Tokenization and Stablecoins: How Financial Markets Are Being Digitized in Practice

International payments can still take several banking days to settle. Securities transactions are often finalized with delays as well. At the same time, money and value move digitally in nearly every other part of society. Against this backdrop, banks and financial institutions around the world are exploring how new technologies can make financial markets faster and more efficient. Two concepts at the center of this development are tokenization and stablecoins.

What is tokenization?

Tokenization refers to representing an asset digitally on a blockchain. This can include money, bonds, equities, or other financial instruments. A token functions as a digital proof of ownership that clearly records who owns what.

Instead of ownership records and transactions passing through multiple layers of banks, custodians, and clearing houses, transfers can occur directly and with full traceability. This has the potential to enable faster settlement, lower administrative costs, and greater transparency.

For this reason, many of the world’s largest banks and financial institutions are actively working with tokenization. Global players in investment banking, exchange trading, and payment infrastructure, including firms such as BlackRock, Robinhood, and PayPal, are already testing tokenized bonds, equities, funds, and internal payment flows. Increasingly, tokenization is viewed not as an alternative to traditional financial markets, but as the next step in their modernization.

What are stablecoins and why are they used?

Stablecoins are crypto assets designed to maintain a stable value, typically pegged to a traditional currency such as the US dollar or the euro. A USD-denominated stablecoin, for example, is intended to correspond to one US dollar.

This stability is achieved by backing the stablecoins with real-world assets. The largest stablecoins on the market hold reserves consisting of cash and highly liquid instruments, primarily short-term US Treasury bills. In theory, each token is backed by assets of equivalent value.

One way to understand stablecoins is to view them as digital money that can be transferred globally, around the clock, without banking hours or intermediaries. Whereas traditional bank transfers can involve delays and several intermediaries, stablecoins can be transferred almost instantly. This is why they are increasingly used for payments, liquidity management, and settlement of transactions in financial instruments built on new technology.

Market size and institutional outlook

The stablecoin market has grown rapidly and today amounts to roughly USD 300 billion in total market value. Several established financial institutions believe this is only the beginning. Standard Chartered, a global bank, estimates that the stablecoin market could grow to around USD 2 trillion before 2028, driven by increased use in payments and clearer regulatory frameworks, including initiatives such as the GENIUS Act in the United States. Citigroup similarly projects a market value of approximately USD 1.9 trillion by 2030 in its base scenario, with potential for further growth if institutional adoption accelerates.

Overall, tokenization and stablecoins aim to make financial markets more efficient, accessible, and inclusive. The development is progressing gradually, but it has the potential over time to reshape how global financial systems are structured and operate.

Exposure through exchange-traded products

Investors have the option to invest securely in crypto assets via fully backed ETP:s through the Swedish company Virtune, whose products are listed on among others Xetra and Nasdaq Stockholm. These can be traded via several of the biggest traditional brokers.

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