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Information is instant. Value is not.
Even after the move to T+1 in U.S. equities, markets still run on a sequence:
Trade → Clear → Settle → Reconcile → Report
Each step takes time. Each step adds cost. Each step creates a window of risk.
On a small scale, it’s trapped capital. At $600 trillion in derivatives and $130 trillion in bonds, it reflects systemic idle liquidity embedded in our global financial infrastructure.
The system works. It just runs on yesterday’s clock.
Outstanding OTC Derivatives
Tokenization compresses time.
Think of it as capital velocity: the time between committing capital and being able to use it as collateral.
In legacy markets, that’s days or weeks. In programmable markets, it can be minutes. Not because the asset changed but because the workflow did.
Today, ownership, cash movement, compliance checks, and ledger updates all happen separately.
Tokenization collapses them into one state change.
Cash moves. Ownership updates. Compliance is enforced. Records are written.
All at once.
And this isn’t hypothetical. BlackRock’s BUIDL, Franklin Templeton’s BENJI, and Ondo’s tokenized Treasuries are live. Stablecoins already settle hundreds of billions on-chain annually. The debate has moved from “if” to “which assets, which jurisdictions, how fast.
Atomic settlement is the breakthrough. Fractionalization is the marketing.
Take a private fund subscription.
Today:
You’ve paid, but you don’t own it yet. Multiple ledgers need to agree. Reconciliation is a time-consuming process.
In a tokenized model:
Delivery versus payment. One transaction. No reconciliation. Settlement, embedded.
Most tokenization conversations focus on the token.
Institutions care about the stack:
Digitizing an asset is easy. Making it balance-sheet efficient is hard.
Institutions don’t adopt technology because it’s new.
They adopt when:
That’s starting to happen.
Tokenized Treasuries are live. Stablecoins already settle hundreds of billions on-chain annually. Permissioned pools are being built for compliance-first liquidity.
The conversation has moved from “if” to “where it improves the balance sheet.”
Tokenization doesn’t remove intermediaries. It reprices them.
Value moves from maintaining ledgers to controlling settlement.
Custodians who become key managers win. Collateral desks that can move assets in real time win.
What loses is any function whose value was the delay itself. Manual transfer agents. Reconciliation layers. Batch reporting cycles.
These were necessary given the infrastructure, but as the infrastructure changes, the old-world business cases disappear with it.
The real work now sits in legal frameworks and operational execution.
The oracle problem is the deepest structural vulnerability in the stack. If the price feed linking real-world assets to on-chain state is stale or wrong, atomic settlement doesn’t protect you; it just executes the error faster.
An atomic settlement eliminates settlement risk. It doesn’t eliminate custodian failure, smart contract exploits, or issuer insolvency. The trust has been relocated, not removed.
On timeline, one variable matters more than any technology choice: regulatory clarity. MiCA, MAS, the FCA, and VARA are building different frameworks at different speeds. The first jurisdictions to resolve the legal status of tokenized ownership will capture volume.
That race is already underway.
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