Tokenization: Why Now?

The GENIUS Act, signed into law by President Trump on July 18, 2025, created America’s first comprehensive federal framework for payment stablecoins. It requires 1-to-1 backing with high-quality liquid assets, including cash and short-term Treasuries, monthly reserve reporting, strict AML compliance, and clear licensing requirements. It also confirms that compliant payment stablecoins are not securities, giving banks, institutions and market participants greater confidence to issue and use them.

This matters because stablecoins are becoming a core settlement layer for digital markets. By creating a regulated structure for dollar-backed stablecoins, the GENIUS Act supports the continued role of the U.S. dollar in global digital finance, while increasing demand for high-quality U.S. dollar assets, including Treasuries. In practical terms, each regulated dollar-backed stablecoin must be supported by real reserve assets, creating a direct link between stablecoin growth, Treasury demand, and the future funding capacity of U.S. markets.

The Digital Asset Market Clarity Act, or CLARITY Act, passed the House in July 2025 and advanced through the Senate Banking Committee in May 2026. It draws a clearer line between the SEC and CFTC, while reinforcing an important principle for capital markets: tokenized equities remain securities under existing rules. Tokenizing a stock does not change its legal status. It remains subject to the same protections, requirements, and investor safeguards as traditional shares.

Together, these developments removed two significant roadblocks. The GENIUS Act gave the market a trusted, regulated settlement tool on chain through stablecoins. The CLARITY Act, alongside SEC guidance, helped confirm that tokenization is a new form of representation and recordkeeping for existing assets, not a way around established securities regulation. The SEC’s January 2026 statement on tokenized securities reinforced this point clearly: the format of a security does not change the application of federal securities laws.

That clarity is now translating into market action. In December 2025, the SEC’s Division of Trading and Markets issued a no-action letter allowing DTC to develop a pilot tokenization service for DTC-custodied assets in a controlled production environment. DTCC has said it expects to begin rolling out the service in the second half of 2026, covering highly liquid assets including Russell 1000 securities, major ETFs, and U.S. Treasuries.

This shift also reflects the role of established infrastructure providers. Equiniti’s work as transfer agent on the tokenization of Bullish shares demonstrates how regulated, trusted market participants can support next-generation ownership models while preserving the integrity, controls and accountability expected in public markets.

In Q2 2025, tokenized stocks across platforms such as Kraken, Robinhood, Coinbase, Gemini and Bybit had already reached hundreds of millions in market capitalization, with industry projections pointing to potential growth into the trillions. The excitement is not theoretical. Fractional ownership can broaden access to high-value assets. Around-the-clock trading can move markets beyond traditional exchange hours. Near-instant settlement can reduce cost, counterparty risk and the friction created by multi-day clearing cycles.

For the future of trading, this points toward a hybrid market structure where traditional and tokenized shares exist side by side across both TradFi and DeFi environments. Over time, this could support shared identifiers, deeper liquidity, more efficient collateral movement, programmable corporate actions, and broader global access. Institutions could benefit from faster financing and collateral mobility, while retail investors may gain access to a wider set of opportunities.

The GENIUS and CLARITY Acts did not invent tokenization. They made it credible for serious capital to engage. By bringing stablecoins, digital assets and tokenized securities into a clearer regulatory framework, the U.S. has laid the groundwork for what could become the most significant modernization of equity markets since electronic trading.

Key events

• July 2025: The GENIUS Act was signed into law, creating the first comprehensive U.S. federal framework for payment stablecoins.
• July 2025: The CLARITY Act passed the House, setting out a proposed market structure framework for digital assets.
• December 2025: SEC staff issued a no-action letter allowing DTC to develop a pilot tokenization service for real-world, DTC-custodied assets in a controlled production environment.
• January 2026: SEC staff issued a statement clarifying that tokenized securities remain subject to federal securities laws. The technology may change the format, but it does not change the legal character of the security.
• March 2026: The SEC approved Nasdaq’s rule change to allow certain tokenized securities to trade on its exchange alongside traditional securities.
• May 2026: The CLARITY Act advanced through the Senate Banking Committee, moving the U.S. closer to a comprehensive digital asset market structure framework.

Newer leadership, including Chair Paul Atkins, has also pushed for clearer on-chain frameworks and innovation pathways. The shift is not about abandoning existing market protections. It is about fitting blockchain-based infrastructure into the legal and operational standards that already underpin U.S. capital markets.