Barriers to scale
Regulators agree on direction but not detail, banks still read capital rules cautiously, and the on-chain cash leg is still unresolved.
Regulatory fragmentation is limiting cross-border adoption
International, institutional investment in tokenised assets is being hindered by regulatory fragmentation, as major jurisdictions write their rules separately and on different timetables.
The US now has a federal stablecoin law, the GENIUS Act, but its implementing rules are still being finalised ahead of a January 2027 effective date (or 120 days after the final implementing regulations are issued); the companion market-structure bill failed a procedural Senate vote on 15 September, leaving the classification of digital assets unsettled.
The EU has the reverse profile, with Markets in Crypto-Assets Regulation (MiCA) fully in force and its transitional period for existing crypto firms ended on 1 July 2026, but the DLT Pilot Regime for tokenised securities infrastructure drawing few entrants because of tight caps. Proposals to raise the cap on the total value of securities a DLT infrastructure may record from €6bn to €100bn and make it permanent are under consideration.
The FCA finalised UK stablecoin rules in June, coming into force in October 2027. The Bank of England’s June 2026 policy statement on systemic sterling stablecoins dropped the proposed holding limits in favour of a temporary £40bn issuance cap per coin, and cut the share of backing held as unremunerated deposits at the Bank from 40% to 30%. Its Code of Practice is due to be finalised by year-end.
For tokenised securities the UK is running a volume-capped Digital Securities Sandbox, which is operational until December 2028 with the window for application closing around March 2027. More broadly, England and Wales confirmed digital assets can be property, and should be recognised and protected as such, in a December 2025 statute.
Key statistic
Basel framework limits Group 2 cryptoasset exposures
Under the Basel framework, banks should generally keep Group 2 cryptoasset exposures below 1% of Tier 1 capital, with an upper limit of 2%. The treatment of tokenised assets depends on their regulatory classification and is not determined solely by whether they operate on a public blockchain.
Upper limit for banks’ Group 2 cryptoasset exposures as a proportion of Tier 1 capital
Divergent regulatory frameworks complicate institutional adoption
Asia is moving fastest on licensing named issuers. Hong Kong granted its first two stablecoin issuer licences in April 2026, to HSBC and Anchorpoint, a joint venture of Standard Chartered, HKT and Animoca Brands, and Japan’s first trust-bank yen stablecoin went live in June. Singapore has published draft legislation to put its stablecoin framework into statute, and Taiwan has passed a dedicated virtual asset law.
Though each regime may be defensible on its own terms, the lack of cohesion means a product built for one may not be compliant with the other.
Even where regulators promise equal treatment, banks remain cautious. The UK's Prudential Regulation Authority has said tokenised assets should generally be treated like their traditional equivalents where legal rights and risks match. Yet respondents to the UK consultation said the underlying Basel standards could still treat some tokenised assets like unbacked crypto for capital purposes, leaving them to take the more conservative reading until global rules are clarified.
Share of the largest firms naming operational complexity as their biggest barrier to tokenisation
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Operational complexity delays mainstream adoption
Regulation dominates discussion of what holds tokenisation back, but for the firms furthest along, the harder problem is operational. In a May 2026 survey of 200 North American financial services firms, commissioned by Broadridge, regulatory uncertainty was the most cited barrier overall, at 33%. Among the largest firms, however, operational complexity came first, at 41%. In practice, that means running tokenised assets alongside existing custody, reconciliation and reporting systems rather than replacing them: 69% of respondents plan to adapt their current infrastructure instead of building separate systems. For larger firms, the challenge is less proving the technology than integrating it.
The cash leg compounds both fragmentation and legal uncertainty. Settling on-chain at scale needs a settlement asset banks can hold without penalty, and each candidate carries caveats:
- Stablecoin regimes are only now going live and differ by bloc on backing, redemption, and who may issue, so a coin usable in one market may not qualify in another
- Tokenised deposits are still mostly usable only among a bank's own clients, though shared networks from Swift, Partior and The Clearing House aim to change that
- Central bank money for tokenised settlement is only now arriving: Pontes went live in September 2026, and the UK’s synchronisation service is not due until 2028
Operational barriers are less visible but present their own issues. Whoever controls the private key, the digital credential that authorises a transfer, controls the asset, so institutions need custody, segregation, and recovery arrangements that satisfy auditors and regulators. Most tokenised assets must still be reconciled with existing books and reporting, which erodes the efficiency gains. The lack of common data standard setting out what asset a token represents, prove what backs it and who holds it means each counterparty must do its own checks.