SEC's Two-Year Prediction: From Traditional Finance to the Global Tokenized Market

SEC Chairman Paul Atkins has made a notable prediction: the entire U.S. financial system—including stocks, bonds, real estate, and credit assets—could fully transition to a blockchain-based architecture within the next two years. This will be the most fundamental overhaul of the U.S. financial markets since electronic trading emerged in the 1970s. This prediction is not just a visionary idea but is based on a specific legal framework and practical cooperation among major organizations.

Comprehensive Legal Framework: When Government, Regulators, and Private Finance Work Together

The “Project Crypto” initiative is seen as the foundation for realizing this prediction. A key difference is that Project Crypto is not an SEC unilateral action but a systematic collaboration among legislators, regulators, and the private financial sector.

To move $50 trillion in U.S. financial assets onto the blockchain, clarity on each party’s role is essential. Three main laws are designed to address this:

GENIUS Act focuses on stablecoins regulated and fully backed by reserves. It grants oversight authority to banking regulators, addressing the “Cash Leg” needs for tokenized transactions and collateral.

CLARITY Act clearly delineates the powers between the SEC and CFTC, defining “mature assets” so organizations know whether digital assets (like Bitcoin) fall under the jurisdiction of one regulator or another. It also provides a pathway for native crypto platforms to register as federal intermediaries.

Additionally, OCC (established 1973) specializes in payments, clearing, and settlement for options, futures, and securities lending. CFTC is the primary regulator of futures markets. This inter-agency cooperation is a prerequisite for the U.S. financial markets to go fully on-chain, laying the groundwork for giants like BlackRock, JPMorgan, and the integration of DTCC—the “central depository” of the U.S. stock market.

Participation of Major Financial Institutions

Major financial players are not just waiting—they are taking concrete actions:

BlackRock was the first to issue a tokenized government bond fund on a public chain (Ethereum), building a platform to bring traditional finance into the public ecosystem.

JPMorgan renamed its blockchain division Kinexys, enabling atomic swaps between tokenized collateral and cash within hours instead of days. Its JPMD experiment on the Base chain is a strategic step toward expanding into the broader blockchain ecosystem.

DTCC (through its subsidiary DTC) received a “no objection letter” from the SEC in December 2025, allowing the connection of traditional CUSIP systems with new tokenization infrastructure. This marks an official milestone for large-scale asset tokenization.

Practical Benefits of Tokenization: Speed, Efficiency, and Liquidity

The core goal of tokenization is to break down the limitations of traditional finance and build a programmable, 24/7 global system.

Leap in Payment Speed: Blockchain can process payments almost in real-time (T+0) instead of T+1 or T+2. UBS issued digital bonds on SDX with T+0 settlement, and the European Investment Bank reduced settlement time from five days to one. This significantly reduces counterparty credit risk, especially important for repos and derivatives margining.

Releasing Locked Capital: “Atomic delivery” (simultaneous transfer of assets and payment) eliminates principal risk in traditional systems. Through tokenization, capital that was previously locked during settlement can be freed—collateral assets managed via tokenization could unlock over $100 billion annually. Tokenized money market funds (TMMF) used as collateral continue to generate returns, avoiding profit loss from converting to cash as in traditional systems.

Full Transparency: Distributed ledgers provide a single, immutable record of ownership. Smart contracts can automatically enforce compliance and dividend payments. This addresses the “double entry” problem—multiple record-keeping in traditional finance—giving regulators real-time oversight like never before.

Global 24/7 Access: Markets are no longer limited by business hours, time zones, or holidays. Tokenization facilitates smoother cross-border transactions, especially beneficial for multinational companies managing cash flows.

Challenges and Risks: Balancing Speed and System Stability

Despite enormous potential, these fundamental changes carry risks:

Liquidity vs. Netting Conflicts: Currently, DTCC performs netting for millions of transactions, reducing the need to transfer 98% of cash—an extremely efficient process. T+0 settlement (RTGS) could undermine this efficiency. Hybrid solutions, such as intraday repos, are needed to maintain balance.

Privacy Paradox: Institutional finance relies on transaction confidentiality, but public blockchains (like Ethereum) are fully transparent. Large organizations face “front-running” risks. Solutions may include zero-knowledge proofs or operating on permissioned chains like Kinexys.

Systemic Risk Amplification: 24/7 markets eliminate the “cooling-off” periods of traditional markets. Algorithmic trading and automated margin calls via smart contracts could trigger large-scale liquidations under market stress, amplifying systemic risk similar to the 2022 UK LDI crisis.

The Central Role of DTCC: Connecting Old Finance and the New Future

DTCC/DTC are not just large organizations—they are the “central depository” and “main clearinghouse” of the U.S. stock market. By 2025, DTC manages assets exceeding $100 trillion, including 1.44 million issued securities—dominating most U.S. equity transactions.

Their involvement signifies official recognition of traditional financial infrastructure for digital assets. Their core responsibility is to serve as a trusted bridge between the existing CUSIP system and emerging tokenization infrastructure. DTC commits that tokenized assets will maintain the same safety, stability, and investor protections as traditional forms.

In December 2025, DTC received a “no objection letter” from the SEC—an historic milestone. This approval indicates that tokenized stocks are on the verge of official U.S. endorsement. Future tokenization projects may connect directly to DTC’s official asset registry rather than building independent infrastructure.

The U.S. stock market will evolve into a new model: Nasdaq and other exchanges act as centralized exchanges (CEX), DTC manages token contracts and allows token withdrawals—realizing full liquidity. DTC will also support collateral liquidity enhancement, enabling 24/7 access and programmable assets. Tokenized stocks will no longer be separate but fully integrated into the traditional market’s ledger system.

Tokenized Stablecoins (TMMF): The Collateral Assets of the Future

Tokenized Money Market Funds (TMMF) exemplify the growth of real-world assets (RWA) in tokenization. They are especially attractive as collateral:

Capital Preservation: Unlike cash, which earns no interest, TMMF used as collateral continues to generate returns until actually used, reducing opportunity costs.

Instant Liquidity: TMMF combines the regulatory safety of traditional funds with blockchain’s instant, programmable payments. BlackRock’s BUIDL fund, for example, allows instant withdrawals via Circle’s USDC, solving the T+1 withdrawal delay of traditional MMFs and enabling 24/7 instant liquidity without profit loss.

As the SEC’s full vision becomes reality, these TMMFs will become key drivers for a global financial system operating on blockchain architecture, ushering in a new era of efficiency, liquidity, and transparency in international finance.