Photo by Robb Miller<\/a> on\u00a0Unsplash<\/a><\/p>\n For years, blockchain has occupied the public imagination as a technology synonymous with cryptocurrency. Bitcoin, altcoins, decentralized finance, NFTs, and various experiments with digital assets became its most visible manifestations.<\/p>\n But developments in financial markets over the past few years point in a rather different direction.<\/p>\n Some of the assets seeing increasing on-chain activity now come from the most conventional corners of finance: U.S. Treasuries, money market funds, gold, and even equities. A report by CoinShares and Token Terminal published in August 2026 suggests that this development no longer stops at issuing digital representations of existing assets. Tokenized real-world assets are increasingly being used across lending, trading, derivatives, and collateral.<\/p>\n This changes the question surrounding tokenization.<\/p>\n The question is no longer simply, what assets can be put on a blockchain?<\/em><\/p>\n The more interesting question\u00a0is:<\/p>\n what happens when traditional financial instruments begin using blockchain as part of their infrastructure?<\/strong><\/p>\n Illustration created using Copilot 365\u00a0(Author)<\/p>\n One number captures this shift particularly well.<\/p>\n RWA deposits across lending platforms and decentralized exchanges reached approximately US$7.4 billion in the second quarter of 2026<\/strong>, more than tripling from around US$2.3 billion a year earlier. The movement becomes even more notable because it occurred while total DeFi deposits declined by approximately 15%. The contrast was even sharper in spot markets: crypto-native spot activity on decentralized exchanges fell by around 70%, while spot trading in tokenized RWAs increased by approximately 220%.<\/p>\n The US$7.4 billion figure, however, does not represent the entire RWA market. It measures assets deposited and used across lending platforms and decentralized exchanges. CoinShares had previously estimated the broader market capitalization of on-chain tokenized RWAs at more than US$40 billion<\/strong>, encompassing tokenized funds, equities, and commodities.<\/p>\n The distinction between these two measures\u00a0matters.<\/p>\n Tokenization can grow first through issuance<\/strong>, but the next measure is usage<\/strong>. An asset can be issued on-chain without subsequently becoming an active part of financial activity taking place\u00a0there.<\/p>\n Recent data suggest that this second stage is beginning to\u00a0emerge.<\/p>\n Tokenized Treasuries and multi-strategy funds have become important components of RWA deposits, while tokenized gold, including PAXG and XAUT, contributes substantially to RWA spot trading activity. In other words, some of the activity developing on blockchain now revolves around instruments whose economic value originates in financial markets outside the blockchain itself.<\/p>\n Tokenization is entering a different phase.<\/p>\n In its simplest form, tokenization sounds relatively straightforward: a claim on an asset is represented through a digital\u00a0token.<\/p>\n But representation is only the first\u00a0layer.<\/p>\n A more consequential change occurs when that digital representation can be transferred, settled, used as collateral, or incorporated into other financial activities through blockchain infrastructure<\/strong>.<\/p>\n Money market funds offer a particularly interesting example because the underlying assets themselves do not necessarily change. Their portfolios can continue to hold conventional money market instruments. What changes is how ownership of those instruments can be represented and\u00a0used.<\/p>\n BlackRock provides a particularly clear illustration of this architecture.<\/p>\n Illustration created using Copilot 365\u00a0(Author)<\/p>\n On August 4, 2026, BlackRock launched tokenized on-chain share classes for several money market funds within its European Institutional Cash Series (ICS)<\/strong>. Twelve share classes across six funds denominated in sterling, euros, and U.S. dollars received tokenized functionality through J.P. Morgan\u2019s Kinexys infrastructure, with the tokens issued on Ethereum.<\/p>\n This is where the US$311 billion figure needs to be read carefully.<\/p>\n BlackRock said the tokenized functionality was being extended across a money market fund platform with approximately US$311 billion in combined assets under management across 15 markets. This does not mean that US$311 billion in assets were moved onto blockchain all at once<\/strong>. The value actually represented by the tokenized share classes is not equivalent to the total AUM of the broader platform.<\/p>\n The structure of the product is more interesting than the headline\u00a0figure.<\/p>\n A token represents a share in the underlying ICS fund. The official shareholder register continues to be maintained through transfer-agent infrastructure, while smart contracts allow ownership to move between approved investor wallets. Investors gain 24\/7 peer-to-peer transfer capabilities and near-real-time visibility without abandoning the existing fund structure.<\/p>\n In other words, BlackRock is not turning a money market fund into a crypto\u00a0product.<\/p>\n It is adding blockchain rails to an existing financial product<\/strong>.<\/p>\n The distinction may sound subtle, but conceptually it is significant.<\/p>\n Tokenization here does not replace the existing financial architecture. The fund structure, transfer agent, regulatory framework, and institutional risk management remain in place. Blockchain is added as a new layer for ownership and transfer. BlackRock itself has pointed to potential applications across corporate treasury management, liquidity optimization, digital collateral management, and integration with the wider tokenized financial ecosystem.<\/p>\n This may be a more realistic picture of how blockchain enters institutional finance: not by dismantling the old infrastructure, but through selective integration with infrastructure that institutions already\u00a0trust.<\/strong><\/p>\n If BlackRock illustrates how a traditional fund can acquire on-chain transferability<\/em>, Franklin Templeton demonstrates the next stage: asset\u00a0utility<\/strong>.<\/p>\n The Franklin OnChain U.S. Government Money Fund is a money market fund whose shares are represented by BENJI tokens through the Benji platform. One BENJI represents one share in the fund, while the platform enables capabilities such as peer-to-peer transfers and blockchain-based ownership records.<\/p>\n In February 2026, Franklin Templeton and Binance took the structure a step\u00a0further.<\/p>\n Eligible institutional clients were able to use tokenized money market fund shares issued through Benji as off-exchange collateral<\/strong> for trading activity on Binance. The underlying assets remain in regulated custody through Ceffu, while their value is reflected within Binance\u2019s trading environment for collateral purposes.<\/p>\n The functional shift is significant.<\/p>\n An asset that primarily served as an investment can now continue generating yield while simultaneously supporting another activity as collateral. Institutions do not need to move the underlying assets onto the exchange to obtain that functionality. Franklin Templeton describes the arrangement as a way to preserve regulated custody and yield while reducing exposure to exchange counterparty risk.<\/p>\n At this point, tokenization begins to mean something more than digitizing ownership.<\/p>\n The asset starts becoming a programmable financial building\u00a0block.<\/strong><\/p>\n And this is where the thesis around RWA rails<\/em> becomes much more interesting.<\/p>\n Put them into the same picture and a fairly clear progression emerges.<\/p>\n The first stage is representation<\/strong>.<\/p>\n Traditional financial instruments acquire digital representations that can be recorded through blockchain infrastructure.<\/p>\n The second is transferability<\/strong>.<\/p>\n Those representations can move between eligible wallets without changing the underlying financial product.<\/p>\n The third is\u00a0utility<\/strong>.<\/p>\n The tokenized asset can begin functioning as collateral, a yield-bearing asset, or a component of other financial activities. The growth in RWA deposits and trading documented by CoinShares suggests that these uses are no longer merely conceptual designs.<\/p>\n This is why RWA rails<\/strong> may ultimately be a more useful concept than simply RWA\u00a0tokens<\/em>.<\/p>\n The token is the instrument. The rails are the infrastructure that allows the instrument to move and be\u00a0used.<\/p>\n Settlement, custody, transfer agents, wallets, smart contracts, collateral management, trading venues, and regulatory wrappers eventually become parts of the same\u00a0problem.<\/p>\n What is being built is not simply a tokenized Treasury, tokenized gold, or a tokenized fund.<\/p>\n What is being built is a set of rails through which different forms of assets can interact within a blockchain-based financial environment.<\/strong><\/p>\n There is a temptation to interpret the involvement of BlackRock, J.P. Morgan, Franklin Templeton, and other large financial institutions as evidence that traditional finance is\u00a0finally:<\/p>\n \u201cmoving into\u00a0crypto.\u201d<\/p>\n I think that interpretation is too simplistic.<\/p>\n What is emerging instead is a hybrid architecture<\/strong>.<\/p>\n In BlackRock\u2019s case, blockchain supports tokenized share classes, while the official record of ownership remains within transfer-agent infrastructure. Under the Franklin Templeton and Binance arrangement, tokenized collateral can support digital-asset trading while the underlying assets remain in regulated off-exchange custody.<\/p>\n The boundary between on-chain<\/em> and off-chain<\/em>, therefore, is not disappearing.<\/p>\n The two are beginning to\u00a0connect.<\/p>\n CoinShares uses a useful term for this development: Hybrid Finance<\/strong>. Its thesis is not that traditional finance will disappear because of blockchain, but that financial infrastructure is beginning to be rewired<\/em> through the convergence of blockchain, decentralized financial venues, and tokenized representations of traditional assets.<\/p>\n That is what makes the current phase of tokenization different from the earlier wave of digital\u00a0assets.<\/p>\n The old question was whether blockchain could create entirely new types of\u00a0assets.<\/p>\n The question now is shifting:<\/p>\n Can blockchain become part of the infrastructure used to move the assets that already form the foundation of the financial system?<\/strong><\/p>\n The scale remains small relative to the global financial system.<\/p>\n CoinShares noted that only around US$2.2 billion of a global equity market worth more than US$100 trillion<\/strong> had been tokenized when its 2026 report was published. It is therefore far too early to suggest that tokenization is replacing existing capital-market infrastructure.<\/p>\n But scale may not be the most important signal at this\u00a0stage.<\/p>\n The more revealing signal is the change in how tokenized assets are being\u00a0used<\/strong>.<\/p>\n Over the past year, the development has moved beyond issuance toward lending, trading, collateral, treasury management, and settlement infrastructure. Emerging forms of institutional adoption also do not require institutions to abandon fund structures, regulated custody, transfer agents, or the legal frameworks underpinning traditional finance.<\/p>\n Blockchain is gradually being positioned between these components.<\/p>\n If this development continues, the most important part of the tokenization revolution may ultimately not be the token\u00a0itself.<\/p>\n The part becoming increasingly invisible may matter most: the rails underneath it.<\/strong><\/p>\n And like many forms of financial infrastructure, the clearest sign of success may eventually be that people stop noticing the rails are\u00a0there.<\/p>\n Are we witnessing a gradual evolution of the existing financial system, or the beginning of a fundamentally different market structure?<\/strong><\/p>\n Tokenization Is No Longer Just About Crypto: Wall Street Is Building New Financial Rails on\u2026<\/a> was originally published in Coinmonks<\/a> on Medium, where people are continuing the conversation by highlighting and responding to this story.<\/p>","protected":false},"excerpt":{"rendered":" Tokenization Is No Longer Just About Crypto: Wall Street Is Building New Financial Rails on Blockchain Photo by Robb Miller on\u00a0Unsplash For years, blockchain has occupied the public imagination as a technology synonymous with cryptocurrency. Bitcoin, altcoins, decentralized finance, NFTs, and various experiments with digital assets became its most visible manifestations. But developments in financial […]<\/p>\n","protected":false},"author":0,"featured_media":214687,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-214686","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-interesting"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/214686"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=214686"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/214686\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/media\/214687"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=214686"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=214686"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=214686"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}From Crypto-Native Assets to Real-World Assets<\/h3>\n
Tokenization Is About More Than Creating\u00a0Tokens<\/h3>\n
BlackRock: When Tokenization Does Not Replace the\u00a0Fund<\/h3>\n
Franklin Templeton: When Tokenized Assets Start to\u00a0Work<\/h3>\n
From Representation to Financial Plumbing<\/h3>\n
Wall Street Is Not Becoming\u00a0Crypto<\/h3>\n
The Rails Are Starting to\u00a0Show<\/h3>\n