Tokenization is coming to Wall Street as J.P. Morgan takes another step toward making Treasurys move like crypto

By Frances Yue

Wall Street's efforts to tokenize real-world assets are progressing in 2026

J.P. Morgan has been one of the most active large banks in pushing to put financial assets on blockchain rails.

The $30 trillion U.S. Treasury market is one of the most important pillars of global finance, and some of Wall Street's biggest firms have been testing out whether these assets would be at home on a blockchain - a key innovation introduced to the world by bitcoin (BTCUSD).

Large financial institutions including J.P. Morgan, BlackRock, BNY and Franklin Templeton are pushing further into tokenized funds, tokenized deposits and blockchain-based settlement.

Recently, the trend appears to have hit a tipping point: Earlier this week, the Depository Trust & Clearing Corporation announced that it would go live with a new tokenization service in October, following an initial, more limited run beginning over the summer. Among the types of real-world assets that DTCC has received permission to tokenize are Treasury bills and bonds. Major equity exchanges like Nasdaq have said they are also actively pursuing tokenized trading of stocks and exchange-traded funds.

Now J.P. Morgan's blockchain unit, Kinexys, in collaboration with Mastercard, Ripple and Ondo Finance, says it has completed the first near-real-time, cross-border and cross-bank redemption of a tokenized U.S. Treasury fund, according to a statement shared with MarketWatch on Wednesday.

Not entirely decentralized

The process required a few steps. Ripple cashed out a portion of its Ondo Finance Short-Term U.S. Government Treasuries, a tokenized Treasury fund that exists on the XRP Ledger, a public blockchain. At the same time, Mastercard's network helped trigger the related dollar payment, and J.P. Morgan's Kinexys helped move the money through the banking system across borders.

In plain English, an investor was able to trade some of their tokenized U.S. Treasurys on a blockchain. The process wasn't entirely decentralized: The dollar payment received for the tokenized Treasurys still moved through the traditional financial system.

Still, the firm touted the transaction as an important step forward in bringing tokenized real-world assets to the masses.

"This pilot is an important step towards establishing a framework for institutional-scale tokenized asset markets," Zack Chestnut, head of commercial at Kinexys by J.P. Morgan, said in the statement.

Crypto proponents have long argued that tokenization could make assets such as Treasurys easier to trade, transfer and use as collateral in a 24/7 trading environment. similar to what investors in the cryptocurrency market currently enjoy.

So far, the portion of Treasurys that have been tokenized remains minuscule at roughly $15 billion, a tiny share of the broader Treasury market, according to data provider RWA.xyz.

Some people involved in the space said they expect it could still take some time for tokenization of real-world assets to go mainstream.

"I don't think we're there yet," Eric Rose, global head of StoneX Digital, said in a phone interview, adding, "I think we're pretty far away" from the point at which tokenization of financial assets becomes mainstream.

But for organizations that are as slow-moving as banks, any step toward tokenization is notable. Large financial firms have been experimenting with tokenization-related pilot programs for more than a decade. Things have only recently started to move past that stage.

"Banks typically move very slow on bringing on new products," he said. "To see large banks moving into this space, it really does reflect where the ball is going."

Regulatory roadblock

Regulators still need to establish more clear-cut, long-term rules to govern trading of tokenized assets. Only after this happens can widespread tokenization of real-world assets truly take hold, Rose said.

If the Clarity Act, a market-structure bill intended to spell out which federal agencies oversee different parts of the crypto market, gets approved this year, there could be much more adoption from institutional players, Rose added.

The Clarity Act has cleared the House of Representatives but is still awaiting action in the Senate. Its prospects improved after senators reached a compromise last Friday. However, its path forward remains uncertain.

-Frances Yue

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05-06-26 0927ET