The future of settlement
Stablecoins and tokenised deposits are emerging as key settlement mechanisms, but significant barriers remain to widespread adoption.
Much tokenised asset trade still occurs over fiat rails
Behind any tokenised fund sits a stack of functions that translate conventional market infrastructure onto a shared ledger. A tokenisation platform handles issuance, investor whitelisting, and the register with the token itself as the on-chain record of ownership; custody and transfer or settlement follow. And naturally, an ‘always-on’ asset needs an equivalent settlement instrument.
The cash leg is dominated by US dollars, either conventionally or in the form of Circle’s USDC stablecoin. Stablecoins passed $300 billion in market capitalisation by April 2026, and around 99% of that is dollar-denominated, according to Deutsche Bank. Most use is still crypto trading: BCG estimates that only $350 billion to $550 billion of the roughly $62 trillion in stablecoin transactions in 2025 were real-economy payments.
This dollar dominance tracks to tMMFs. An April 2026 survey of the largest tMMFs by the ECB found all use dollars or USDC for subscriptions and redemptions, bar two small European funds operating in euros and sterling. Non-dollar settlement is concentrated in sovereign and infrastructure-led deals. Hong Kong's fourth digital green bond, priced on 28 September at around HK$20 billion (US$2.5 billion), was issued in Hong Kong dollars, renminbi, US dollars and euros, while Swiss franc bonds settle on the SIX Digital Asset Platform.
Key statistic
US dollar-backed stablecoins dominate the market
Almost all of the $306 bn stablecoin market is pegged to US dollars. Most of it is Tether. Tether (USDT) or Circle's USD Coin (USDC) accounting for USD 184 billion (63%) and USD 73 billion (26%) of stablecoin market capitalisation respectively. Tether plays little part in tokenised fund settlement, where USDC is the coin that matters. Euro stablecoins remain marginal, and the ECB has argued against promoting them, favouring public infrastructure that will enable alternative instruments, such as stablecoins and other forms of tokenised money, to operate within a framework anchored by central bank money. Whether non-dollar tokenised markets develop may depend more on that infrastructure arriving than on new stablecoins.
Share of stablecoin market capitalisation denominated in US dollars
Stablecoins, overwhelmingly USDC, become the default only where a fund lives natively on a public blockchain, and their strongest role is at the exit, where third parties front liquidity ahead of the fund’s own settlement.
By value, most tokenised activity still settles in ordinary bank money over conventional rails. BlackRock's BUIDL accepts subscriptions only by US dollar wire, received before the afternoon cut-off, after which the transfer agent mints the tokens. The largest tokenised market by volume, Broadridge's repo platform, coordinates delivery on its ledger but pays the cash leg by triggering a payment on existing payment rails.
Stablecoins become the default where the fund itself lives on a public blockchain, and in practice that means USDC. The ECB found that many tMMFs accept both fiat and stablecoins, some accept only fiat, and two operate solely in stablecoins. Circle's USYC is one of the two: investors subscribe and redeem in USDC through a smart contract, around the clock. Ondo accepts USDC, PYUSD, RLUSD or a dollar wire. The ECB flags the concentration this creates: most of the largest funds that use stablecoins rely on USDC alone. In other cases the stablecoin is simply how the investor pays, not what the fund receives. When Securitize began accepting USDC for BUIDL subscriptions in 2024, the coins were converted into dollars before reaching the fund.
The stablecoin's role is strongest at the exit. A BUIDL holder can swap into USDC through a Circle smart-contract facility, or use committed-liquidity facilities such as Grove Basin, which plans up to $1 billion in daily capacity, to be paid in stablecoin immediately while the fund's redemption completes in the background. In each case the exit is faster because someone fronts the liquidity ahead of the fund's own settlement, so a holder wanting fiat still faces a further conversion step.
USDT and USDC make up 87% of the total market capitalisation for stablecoins
Stablecoins, tokenised deposits, and wholesale CBDCs are needed to realise the many of the benefits of tokenisation
Tokenised deposits and wholesale central bank digital currencies (CBDCs) are other options, and sit closer to fiat. JP Morgan’s Kinexys is an example of an operational tokenised deposit payout option. A group of large US banks including JPMorgan, Citi, Bank of America, and Wells Fargo have announced a shared tokenised deposit network, operated by The Clearing House and targeting a launch in the first half of 2027. De-tokenising it back to an ordinary balance is a near-instant ledger operation within the issuing bank. The extent to which this accelerates the process depends on whether the money has to move to a different institution, where it inherits the speed of whatever interbank rail carries it.
Wholesale CBDCs, a digital form of central-bank reserves for settlement between institutions, are the least developed of the three in live use, though initiatives that settle in funds held at the central bank, such as the UK's Fnality, now carry formal settlement-finality status. The European Central Bank’s (ECB) Pontes, launched on 21 September 2026, lets eligible institutions settle tokenised transactions in central bank money through a link to TARGET, with round-the-clock availability and on-ledger finality planned for 2027.
The BIS’s Project Agorá, with seven central banks and more than 40 private firms, is designing a shared ledger on which tokenised deposits and wholesale central bank money can interoperate. Further east, mBridge, the multi-central-bank platform now led by China, had settled about US$55 billion by early 2026, with e-CNY accounting for 95% of settlements, according to DBS.
Industry perspectives
Industry leaders reflect on the report’s key findings.
Michelle Kirschner, Partner and Co-Chair, Global Financial Regulatory Group, Gibson, Dunn & Crutcher
"Tokenisation is often discussed as an asset story. For payments, it is a money story. Tokenised securities and collateral will only deliver on their promise if they settle against a trusted digital cash leg, and the mix is still being decided: systemic sterling stablecoins, tokenised deposits and central bank money synchronised with RTGS. The answer in the UK will take shape over the next twelve months, as the Bank of England finalises its stablecoin Code of Practice, the FCA and the Bank publish their tokenisation roadmap and Chris Woolard reports on interoperability. Settlement design is easier to shape than to retrofit."
Olga Mackintosh,
Chief Commercial Officer,
Clear Junction
"Tokenised MMFs make the distinction between transferability and liquidity very clear. A fund may redeem into USDC in seconds; but a more relevant treasury metric is when the holder has cash it can actually deploy. 24/7 token movement and 24/7 fiat availability are separate service characteristics. The end-to-end journey and final outcome still depend on liquidity conversion and availability, transaction screening, reconciliation and settlement into the relevant USD, GBP or EUR accounts. Connecting tokenised assets, stablecoins and existing fiat rails in one optimised operating flow is what turns faster redemption into usable liquidity."
Lisa Lee Lewis
Partner, Fintech, Financial Services Regulation and Financial Crime Prevention
Addleshaw Goddard
"Tokenised markets are moving from potential to production, but only in selected corners of the market. The real dividing line is not whether assets can be put on-chain, but whether the full value chain can move together, especially the cash leg. Stablecoins, tokenised deposits and wholesale CBDC models are all aiming to solve that problem. Yet scale still depends on more than technology. Market participants need legal certainty, interoperable infrastructure, robust custody and enough liquidity to create network effects. The next phase is about proving tokenisation can work safely, efficiently and at institutional scale to move from potential to production."