2026: Asset Fungibility as a Tipping Point for Financial Markets 24/7

Capital markets are on the threshold of a historic transformation. As tokenization accelerates operational efficiency, asset fungibility emerges as the key concept that will redefine how global markets operate. 2026 represents a breaking point where continuous markets cease to be theoretical and become the dominant operating structure.

Collateral Fungibility: A Driver of Transformation in Continuous Markets

According to David Mercer, CEO of LMAX Group, capital markets still operate under a century-old paradigm based on price discovery, batch settlement, and tied up collateral. This system is coming to an end. With tokenization speeding up liquidation cycles from days to seconds, collateral fungibility allows institutions to reallocate portfolios on an ongoing basis.

When collateral acquires the characteristics of a fungible asset and liquidation occurs instantaneously instead of days, structural frictions disappear. Stocks, bonds, and digital assets become fully fungible components within a single continuous allocation strategy. The weekend disappears as a reference. The markets do not close; they are continually wobbling.

Market projections reveal massive ambitions. By 2033, market players project that tokenized assets will reach $18.9 trillion, representing a compound annual growth rate of 53%. Mercer estimates that, once mass deployment begins, 80% of the world’s assets could be tokenized by 2040. The exponential curves of historical adoption (mobile phones, air travel) suggest that these numbers, while ambitious, are moderate.

Secondary Impact: Deepened Liquidity and Unlocked Capital

The fungibility of tokenized assets unleashes second-order effects throughout the financial value chain. Capital trapped in traditional liquidation cycles (T+2, T+1) is released. Tokenized stablecoins and money market funds act as the connective tissue between previously isolated asset classes, allowing for instant capital movement.

This improvement in efficiency has measurable consequences: deeper order books, increased trading volumes, and acceleration of the velocity of money in both digitized and fiat form. With no risk of blocking settlement, the financial system can breathe.

For institutions, 2026 marks the moment of operational urgency. Risk, treasury, and settlement teams must transition from discrete batch cycles to continuous processes. This requires round-the-clock collateral management, real-time AML/KYC protocols, full digital custody integration, and functional acceptance of stablecoins as smooth settlement pathways. Institutions that manage liquidity and risk on an ongoing basis will capture capital flows that others structurally cannot.

Infrastructure Under Development and Regulatory Signals

The necessary infrastructure is already taking shape with regulated custodians and credit intermediation solutions moving from proofs of concept to production. A key indicator: The SEC has approved the Depository Trust & Clearing Corporation (DTCC) to develop a securities tokenization program that records ownership of stocks, ETFs, and Treasuries on the blockchain. Regulators are seriously considering this convergence.

While greater regulatory clarity is required before mass deployment, institutions that build operational capacity for continuous markets will be well positioned when frameworks are consolidated.

Global Adoption: Signs of Structural Change

While the U.S. and U.K. faced regulatory hurdles this week, global adoption accelerated significantly. South Korea lifted a nine-year ban on corporate investment in cryptocurrencies, now allowing public companies to own up to 5% of their equity in crypto assets (limited to BTC and ETH). South Korea lifts 9-year ban on corporate investment in cryptocurrencies.

Electronic trading giant Interactive Brokers launched USDC deposits with scheduled support for RLUSD (Ripple) and PYUSD (PayPal), enabling 24/7 instant funding in stablecoins. This step reflects how well fungible stablecoins already are in modern settlement systems.

U.S. regulatory news, however, shows resilience. The critical piece of crypto legislation faced gridlock in the Senate Banking Committee, with stablecoin rewards as a sticking point between traditional banks and non-bank issuers.

In the United Kingdom, Labour MPs are urging Prime Minister Keir Starmer to ban crypto donations to political parties over fears of foreign interference. Ethereum, meanwhile, is experiencing renewed adoption with new addresses interacting with the network at record rates, indicating growing institutional participation.

The Second Year of Cryptocurrency: Consolidation or Recession

Andy Baehr, Head of Product and Research at CoinDesk Indices, proposes an institutional metaphor: 2025 was the “rookie year” of cryptocurrencies in the United States—the inaugural year of enrollment in institutional capitalism. Logically, 2026 would be the “sophomore year”: a year to build, grow, specialize.

The 2025 academic newsletter was mixed. The powerful rally that followed Election Day generated carefree celebration until Opening Day, when Bitcoin hit an all-time high. The next four quarters showed different moods:

• Q1: First early lesson. Tariff conflicts caused Bitcoin to drop below $80,000 and ETH near $1,500.
• Q2: Revitalized market found pace with positive execution in the Circl Offering (CRCL) and preparation of the GENIUS Act.
• Q3: All-time highs, valuable DATs, and ubiquitous stablecoins.
• Q4: Painful. Self-deleveraging caused a drop in confidence with no recovery.

Avoiding the Curse of the Second Year

By 2026, cryptocurrencies must get three critical aspects right: clear legislation (CLARITY Act must navigate stablecoin rewards controversy), significant distribution beyond self-directed traders, and focus on higher-quality assets. CoinDesk 20 (largest caps) surpassed CoinDesk 80 (mid-caps) during 2025, proving that quality will prevail. Twenty major names — coins, smart contract platforms, DeFi protocols, infrastructure pillars — offer diversification without cognitive overload.

The second year can be productively unforgettable if cryptocurrencies “declare specialization” and begin to contribute more meaningfully to multi-asset portfolios and trade and risk management in global markets.

Market Indicators: Bitcoin and Gold Converge

The 30-day rolling correlation between Bitcoin and gold turned positive for the first time in 2026, standing at 0.40, when gold hits new all-time highs. However, Bitcoin maintains technical weakness priced at $85.16K (-4.94% in 24 hours) without recovering its 50-week Exponential Moving Average after a weekly decline of 1%.

Ethereum is trading at $2.84K (-5.42% in 24 hours). The USDC and PYUSD stablecoins maintain peg at $1.00.

The fundamental thing to monitor is whether a sustained uptrend in gold will provide medium-term momentum for Bitcoin, or whether BTC’s persistent weakness will confirm the decoupling of traditional safe-haven assets. This divergence has implications for how fungible markets will behave under stress.

Pudgy Penguins: Tokenization and Distribution of Fungible Assets

Pudgy Penguins emerges as one of the strongest NFT brands of the current cycle, transitioning from speculative “digital luxury goods” to a multi-vertical intellectual property platform. Their strategy: acquire users through mainstream channels first (toys, retail partnerships, viral media), then integrate them into Web3 through games, NFTs, and the PENGU token ($0.01).

The ecosystem encompasses phygital products (>$13M in retail sales, >1M units sold), gaming experiences (Pudgy Party surpassed 500k downloads in two weeks), and widely distributed token (airdropped to 6M+ wallets). While the market needs Pudgy at relative premium to traditional intellectual properties, sustained success depends on execution in retail expansion, game adoption, and deeper token utility. The PENGU asset, while highly fungible within its ecosystem, requires accelerated value demonstration.

2026: Capital Markets Transformation Through Fungibility

Capital markets have always evolved toward greater access and less friction. Tokenization, enabled by genuine asset fungibility, is the next evolutionary step. By 2026, the key question will not be whether markets operate twenty-four hours a day, but whether your institution possesses the operational capacity to do so.

The fungibility of fungible good is not merely a technical refinement—it is the structural condition that allows market capitalism to function in continuous, uninterrupted cycles. Those who build that capability now will be positioned to capture value in 2026 and beyond.