Tokenisation boom will stall in bank back offices
By Jennifer Johnson Between high-profile fraud convictions and price crashes, it’s easy to forget there was a utopian ideal at the heart of the crypto movement: building financial services on decentralised infrastructure, which cuts out banks and other fee-seeking middlemen. Yet, despite years of hype, cryptocurrencies and the blockchain ledgers they live on have not been widely adopted. Tokenisation, the process of logging real-world assets on blockchains, could change that – but banks and their clients are the most likely beneficiaries.The argument for registering asset ownership on crypto rails essentially boils down to speed and convenience. Because public blockchains operate around the clock, there would be no set trading hours, and settlement could be near-instantaneous. Advocates also argue it’s easier to trade costly, illiquid holdings – like real estate – if they’re fractionalised, or broken up into smaller units. Tokenisation makes it theoretically possible to own a tiny portion of, say, a commercial building.Growth projections are heady, to say the least. Analysts at Standard Chartered have predicted that the market value of all tokenised real-world assets (RWAs) will hit $2 trillion by 2028. That’s not including stablecoins, cryptocurrencies pegged to the price of an existing currency. Vlad Tenev, the chief executive of brokerage app Robinhood Markets , told Bloomberg in October that tokenisation is a “freight train, and it’ll eat the entire financial system”.Banks, however, are in a prime position to devour the lion’s share of the cost savings from this new system first. For instance, a bank could tokenise a corporate client’s deposits, thereby allowing it to move money between its various global accounts in seconds. Citigroup currently offers a service like this to certain institutional customers, as does HSBC . Meanwhile, e-commerce giant Alibaba has revealed plans to launch a tokenised global payment network using technology developed by JPMorgan. Kuo Zhang, president of Alibaba.com, told CNBC that the group will launch a stablecoin-like system to speed up international business-to-business transactions.A cynic might say that lenders are only developing these products to offset the competitive threat from stablecoins. If clients used cryptocurrencies as they do cash, it would pull money out of the banking system. This would add further pressure to lenders that are facing lower revenue as interest rates decline in key markets. With tokenised payments and deposits, clients can still expect instant settlement, but with the protections offered to them by a bank.Moreover, individuals trading tokenised equities on platforms like Robinhood don’t necessarily have the same rights as conventional shareholders. European regulators are increasingly wary of tokenised stocks for this reason, though they are legal in the region. Despite U.S. President Donald Trump’s well-documented enthusiasm for crypto, tokenised stocks aren’t generally available in the U.S. Without more explicit backing from regulators, demand may stall.For now, it looks like the dream of decentralised finance is giving way to a more practical reality: crypto rails will allow banks to remove much of the friction in parts of their existing infrastructure. And far from being cut out of the crypto party, old-school lenders will become essential hosts.Follow Jennifer Johnson on Bluesky and LinkedIn.This is a Reuters Breakingviews prediction for 2026.