SEC Signals Tokenization Could Reshape U.S. Markets in 2 Years

U.S. lawmakers claim a proposed cryptocurrency bill is nearly ready for passage, signaling a major step in the regulation of digital assets. However, the White House has pushed back, urging the Senate to refine and improve the bill before moving forward. The delay reflects broader tensions between legislative and executive branches over the best approach to crypto policy.

President Trump's national security strategy, released recently, notably omitted any specific mention of crypto or blockchain, despite previous statements from the administration about its strategic importance. Trump had previously expressed a desire to prevent China from leading in the crypto space and has advocated for all Bitcoin mining to occur domestically.

Meanwhile, the SEC has signaled a shift in tone, with Chair Paul Atkins suggesting that tokenized assets could play a central role in the future of U.S. financial markets. He highlighted the potential for blockchain to streamline settlement processes and reduce risk, signaling a regulatory openness that marks a departure from the agency's earlier stance.

The SEC's New Stance on Tokenization

Paul Atkins, chairman of the U.S. Securities and Exchange Commission (SEC), has made a striking claim that tokenization could become a central part of the U.S. financial system within "a couple of years." This statement has caught many by surprise, as it represents a significant shift from the SEC's historically cautious approach to digital assets. The U.S. equity market is valued at around $68 trillion, yet only about $670 million of that is currently tokenized, leaving a massive gap in on-chain representation according to SEC Chair Paul Atkins.

Atkins has emphasized the need to close this gap, noting that the integration of blockchain technology could enhance predictability and reduce settlement risk by aligning trade execution with final settlement. This marks a clear departure from the SEC's earlier resistance to blockchain-based innovations. Several investigations into digital assets have been dropped, and roundtable discussions have resumed, suggesting a new regulatory openness.

Regulatory Frameworks and Industry Tensions

The SEC is currently developing a "token taxonomy" to better define which digital assets fall under its jurisdiction. This framework is rooted in the Howey test, but it aims to account for how networks evolve and operate without a central issuer. The goal is to bring tokenization activities onshore and within the reach of U.S. regulators according to reports.

However, not all SEC commissioners agree on the best path forward. Caroline Crenshaw has raised concerns about "wrapped securities," noting that they may not fully reflect the economic rights or protections of the underlying assets. These issues have sparked tensions among industry players, with companies like Citadel Securities and Coinbase debating the role of decentralized finance in tokenized markets. The SEC will need to determine whether these competing models can coexist or if a more prescriptive regulatory approach is necessary.

Market Readiness and Infrastructure Challenges

While the SEC's new stance is encouraging, practical challenges remain. For instance, Nasdaq processes around 2,920 trades per second and $463 billion in daily notional value. By comparison, most public blockchains cannot match this scale, even though they offer improvements in post-trade workflows according to financial analysts. This means that for tokenized assets to become a significant part of the U.S. market, substantial upgrades across clearinghouses, custodians, and digital-asset networks will be required.

RWA.xyz data shows that the value of real-world assets on-chain has grown to about $35.8 billion, roughly double its level at the end of 2024. While this is still small relative to the broader financial system, it indicates a growing comfort with tokenization, particularly for treasuries, cash instruments, and credit according to market data.

Global Competition and the Path Forward

The U.S. is not the only country making moves in the tokenization space. Singapore and Hong Kong have launched tokenized bond programs and digital fund structures, showing that other jurisdictions are moving faster. U.S. regulators are aware that unclear rules could push tokenization offshore, especially if synthetic or wrapped products remain in legal uncertainty according to regulatory analysis.

Atkins has positioned the U.S. as aiming to regain leadership in this area, arguing that clear rules will allow market participants to innovate domestically. Whether the U.S. closes the tokenization gap will depend on how quickly the SEC finalizes its taxonomy, how it resolves conflicts between traditional finance and decentralized finance, and how infrastructure providers respond to the demands of blockchain settlement.

Implications for Investors and the Market

For investors, the developments signal a potential shift in how digital assets are treated within the broader financial system. If tokenization becomes a formal component of U.S. market structure, institutions will need to develop systems capable of handling digital issuance, on-chain reconciliation, and regulatory reporting at scale according to financial experts.

The current $670 million tokenized footprint could expand significantly over the next several years if compliant pathways are developed as Atkins outlined. However, if rules remain unsettled, capital may continue to flow to jurisdictions with more mature frameworks. Investors are watching closely to see whether the U.S. can maintain its leadership in financial innovation or whether it will cede ground to global competitors.