Is Wall Street planning to move the entire financial system onto the blockchain?

Author: Jason Rosenthal

Translation by: AididiaoJP, Foresight News

Wall Street is no longer just symbolically exploring blockchain; it is moving toward it.

After years of hesitation, various institutions that are pillars of the global capital markets—including exchanges, clearinghouses, and electronic trading platforms—are shifting their operations on-chain.

What is happening now is the largest infrastructure upgrade in capital markets since the transition to electronic trading three decades ago.

However, most people will only realize this transformation after it is completed.

Why now: Speed changes everything

Every institution moving in this direction shares the same belief—that on-chain infrastructure will significantly enhance the speed of capital flow. History has made it clear what results this will bring.

Looking back at the transformation brought by electronic exchanges in the 1990s: before the emergence of electronic communication networks and online brokers, a single transaction could take several minutes to execute, bid-ask spreads were quoted in fractions, and market access was limited by geography and capital size. With improvements in infrastructure, spreads narrowed significantly, commissions dropped from $150 to $9.95, and then to zero, resulting in explosive growth in trading volume and a significant increase in retail investor participation. By the 21st century, the market landscape had changed dramatically compared to the 1990s—not only had costs significantly decreased, but the market size also expanded enormously.

Tokenization applies the same logic to the entire global financial system: achieving round-the-clock trading, instant settlement, and seamless cross-border circulation, allowing assets that previously required six-figure capital thresholds to be fractionalized, and enabling collateral to flow in real-time rather than sitting idle overnight. This will lead to higher capital turnover, broader participation, and a larger total market size.

What does tokenization specifically mean? Tokenized assets refer to digital representations of real-world assets—such as U.S. Treasury bonds, shares of Apple Inc., and real estate contracts—recorded on the blockchain in programmable token form. Unlike the traditional model where custodians track ownership through centralized databases during business hours in a single time zone, tokenized assets exist on-chain: they can be transferred, programmed, and settled instantly from anywhere in the world at any time.

They are not derivatives but rather the real assets themselves, equipped with superior underlying infrastructure.

Institutions are taking action

In December 2025, the U.S. Securities and Exchange Commission granted a no-action letter to the U.S. securities depository and clearing company, allowing it to tokenize real-world assets on an approved blockchain. The company processed a total of $37 trillion in transactions in 2024. It plans to launch production-level tokenization services for U.S. Treasury bonds in the first half of 2026.

On January 19, 2026, the New York Stock Exchange announced the launch of a platform for 24-hour on-chain trading and settlement of U.S. stocks and exchange-traded funds—supporting fractional trading, instant settlement, and stablecoin financing—and partnered with BNY Mellon and Citibank to provide tokenized deposit support for the Intercontinental Exchange’s clearinghouse. The world’s most iconic stock exchanges are migrating on-chain.

In August 2025, Tradeweb completed its first fully on-chain, real-time transaction for U.S. Treasury bonds, financed by USDC—the transaction was executed on a Saturday, outside traditional settlement windows, with participants including Bank of America, Castle Securities, the U.S. securities depository and clearing company, and Virtu Financial. Its business scope continues to expand quarterly and now covers cross-border settlements and intraday settlements. Nasdaq also submitted its rule change proposal to the U.S. Securities and Exchange Commission in September 2025.

This series of movements increasingly reflects a trend of overall migration rather than isolated experimental attempts.

Hidden costs within the existing system

Another force driving this process is the structure of the existing market, which is built around intermediaries rather than focusing on the market itself.

Take a typical securities transaction as an example: investors pay the bid-ask spread to brokers. In institutional trading, prime brokers charge financing fees. Exchanges and transfer agents charge their respective fees. Custodians charge asset custody fees. The U.S. securities depository and clearing company charges fees at each stage of clearing, netting, and settlement. Even if the U.S. achieves T+1 settlement in 2024—after decades of reforms due to previous settlement cycles lasting several days—funds still need to be locked overnight, creating a “structural cost” for all participants.

Smart contracts and atomic settlement technology can compress these layers. Now, both parties to a transaction can complete trades instantly on-chain and achieve final settlement.

The rent extraction in the existing system—its profit margins—will not disappear… but will transform into opportunities for new entrants. In other words, the profit margins of existing institutions represent the opportunity for you to build new infrastructure.

The key lies in regulatory clarity—and that condition is finally beginning to materialize. If the current momentum continues, the impact of the CLARITY Act on traditional finance is expected to be similar to that of the GENIUS Act on the adoption and development of stablecoins.

The institutional safeguards anticipated by large players are just around the corner. So, what does this mean for builders?

The migration of global financial infrastructure to on-chain will create demand for an entirely new category of products and services.

The fastest-moving legacy institutions are not your competitors, but rather your clients. The U.S. securities depository and clearing company has no intention of developing middleware, the New York Stock Exchange has no intention of building compliance tools, and Tradeweb has no intention of creating a cross-border distribution layer.

These institutions are laying the foundation of regulated, institution-grade infrastructure. Founders are responsible for building all applications that run on top of this foundation.

This mirrors the development model of the 1990s. Exchanges did not create ETRADE, nor did they create Bloomberg, and they certainly did not develop the order management systems and prime brokerage platforms that defined the next era. These outcomes were all crafted by founders who foresaw future trends.

More participants joining, faster capital flow, lower trading friction.

More abundant liquidity, broader market space.

History has already clearly revealed the ultimate direction of this process.

The window for building the foundational infrastructure of tokenized financial markets has now opened.