Trump Administration’s Impact on Tokenization: Is the Golden Age Upon Us?

For years, US financial institutions have faced significant hurdles in adopting tokenization, primarily due to regulatory uncertainty and operational challenges. But recent changes under the Trump administration are clearing these obstacles, paving the way for the golden age of tokenization in the United States.

Breaking the Custody Barrier

The SEC’s Staff Accounting Bulletin 121 (SAB 121) created a major roadblock by requiring institutions holding tokenized assets for clients to report these as liabilities on their balance sheets.

This increased financial exposure discouraged institutions from offering custody services. With the repeal of SAB 121, this burden has been lifted, enabling institutions to provide custody solutions for tokenized securities without unnecessary financial risk.

Public Blockchains Gain Regulatory Support

Institutions have long recognized the value of public blockchains for tokenized assets, removing silos, ensuring transparency, and unlocking interoperability. However, regulatory uncertainty left many hesitant to adopt them.

President Trump’s new executive order on digital assets changes this, ensuring lawful access to public blockchain networks and introducing technology-neutral regulations.

Like other forward-thinking jurisdictions (e.g., E.U., Singapore, Hong Kong), the US now takes a “same assets, same rules” approach, where compliance becomes the focus, not the underlying technology.

Tokeny’s proven solutions, using the ERC-3643 ‘T-REX’ standard, address the critical question of how to enforce compliance on public blockchains, allowing institutions to confidently move forward.

Stablecoins: Institutionally Accepted On-Chain Cash

One of the biggest challenges for tokenization has been the absence of on-chain cash that institutions are willing to adopt. Stablecoins, despite their wide adoption by cryptocurrency players, have faced hesitation from financial institutions due to concerns about legitimacy.

The recent executive order promotes lawful USD-backed coins while banning CBDCs in the US. This move not only provides regulatory clarity but also establishes stablecoins as a trusted on-chain cash solution.

While some institutions remain cautious, this shift is expected to accelerate institutional acceptance of cash coins for tokenized securities. It will unlock atomic settlements, where security and cash coexist on the same ledger, and enable automation of processes like capital calls, dividend payments, and more.

The growing demand for dollar-backed stablecoins is creating significant opportunities for tokenized money market funds. Stablecoin issuers will mint more tokens as adoption grows, driving a greater need for collateral that is liquid, safe, and yield-bearing. It’s precisely what tokenized money market funds offer.

At the same time, tokenized MMFs also represent onchain cash with yield, positioning them as an alternative to the first generation of stablecoins, which typically capture yield for themselves. This dynamic introduces both competition and synergy between the two, as stablecoin issuers may turn to tokenized MMFs for reserves, while investors seeking yield-bearing onchain cash could increasingly look to MMFs instead of stablecoins.

Tokeny’s customers are already leading the way. Moreliquid, which tokenized the HSBC Euro Liquidity Fund, and Fasanara, which tokenized U.S. Treasury Bills, are capturing this trend with the scalable solutions we provide underneath.

A Golden Moment for Tokenization

The challenges are being resolved: regulations are aligning, proven technology like ours is ready, and the market is moving rapidly. Institutions must now ask themselves: What are we waiting for?

We believe this could be the year we bring the first trillion dollars in assets on-chain as an ecosystem. Let’s shape the golden age of tokenization together!

Previous Newsletter