Fidelity Executive Says Tokenization Shift Is Irreversible

Financial institutions are moving toward an onchain future at a pace that has become effectively irreversible, according to Matthew Horne, head of digital asset strategists at Fidelity Investments. Speaking during a panel discussion in Singapore, Horne said the institutional push over the last 18 months represents a structural shift rather than a passing trend. 'In the last 18 months, if you look at the push by true institutions to move toward an onchain future, it's really no going back,' Horne said. The comments underscore how major asset managers now view tokenization not as an experiment but as a core component of future market infrastructure.

Key Facts

• Fidelity's Matthew Horne said institutions moving toward an onchain future is irreversible.
• Tokenization provides structural advantages and helps asset managers reach new markets.
• Demand for tokenized real-world assets rose 41% over a recent 30-day period, with holders surpassing 493,000, excluding stablecoins.
• UBS's Ka Yan Chan said Treasuries and equities could bring billions of dollars onchain.
• Chan said market infrastructure players like the Federal Reserve or DTCC must transform custody into a tokenized platform to drive trillions.
• In December 2025, the SEC issued a no-action letter to a DTCC subsidiary for a securities market tokenization service.
• In September, the SEC approved a temporary exemption for limited trading of tokenized US stocks on certain onchain venues.
• Securitize launched trading of tokenized shares of a dozen widely held US stocks with security entitlements.
• More than $1.2 billion in capital moved onchain in 30 days, with stablecoins and tokenized assets exceeding $323 billion.
• Standard Chartered predicted tokenized RWAs may reach $4 trillion by the end of 2028.

Why Tokenization Is Gaining Institutional Traction

Tokenization refers to the process of representing traditional assets—such as government bonds, equities, money market funds, private credit, and real estate—as digital tokens on a blockchain. For financial institutions, the appeal is not merely technological novelty. Tokenized assets can settle faster, trade around the clock, be divided into smaller units, and integrate with programmable financial applications. Those features can reduce operational friction, lower reconciliation costs, and expand access to investors who previously could not efficiently access certain products.

Horne emphasized that US asset managers are especially motivated to move assets onchain because tokenization improves investor access and helps firms reach new markets. The ability to distribute tokenized products across borders and through digital channels could open segments of the market that traditional fund structures have struggled to serve. For large institutions, the question is increasingly not whether to adopt tokenization, but how quickly they can build the infrastructure and compliance frameworks needed to support it.

UBS Executive Sees Treasuries and Equities as Onchain Catalysts

Ka Yan Chan, head of digital assets business development at UBS, said Treasuries and equities—the staples of portfolio construction—may bring billions of dollars onchain. According to Chan, the real breakthrough will come when market infrastructure players such as the Federal Reserve or the Depository Trust and Clearing Corporation make the first move in transforming the custody layer to a tokenized platform. These institutions sit at the center of the financial system, and their adoption would provide the legal, operational, and settlement certainty that larger pools of capital require.

Chan added that industry participants could piggyback on such initiatives by building the distribution layer for tokenized assets. In that model, core market infrastructure would handle custody and settlement, while asset managers, brokerages, and fintech platforms would focus on packaging and distributing tokenized products to end investors. That division of labor could accelerate adoption because it allows each part of the value chain to specialize.

Regulatory Developments Add Momentum

The institutional shift is being supported by regulatory developments in the United States. In December 2025, the Securities and Exchange Commission issued a no-action letter to a subsidiary of the Depository Trust and Clearing Corporation, enabling it to offer a new securities market tokenization service. The move was significant because DTCC is central to the clearing and settlement of US securities. A tokenization service from a DTCC subsidiary signals that tokenized securities are moving closer to mainstream market infrastructure.

In September, the SEC approved a temporary exemption allowing limited trading of tokenized US stocks on certain onchain venues. That exemption created a controlled path for tokenized equities to be tested in live markets. Separately, Securitize announced the launch of trading for tokenized shares of a dozen of the most widely held US traded stocks, including security entitlements. Security entitlements are important because they give token holders legal rights connected to the underlying shares, addressing one of the biggest concerns institutional investors have about tokenized equity products.

These steps do not resolve every regulatory question. Issues around custody, disclosure, market manipulation, and cross-border compliance remain. But they represent a shift from theoretical discussion to practical implementation. For banks, asset managers, and market infrastructure providers, the direction of travel is becoming clearer.

Market Data Reflects Rapid Growth

Market data illustrates how quickly the tokenized asset sector is expanding. Demand for tokenized real-world assets rose 41% during a recent 30-day period, with the number of holders topping 493,000, excluding stablecoins. More than $1.2 billion in capital moved onchain during the past 30 days, boosting the total across stablecoins and tokenized assets to more than $323 billion. Those figures show that tokenization is no longer a niche activity. It is attracting capital, users, and institutional attention.

The growth is coming from multiple directions. Stablecoins provide a digital cash layer for settlement and liquidity. Tokenized Treasuries offer yield-bearing instruments that can be used as collateral in onchain markets. Tokenized equities and funds expand the investable universe. Together, these categories are building a parallel financial system that connects traditional assets with blockchain-based markets.

From Billions to Trillions

The next phase of growth will depend on whether large-scale market infrastructure can be upgraded. Chan's argument is that Treasuries and equities are the assets that could move the market from billions to trillions. If the custody layer becomes tokenized, then settlement, collateral management, and asset servicing could all be re-engineered around blockchain rails. That would make tokenized assets more useful for institutional portfolios, not just as standalone products but as building blocks for broader strategies.

Industry forecasts support the optimistic view. Standard Chartered's global head of digital asset research predicted in August that tokenized real-world assets may reach $4 trillion by the end of 2028. While forecasts vary, the direction is consistent: tokenization is expected to grow as regulatory clarity improves and as market infrastructure modernizes. The involvement of firms like Fidelity and UBS suggests that large incumbents are preparing for that future rather than waiting for it to arrive.

Challenges That Could Shape the Timeline

Despite the momentum, several challenges could affect the pace of adoption. Interoperability between blockchains remains a work in progress. Institutions need robust custody solutions that meet regulatory standards. Legal frameworks must clarify how tokenized assets are treated in insolvency, taxation, and investor protection. Liquidity is another factor: tokenized markets need enough depth to support institutional trading without significant slippage.

There is also the question of user experience. For tokenization to reach its full potential, investors and advisors must be able to access tokenized products through familiar channels. That means integrating blockchain-based assets into existing portfolio management systems, trading platforms, and reporting tools. The distribution layer that Chan described will be critical in making tokenized assets accessible to a broad audience.

What the Institutional Shift Means for Markets

The movement toward tokenization could reshape how financial markets operate. Faster settlement could reduce counterparty risk and free up capital. Programmable assets could automate compliance, dividend payments, and collateral management. Fractional ownership could democratize access to assets that were once reserved for large investors. For asset managers, tokenization could open new distribution channels and create products that are more flexible than traditional funds.

Horne's comment that there is 'no going back' reflects a growing consensus among institutions. The last 18 months have seen a wave of experimentation, pilot programs, and regulatory engagement. What was once a speculative idea is now part of strategic planning at some of the world's largest financial firms. The combination of institutional demand, regulatory progress, and market infrastructure development suggests that tokenization will continue to move from the periphery toward the center of finance.

As of early October 2026, the data points to acceleration rather than slowdown. Tokenized real-world asset holders have surpassed 493,000. Capital flows onchain have exceeded $1.2 billion in 30 days. Total stablecoin and tokenized asset value has topped $323 billion. Forecasts project tokenized RWAs could reach $4 trillion by the end of 2028. Those numbers may prove conservative if major market infrastructure providers follow through on tokenization initiatives.

Source:Cointelegraph News