Tokenization
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The regulatory debate is increasingly shifting from whether financial markets will move onchain to how they should get there. After Congress was unable to advance the CLARITY Act in September, the SEC moved ahead with an "Innovation Exemption" allowing certain tokenized U.S. stocks to trade onchain while the agency considers more durable rules. The appeal is straightforward: tokenization can make securities easier to transfer, automate parts of settlement and collateral management, and reduce delays created by fragmented market infrastructure. But institutions interested in those advantages are not necessarily going to move all of their cash onchain. Their money may still need to remain in regulated bank accounts, corporate treasury systems or other traditional financial infrastructure until the moment it is needed.

That creates the next important challenge for tokenized markets: connecting onchain assets with the money institutions already use. A Treasury, fund or equity can settle onchain, but the market around it only works at institutional scale if firms can move cash into the transaction and back out again quickly, reliably and compliantly.

The asset side is advancing quickly. RWA.xyz now tracks nearly $15 billion in distributed value across tokenized U.S. Treasury funds, with BlackRock's BUIDL alone accounting for roughly $2.7 billion. Equities are following: tokenized public stocks and ETFs have grown to roughly $2.9 billion in distributed value, with more than 3.6 million holders. And this is no longer limited to crypto-native platforms. Robinhood now offers European customers more than 2,000 tokenized contracts linked to U.S. stocks and ETPs, after launching the product with just over 200 in 2025. The question of whether traditional assets will move onchain is increasingly being answered in production.

The money side is also developing. Stablecoins provide a form of cash that can move onchain continuously and settle alongside tokenized assets. For institutions, the harder problem is moving money seamlessly between bank accounts and onchain settlement assets when a transaction begins, and back into the traditional financial system when it ends.

We saw that firsthand this summer. In July, HIFI participated in DTCC's first production trades using DTC-tokenized U.S. securities, an initiative that included Treasury repo and equity delivery-versus-payment transactions alongside firms across the traditional and digital markets. In two onchain Treasury repo transactions involving HIFI, a DTC-tokenized Treasury was financed against tokenized cash, while HIFI moved the cash leg from dollars in the banking system into USDC and then USDCx on Canton for settlement, with the process reversing at maturity.

The important part was that an institution could enter and unwind an onchain repo transaction directly from its existing banking infrastructure. Its cash did not have to live permanently onchain. For many institutions, that matters because idle cash still needs to remain inside existing treasury, liquidity and risk-management systems when it is not being deployed in a trade. Dollars could move from a bank account into the digital assets required for settlement, complete the transaction onchain, and return to the banking system when the trade matured.

A separate live transaction HIFI completed with DRW and Marex demonstrated the same idea using a workflow institutions already understand. The trade was priced through Tradeweb, while the Treasury and payment moved together onchain in real time. HIFI connected the traditional cash entering the transaction with the stablecoins used for settlement and reversed that process when the repo matured.

That connection matters because the asset and payment sides of a trade are economically inseparable. Delivery-versus-payment is designed to ensure that an asset changes hands only when payment does as well. Stablecoins can already move around the clock once money is onchain. The remaining friction appears at the boundaries: getting money from a bank account onto a blockchain, moving it between different networks or forms of digital money, and converting it back into the accounts and currencies institutions use offchain.

This is becoming one of the central questions in the design of next-generation financial infrastructure. The Bank for International Settlements' 2026 Annual Economic Report describes an architecture in which tokenized central bank reserves, commercial bank money, other regulated private money and financial assets can interact on programmable infrastructure capable of atomic settlement. The BIS argues that doing so can shorten settlement cycles, reduce operational errors and lower the amount of capital that needs to be pre-funded.

There will almost certainly be more than one form of money in that system. Central bank money, tokenized bank deposits, regulated stablecoins and other cash instruments will serve different institutions and use cases, just as different forms of money coexist today. The infrastructure problem is therefore larger than choosing a preferred settlement asset. Markets need ways to move between those forms of money, banking rails and blockchain networks without breaking the compliance, reconciliation and legal certainty institutions depend on.

That requirement becomes even more important as markets stretch beyond conventional operating hours. An onchain asset may be transferable at 2 a.m. on Sunday, and stablecoins can move with it. But an institution whose cash is still held in a bank account needs infrastructure that can bridge those two environments whenever it wants to participate. Otherwise, the market may be always on while access to institutional funding remains dependent on the systems sitting around it.

Liquidity is part of the same equation. A security may be technically transferable onchain and still trade poorly if buyers cannot readily fund positions, dealers cannot finance inventory or holders cannot convert proceeds into the currency and account they need. Deep markets emerge from the interaction of assets and money, and digitizing only one side does not change that economic reality.

The institutional market is already moving toward this broader view of infrastructure. On September 16, DTCC announced that Ondo's broker-dealer subsidiary had become the first tokenization platform to join Fund/SERV, the processing and distribution network that handles more than 85% of U.S. mutual fund transaction activity. The significance is the connection: tokenized products are beginning to plug into the operational machinery through which large financial markets already function.

The same principle applies to settlement. Tokenized assets will scale when institutions can buy them, finance them, pledge them, redeem them and move the resulting cash without building a new infrastructure stack for every transaction. Compliance controls, bank connectivity, liquidity, blockchain interoperability and settlement need to function as parts of the same system.

That is why the next phase of tokenization will be measured by more than the value of assets issued onchain. The more revealing measures will be how much capital can move around those assets, how quickly transactions can reach final settlement and whether institutions can participate while continuing to use the banking, compliance and market infrastructure they already rely on.

Creating digital representations of financial assets was an important first step. Connecting those assets to the money institutions already use is what turns tokenization into functioning capital markets.

About Zach Walsh

Zach Walsh is the co-founder and CEO of HIFI, a financial technology company building infrastructure for programmable global money. Before founding HIFI, Walsh held roles at Sony and Uber and helped scale the financial technology company Quadpay prior to its acquisition. His experience working across technology, payments and financial products led him to recognize the need for infrastructure connecting stablecoins with traditional financial rails. At HIFI, Walsh is focused on making money movement faster, more programmable and globally accessible.