Tokenization's Quiet Takeover: Why Wall Street Can't Ignore It Anymore

Bank of America’s recent analysis underscores the growing importance of asset tokenization in reshaping the global financial landscape, particularly through the disruptive potential of stablecoins and tokenized real-world assets. The firm estimates that tokenized assets, including stablecoins, have neared $300 billion in market value, with stablecoins accounting for approximately $266.7 billion of that total. This significant growth reflects the expanding role of tokenized financial instruments as both a settlement mechanism and an asset class in its own right [1].

Stablecoins, in particular, are being positioned as a transformative force in cross-border transactions and retail settlements. According to the report, peer-to-peer (P2P) stablecoin payments offer efficiency and cost advantages over traditional systems, potentially facilitating capital flows in emerging markets. The acceptance of USDC stablecoin by platforms like Shopify marks a milestone in retail adoption, while tokenized UST bonds have attracted institutional interest through their settlement capabilities [1]. Bank of America also notes the potential for stablecoins to support U.S. Treasury markets, estimating a possible $25 billion to $75 billion in demand over the next year. However, this figure, while significant, is unlikely to immediately disrupt the broader Treasury market's supply-demand balance [1].

The impact of tokenization is not limited to stablecoins. Tokenized U.S. Treasuries have emerged as a major segment of the tokenized asset market, surpassing $7.3 billion in outstanding value by mid-2025. BlackRock’s BUIDL fund leads the category with $2.4 billion in assets, followed by Franklin Templeton’s BENJI fund and other tokenized products. These funds are seen as alternatives to yield-bearing stablecoins and are increasingly used for yield capture and settlement efficiency, especially in a high-interest-rate environment [1]. The growth of tokenized money-market funds and Treasuries has risen nearly 80% year-to-date, highlighting a shift in capital allocation toward digitalized financial instruments [1].

Despite the progress, institutional adoption of tokenized assets faces challenges related to infrastructure and regulatory compliance. While BlackRock and other traditional financial institutions have integrated tokenization into their operations, many still rely on off-chain services for KYC and custody, raising concerns about the centralization of functions that blockchain was designed to decentralize. Public blockchains such as Ethereum, though dominant in terms of market share, struggle to meet the operational demands of regulated financial institutions. Issues such as probabilistic settlement finality, compliance, and interoperability remain unresolved, prompting institutions to seek purpose-built blockchain solutions [4].

Regulatory developments also play a pivotal role in the trajectory of asset tokenization. The ongoing debate around the U.S. GENIUS Act and its provisions—particularly those related to interest payments and stablecoin regulation—has drawn attention from both the crypto industry and traditional banks. The American Bankers Association and the Bank Policy Institute have pushed for amendments that would restrict yield programs offered by stablecoin issuers, citing concerns about systemic risks. Conversely, crypto groups argue that these changes would unfairly favor traditional financial institutions and limit access for underbanked consumers [3]. The final shape of the regulatory framework is expected to influence how tokenization evolves in the coming years.

Looking ahead, Bank of America anticipates a future where on-chain financial asset trading becomes more prevalent. As public blockchain interoperability improves and digital wallet adoption increases, some financial assets may circulate fully on-chain, reducing the need for traditional fiat currency exchanges. This transition, however, will require substantial infrastructure investment and regulatory alignment. Traditional financial institutions and digital-native platforms are expected to have equal opportunities in shaping the future of tokenized finance [1].

Source:

[1] Stablecoins' Disruptive Potential in Global Finance (https://www.gurufocus.com/news/3070202/stablecoins-disruptive-potential-in-global-finance-insights-from-bank-of-america)

[2] Tokenized assets near $300 billion as Wall Street quietly ... (https://cryptoslate.com/tokenized-assets-near-300-billion-as-wall-street-quietly-floods-on-chain/)

[3] Crypto Lobby Pushes Back Against Bank Effort to Rewrite ... (https://www.coindesk.com/policy/2025/08/20/crypto-lobby-pushes-back-against-bank-effort-to-rewrite-stablecoin-law)

[4] Public Blockchains Aren't Ready for Real-World Assets— ... (https://www.newsweek.com/public-blockchains-arent-ready-real-world-assetsheres-why-211662)

[5] Wall Street's revolution: BlackRock, JPM, Citi bets on ... (https://coingeek.com/wall-street-revolution-blackrock-jpm-citi-bets-on-tokenization/)