Banks and Fintechs Fuel Tokenization's Push to Redefine Finance

Tokenization Will Reshape Finance, Says Robinhood CEO

Robinhood CEO Vladimir Tenev recently asserted that tokenization is poised to revolutionize financial systems, emphasizing its potential to democratize access and enhance efficiency. This assertion aligns with broader industry shifts, as stablecoin markets evolve and regulatory frameworks like the U.S. GENIUS Act and the EU's MiCA reshape the landscape.

The stablecoin duopoly of Tether's USDT and Circle's USDC has seen its combined market share decline from 91.6% in March 2024 to 83.6% as of August 2025, according to data from DefiLlama and CoinGecko. New entrants, such as Ethena's USDe, are challenging their dominance. USDe, which employs delta-neutral hedging strategies to maintain its peg to the U.S. dollar, has surged to a $12 billion supply, offering holders yields of 9%-11% through perpetual futures funding rates. This innovation underscores how tokenization is enabling yield generation in ways traditional stablecoins, now restricted by the GENIUS Act, cannot replicate.

Regulatory clarity under the GENIUS Act, enacted in July 2025, has further catalyzed innovation. The law mandates 1:1 reserve backing for U.S. dollar-pegged stablecoins and prohibits interest payments, effectively sidelining algorithmic models. Meanwhile, the EU's MiCA framework, effective since December 2024, imposes similar reserve requirements but allows for broader crypto-asset regulation. These regimes are fostering competition by enabling banks and fintechs to issue compliant stablecoins. For instance, ING and UniCredit recently announced a joint venture to launch a euro-denominated stablecoin under MiCA by mid-2026.

Banks are increasingly entering the space, with JPMorgan and Citigroup exploring consortia to issue stablecoins capable of competing with Tether. Such collaborations aim to leverage institutional credibility and distribution networks, addressing concerns about liquidity and scalability. Robinhood, which integrated USDC for user settlements, exemplifies how traditional platforms are adapting to tokenization's potential. The company's partnership with Circle highlights the growing acceptance of stablecoins as infrastructure for digital finance.

Technological advancements are further accelerating tokenization's adoption. USDe's use of cross-chain collateral pools-including tokens like BNB and XRP-enhances its utility across decentralized finance (DeFi) ecosystems. Similarly, Circle's expansion of USDC on 14 blockchains, including Solana and Arbitrum, has improved transaction speeds and reduced costs. These innovations align with Tenev's vision of programmable money, where tokens can automate financial workflows, from remittances to yield farming.

However, challenges remain. The GENIUS Act's restrictions on yield-bearing stablecoins have spurred alternative models, such as Ethena's delta-neutral hedging, but also raised concerns about systemic risks. Leverage-dependent strategies, like recursive borrowing loops on Aave and Pendle, amplify returns but could destabilize if funding rates turn negative. Regulatory scrutiny, particularly under MiCA, continues to test the resilience of synthetic stablecoins.

Despite these hurdles, tokenization's trajectory appears irreversible. As of Q1 2025, 80% of North American fintech apps supporting stablecoin payments include USDC, while Ethena's ENA token has surged in value amid growing protocol revenues. These trends suggest that tokenization will not only redefine asset classes but also reshape financial intermediation, reducing reliance on traditional banking systems.

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