Blockchain-Driven Financial Infrastructure: The Tokenization Revolution in Asset Custody and Settlement

The financial system is on the cusp of a transformation as profound as the shift from barter to fiat currency. Robinhood CEO Vlad Tenev's assertion that tokenization will "eat the entire financial system," in a Coindesk interview, is not mere hyperbole but a prescient observation of a structural shift. Tokenization-representing real-world assets (RWAs) as digital tokens on blockchain-is redefining asset custody and settlement, challenging the foundational assumptions of traditional finance. From fractionalized real estate to tokenized U.S. Treasuries, the implications are vast, and the evidence of disruption is already visible in pilot projects, institutional experiments, and regulatory sandboxes.

The Mechanics of Disruption

Tokenization's disruptive potential lies in its ability to automate, democratize, and globalize financial infrastructure. By converting assets into programmable digital tokens, blockchain eliminates intermediaries in custody and settlement, reducing costs and timeframes. For instance, ANZ Bank's use of Chainlink's Cross-Chain Interoperability Protocol (CCIP) enables cross-chain settlements for tokenized assets, allowing clients to trade nature-based assets using stablecoins across multiple blockchains, according to a Chainlink case study. This mirrors the broader trend of financial institutions leveraging blockchain to streamline operations. The OECD notes that tokenized bonds and securities are moving from experimental phases to scalable deployments, with Switzerland's Helvetia III and the UK's Digital Securities Sandbox leading the way, as detailed in OECD insights.

The case of tokenized U.S. Treasuries further underscores this shift. By early September 2025, tokenized Treasuries and cash equivalents had surpassed $7.4 billion in value on public chains, according to a New York Fed analysis. Platforms like Franklin Templeton's OnChain U.S. Government Money Fund (FOBXX) and BlackRock's BUIDL Fund demonstrate how tokenized funds are reducing minimum investment thresholds and expanding access to global markets. These innovations are not confined to public markets: Siemens' €60 million digital bond issued under Germany's eWpG framework and Hamilton Lane's tokenized private equity offerings highlight the growing appetite for tokenized infrastructure and private assets.

Challenges and the Path to Adoption

Despite these advancements, tokenization faces significant hurdles. Regulatory uncertainty remains a critical barrier. The OECD emphasizes that varying classifications of tokenized assets across jurisdictions complicate compliance and trading. For example, while the EU's MiCA regulation provides a framework for digital assets, the U.S. lags, with Tenev noting that its current system "works well enough" to stifle urgency for change. Infrastructure gaps also persist: robust trading platforms, custodial services, and secure wallets are still emerging.

Yet, progress is undeniable. JPMorgan's JPM Coin, processing $1 billion daily in wholesale payments, and Fnality International's utility settlement coins illustrate how major banks are integrating blockchain into core operations, as reported in an IndustryExaminer piece. Meanwhile, custody solutions are evolving rapidly. Multi-Party Computation (MPC) technology, adopted by platforms like Cobo's Wallet-as-a-Service, is addressing security concerns by distributing private keys across multiple locations, as described in a Cobo guide. Regulatory clarity, such as MiCA and Singapore's digital asset frameworks, is further bolstering institutional confidence.

The Investment Implications

For investors, the tokenization wave presents both opportunities and risks. McKinsey estimates that tokenized financial assets could reach $2 trillion in market capitalization by 2030, driven by tokenized cash, bonds, and securitization. This growth will likely be uneven, with early adopters-such as asset managers, custodians, and fintechs-capturing first-mover advantages. However, volatility in regulatory environments and technological immaturity mean that caution is warranted.

Conclusion

Tokenization is not a speculative fad but a structural shift in financial infrastructure. As Tenev argues, it is a "freight train" reshaping custody, settlement, and access to capital. While challenges remain, the momentum-backed by institutional adoption, regulatory experimentation, and technological innovation-suggests that tokenization will indeed "eat" the financial system. For investors, the key lies in balancing optimism with pragmatism, recognizing that the future of finance will be built on the blockchain's promise of transparency, efficiency, and inclusivity.