holding the key to a receipt rather than holding the asset.

Future Outlook

It is clear to anyone watching the markets that blockchain as a technology and bitcoin as an ideology are diverging. On one side is the belief in sovereign ownership, sound money, and protocols that support that mission. On the other are the large institutions, aiming to leverage the technology to improve their current systems while maintaining central control. There is room for both sides to win, but people often combine the two as one. It is important to understand the distinction and which players will control what. While this push and pull between government control and sovereignty remains up in the air, the technological advancements of the financial systems are not in doubt.

Ledger Lens

With a 24/7 programmable settlement layer, autonomous agents will thrive as they need instant, always-on, machine-readable structure. Ledger’s Enterprise CLI giving agents programmatic access to Ledger Enterprise capabilities is perfectly positioned to be a benefactor of this adoption regardless of the divergence. [21] Ledger Enterprise Tradelink settlement engine also lets institutions use self-custodied assets as collateral with their own counterparties. [22] Ledger is a company that bridges two diverging avenues, allowing bitcoin believers to maintain sovereign ownership in a physically protected space, while also building technology that will be needed in a blockchain based financial infrastructure.

With trillions of dollars in assets shifting to the blockchain as tokenized digital assets, autonomous agents will become the primary actors of our financial systems with the ability to research, negotiate, and transact in milliseconds. Humans must be the orchestrators of AI agents, and in order for this to be possible, we need an infrastructure layer for the agentic economy that is blockchain compatibility.

Upcoming legislation will be a big determiner of the future for blockchain technology. The CLARITY Act passed the House in July 2025 and cleared the Senate Banking Committee 15-9 in May 2026, with all thirteen Republicans joined by two Democrats who cautioned that their committee votes did not guarantee floor support. [23] Majority Leader John Thune conceded the votes were not there before the August recess. [24]

There is a fight for how to structure tokenized equities because it will dictate how companies position themselves for the future. Coinbase withdrew support in January 2026 over four concerns, including draft language restricting how blockchain-based shares can operate on crypto infrastructure, then re-endorsed the revised effort in April. [25] The question of who a tokenized share answers to (SEC, the CFTC, or a new body) has yet to be answered.

Tokenization of Everything

Advancing the financial infrastructure through tokenization is the foundation for the tokenization of everything. Every asset class will eventually get a token representation: equities, bonds, real estate, private credit, commodities, art, and eventually the identity of the person holding them. Trillions of dollars in assets are said to be shifting onto blockchains. The ambition is real and the direction of travel is not seriously in dispute anymore.

Stablecoins dominate everything else by an order of magnitude, with USDC alone at roughly $77 billion in circulation and $21.5 trillion in on-chain transaction volume in a single quarter. [26] Tokenized Treasury funds are next, at a few billion dollars each across BUIDL, USYC and BENJI. [27] Tokenized corporate bonds sit at around $1.77 billion. Tokenized commodities are around $7.37 billion, driven almost entirely by gold. [28] Real estate and art represent such a small position comparatively, showing the opportunity for growth is very large.

Real world assets will also be built on blockchain technology with the properties of tokens and not the ownership. They are the category with the furthest to travel and the least room to hide the mechanism.

In order for a RWA to reach tokenized form, it gets placed inside a legal wrapper, where a regulated entity takes custody of the underlying and a transfer agent maintains the register. A physical or legally registered asset cannot be transferred by signing a message, so they need these intermediaries despite the ideology that blockchain will replace middlemen. This is true whether the asset is a Treasury bill, a building, a private credit facility, or a bar of gold. The wrapper is the only mechanism by which something that exists off chain can be represented onchain at all.

Tokenization is essentially a better way to build the recording system. A token can be portable, programmable, self-custodiable and tradable at any hour even if the underlying is not. Tokenization is not reinventing the wheel, but adding another abstraction layer on top of the same receipt layers that have been around since the 17th century. Law still governs ownership rather than code.

So RWAs will not return ownership to individuals, but they will make claims on institutions that move faster, cost less, and settle continuously. That is a genuine improvement to financial infrastructure, but it is a different thing entirely from what the technology was originally built to deliver. The shift is still a positive one, but it is critical to understand how.

• [1] DTCC. “DTCC Advances Development of New Tokenization Service.” 4 May 2026. dtcc.com
• [2] U.S. Securities and Exchange Commission, Division of Trading and Markets. No-action relief permitting parallel DLT recording of security entitlements, December 2025. See also The Block, “DTCC subsidiary authorized to offer tokenization service,” 12 December 2025.
• [3] DTCC. “Asset Services” and corporate overview materials. dtcc.com
• [4] Ammous, Saifedean. The Bitcoin Standard: The Decentralized Alternative to Central Banking. Wiley, 2018.
• [5] World Gold Council, annual gold supply and mine production data. gold.org
• [6] DTCC. “Our History.” dtcc.com
• [7] U.S. Securities and Exchange Commission. “Investor Bulletin: Holding Your Securities.” sec.gov/resources-for-investors/investor-alerts-bulletins/investorpubsholdsechtm
• [8] DTCC Learning. “Issuer Services Frequently Asked Questions.” dtcclearning.com
• [9] Guiding and Establishing National Innovation for U.S. Stablecoins Act, Pub. L. No. 119-27, signed 18 July 2025.
• [10] Circle Internet Financial. Reserve disclosures and “Deepening Our Partnership with BlackRock.” circle.com
• [11] Eco. “BUIDL Deep Dive 2026.” eco.com/support
• [12] Franklin OnChain U.S. Government Money Fund (FOBXX), Form 485BPOS prospectus, SEC EDGAR. sec.gov/Archives/edgar/data/1786958
• [13] Circle Internet Financial. “$3.3 Billion of USDC Reserve Risk Removed, Dollar De-peg Closes.” 12 March 2023. circle.com/pressroom
• [14] Ledger Insights. “Fed researchers examine how SVB collapse reshaped Circle’s USDC reserves.” August 2026.
• [15] ChainUp. “DTCC ComposerX: Inside the Institutional Tokenization Engine.” June 2026.
• [16] Federal Register. “Self-Regulatory Organizations; National Securities Clearing Corporation,” 30 August 2023. federalregister.gov/documents/2023/08/30/2023-18670
• [17] Decrypt. “What Is Robinhood Chain?” July 2026.
• [18] Robinhood Europe. “Stock Tokens FAQ.” robinhood.com/eu/en/support/articles/stock-tokens-faq
• [19] A-Team Insight. “DTCC Declares That Tokenisation Has Become a Reality.” July 2026.
• [20] J.P. Morgan Kinexys. JPMD deposit token announcements, 2026.
• [21] EIN Presswire. “Ledger Enterprise and Membrane Labs Connect Secure Digital Asset Collateral to Institutional Lending Workflows.” 1 September 2026.
• [22] Ledger Enterprise. enterprise.ledger.com
• [23] “US Crypto Policy Tracker: Legislative Developments.” Latham & Watkins. Updated August 2026. lw.com
• [24] “Senate leaves town without voting on crypto bill, dimming its chances of passing.” The Hill. August 2026.
• [25] “CLARITY Act Fact Sheet.” DeFiRate. August 2026.
• [26] Circle Internet Financial, Q1 2026 results.
• [27] RWA.xyz. Tokenized U.S. Treasury Funds. app.rwa.xyz/treasuries
• [28] “RWA categories in 2026: tokenized Treasuries, equities, credit, and more.” MetaMask. August 2026, citing rwa.xyz.

I confirm this paper is my own original work and that all sources and quotations are cited. I may have used AI tools to assist my research or writing, but the final paper is not AI-generated content presented as my own.

Sebastian Sampedro  ·  September 2026