MetroTrade Monthly: Tokenization; What Does That Mean for Us?

MetroTrade Monthly is a monthly newsletter from David Klotz, President of MetroTrade, with thoughts, updates, and reflections from around the company and industry.

If prediction market was the buzzword of 2025, then I’m speculating (on Kalshi) that the financial industry buzzword for 2026 will be tokenization.

I have been trying, and failing, to get my arms around what tokenization could look like for a few months, and I think that’s because the term means something different to every person in the industry.

While the futures industry is likely a long way off from meaningful implementation, I think it’s important to set the table on where tokenization is today, and how its implementation across the wider industry could impact its deployment here.

But first and foremost, let’s define what tokenization is and what a tokenized asset is.

Per the DTCC, asset tokenization is the process of converting ownership rights to a financial asset into a digital token recorded on the blockchain.

These tokenized assets represent the same legal rights as the original but can be transferred, tracked, and managed digitally.

Blockchain tokenization can introduce new capabilities, reduce risk, unlock liquidity, and broaden market access across platforms and jurisdictions to a whole host of traditional, crypto, and newly digitized assets with:

Fractional ownership that provides the ability to trade or invest in specific dollar amounts, rather than whole shares or contracts.
Faster cross-border transfers that may eliminate the friction of transacting offshore concerning currency and interest rate risk.
Built-in rule enforcement with smart contracts that may eventually automate and cheapen the infrastructure necessary to support corporate actions.
More efficient transactions (think T+0 instead of T+1 settlement) may lower margin rates and transaction costs.

The Regulator’s Stance

Late last year and early in 2026, both the CFTC and the SEC issued statements clarifying their positions on some elements of tokenization.

Specifically, the SEC issued guidance indicating that tokenized securities will remain subject to existing securities laws and will fall under the jurisdiction of the SEC. The SEC also sent a no-action letter to the DTC allowing them to offer a new service to tokenize DTC-custodied assets in production and provided guidance on how broker-dealers could meet their 15c3-3 obligations with respect to crypto and tokenized securities.

In a speech to the Asset Management Derivatives Forum, SEC Commissioner Mark Uyeda further clarified that the SEC’s task is not to invent a new rulebook for tokenized and crypto-native assets but to translate existing securities laws into on-chain environments.

The CFTC issued a no-action letter to Coinbase Financial Markets, Inc., allowing them to accept tokenized assets as collateral for futures positions, provided the DCO (Derivatives Clearing Organization, i.e., the clearing house) accepts that asset as collateral.

On the face of it, these two letters may not seem significant. Still, they provide the financial industry with the necessary foundation to build and expand tokenization infrastructure and technology, backed by the implicit support of Federal regulation.

The Exchanges and Issuers

On the heels of the SEC news, the NYSE announced the development of a platform for trading and on-chain settlement of tokenized securities. The NYSE and its parent, Intercontinental Exchange (ICE), said the new platform will incorporate many of the key tenets of on-chain migration.

ICE’s clearinghouses are enhancing their clearing infrastructure to support tokenized collateral and are working with settlement banks to enable tokenized deposits, including the transfer of tokenized collateral outside of banking hours, to meet margin obligations and funding needs across jurisdictions and time zones.

Nasdaq also filed a rule change with the SEC seeking approval to trade tokenized US stocks and ETFs alongside traditional shares on the same order book.

The CME Group also announced that it will introduce tokenization initiatives via Google Cloud’s universal ledger. While no specific assets were mentioned in their initial press release, the CME Group’s cash treasury business is an obvious starting point for implementing tokenization.

Meanwhile, on the ETF front, last month F/m Investments asked the SEC for permission to record ownership of tokenized shares of their TBIL ETF on a permissioned blockchain ledger.

The request was structured such that the ETF will remain able to operate within the framework of Rule 6c-11 of the 1940 Investment Act, and could act as a template for other ETF issuers to follow.

What’s notable here is the breadth and depth of legacy players moving simultaneously into the space. Given that the SEC and CFTC announcements just came out in Q4 2025, it’s clear Wall Street has been looking into tokenization for quite some time and was just waiting for clarity from regulators before making their moves public.

Who is Using and Working With Tokenization

As is typical in the financial industry, tokenization is currently a top-down process, with key institutional players like BlackRock, Franklin Templeton, JP Morgan Chase, and Fidelity leading the tokenization efforts in the private sector and trading tokenized assets among themselves.

Robinhood is using tokenization to offer on-chain versions of US stocks and ETFs to European customers today, and is building its own atrium-based layer 2 chain.

At the moment, Robinhood’s offering really acts more like a contract-for-difference exchange, where Robinhood is providing customers the economics of the underlying security, but not direct legal ownership. This is an important distinction, because while these contracts look and act like digital tokens, they are really just derivatives contracts that are dressed up as a token, and they lack the inherent fungibility and interoperability of true tokenized assets.

Kraken acquired Backed Finance and its xStocks product, which brought tokenized versions of 60 US equities and ETFs on-chain. While currently only available to non-US users, these are fully regulated on-chain tokens redeemable 1:1 with the underlying asset. They also trade 24/7 on 3rd-party chains like Solana, BNC Chain and Tron.

What This All Means

Currently, it is estimated that $36 billion of Real World Assets (RWAs) have already been moved on-chain. While a broad range of assets have been tokenized, they are generally organized into the following three tranches:

Financial assets – namely US Treasuries, corporate bonds, public equity (stocks/ETFs), and non-US government debt.

Real assets – real estate, gold, and other commodities, with legal title held by licensed custodians and Special Purpose Vehicles.

Alternative assets – non-conventional or complex assets like carbon credits, intellectual property rights, and institutional alternative funds.

While the use case is strong, and institutional adoption has been robust, there are still structural questions and issues that need to be addressed before wide-scale (i.e. retail) adoption can happen.

Constraints, Issues, and Bottlenecks

As we learned during the FTX debacle, funding an entity with self-generated tokens (does everyone remember FTT?), only works as long as the rest of the world accepts the value of that token.

One of the key issues facing tokenization is global acceptance of tokens as a means and value of exchange. All token issuers are not the same – for example, JP Morgan issuing a JPM token is not the same as Silicon Valley Bank issuing an SVB token.

Additionally, the integrity of the asset and the guarantee of 1:1 redeemability is of paramount importance, whether it’s a bank-issued stablecoin, an on-chain ETF share, or a fractional US government bond.

Similarly, interoperability is a major topic of concern, because to be truly successful, these products need to be able to be transferred via secondary markets and outside of the networks and protocols where they originated. An ETF token generated by Franklin Templeton has to be accepted by Fidelity, and vice versa.

Lastly, for tokenization to truly take hold, the regulatory environment for all jurisdictions needs to be in sync, with common core elements and a focus on applying current rules to new platforms, rather than creating new rules and frameworks (looking at you, European Union). With tokenization, the risks of regulatory arbitrage threaten not just the sanctity of that jurisdiction, but potentially the chain itself.

Wrapping Up

While it’s true that tokenization can open up new opportunities and benefits for all levels of traders and investors, from 24/7 trading to smaller-sized products, its important to ignore the hype and remain focused on why you want to buy or trade the asset in the first place.

Hypothetically, just because you can buy a fractional piece of art in your digital wallet using the doge coin you took a flyer on five years ago doesn’t mean you should.

Tokenization, like micro futures before it, is ultimately about access — making markets and assets available to a broader audience in smaller, more manageable increments.

But access without infrastructure is just a promise, and infrastructure without regulation is just technology looking for a home.

The pieces are moving into place — the regulators have signaled their intent, the exchanges are building, and the institutional players are already issuing. What remains to be seen is whether the plumbing can keep up with the ambition, and whether the interoperability and trust frameworks necessary for widespread adoption can be established before the hype cycle moves on to the next thing.

For the futures industry specifically, the CFTC’s collateral no-action letter may prove to be the most consequential development here, quietly opening a door that could fundamentally change how margin and settlement function in the years ahead.