Financial institutions are moving blockchain-based market infrastructure out of the pilot stage and into live operations, with major banks, settlement firms and market operators using shared ledgers to handle repo transactions, securities settlement, bond issuance and payments.
The shift is no longer limited to experiments around tokenized assets. It is beginning to affect core functions in global finance, including clearing, collateral movement, settlement finality and cash transfers. These processes sit at the center of markets measured in trillions of dollars, and the institutions adopting the technology are seeking faster settlement, lower operational risk and more efficient use of capital.
A large part of the activity is taking place on or around the Canton Network, a public-permissioned blockchain infrastructure designed for regulated financial institutions. Canton-based systems are already being used in live repo markets, digital bond issuance and securities settlement testing. The network has gained attention because it combines privacy controls, interoperability and regulatory compatibility, three features that banks and market operators consider essential before shifting critical infrastructure to a distributed ledger.
Broadridge’s Distributed Ledger Repo platform is one of the clearest examples of the transition. The platform currently processes about $7.7 trillion in repo transactions each month, with an average daily volume of about $368 billion. More recent June data showed monthly repo volume of about $7.5 trillion, while average daily activity rose 68% from a year earlier.
That scale is significant because repo markets are a key source of short-term funding and collateral movement across the global financial system. The use of distributed ledger technology in this market suggests that blockchain systems are being adopted not only for new digital assets, but also for some of the most important plumbing in traditional finance.
Hong Kong has also moved from testing to practical use. The government issued a HK$6 billion digital green bond through HSBC Orion, with the bond designed so it could be used immediately as collateral in a repo transaction. That transaction showed how digital issuance, settlement and collateral reuse can be linked in a single infrastructure layer, reducing the delays and verification steps that usually separate primary markets from secondary market funding.
At the same time, the Depository Trust & Clearing Corporation and the London Stock Exchange Group have begun testing settlement processes on Canton infrastructure after receiving regulatory clearance. DTCC is also expected to begin limited production trades of tokenized securities this month on networks including Canton. A broader launch involving more than 50 firms is expected in October 2026, with the service set to cover a portion of the U.S. Treasury market and major equity markets.
The developments point to a broader change in how institutions view blockchain. For years, the technology was often treated as a separate market built around cryptocurrency trading. Now, regulated financial firms are adapting parts of the technology to improve traditional market infrastructure.
On-chain assets grow sharply
The market for on-chain assets has expanded rapidly. According to data provider rwa.xyz, total on-chain issued assets reached about $34 billion by May 2026, compared with about $1.5 billion in 2020. That represents growth of more than 20 times in roughly five years.
By early July 2026, the value of on-chain assets stood near $33.5 billion, up from about $28.9 billion two months earlier. Tokenized U.S. government debt remains the largest asset class in this market, with estimates placing its value between $12.9 billion and $16.2 billion.
The dominance of tokenized government debt is not surprising. Institutions typically prefer to begin with assets that are liquid, familiar and lower risk. U.S. Treasurys fit that profile. They are widely used as collateral, held across global portfolios and central to short-term funding markets. Turning those instruments into digital assets can make them easier to transfer, pledge and settle across connected systems.
The total value becomes much larger when represented assets are included. These are assets whose ownership is recorded on-chain even if the underlying financial product may remain linked to off-chain legal structures. On that broader basis, the market is valued near $360 billion.
While those figures remain small compared with the size of global securities and money markets, the growth rate is attracting attention from banks, custodians, asset managers, market infrastructure providers and regulators. The key issue is not only how many assets are tokenized, but whether those assets can be used within trusted, regulated systems that support large-scale financial activity.
Why settlement is changing
Tokenization is often described as the process of placing traditional assets on a blockchain. But for market infrastructure, the more important change is how settlement works.
In conventional markets, different parties often keep separate records of the same transaction. Brokers, custodians, clearing houses, settlement agents, paying banks and other intermediaries each maintain their own systems. These systems must be reconciled, sometimes across time zones and currencies. That process can create delays, operational costs and settlement risk.
A shared ledger can reduce some of those frictions by giving approved participants access to a common record. When securities and cash are both represented on compatible digital systems, transactions can settle through delivery-versus-payment, or DvP. In a DvP transaction, the asset and payment move together, so one side cannot complete without the other.
This is known as atomic settlement. It means execution and transfer are synchronized in one step. If one leg of the transaction fails, the entire transfer fails. That reduces the risk that one party delivers securities without receiving cash, or pays cash without receiving securities.
In repo markets, this can have a direct effect on liquidity. Repos often require careful management of cash and collateral over weekends, holidays and overnight funding windows. Traditional systems may require firms to keep cash reserves idle because settlement cannot occur continuously. A blockchain-based system can allow transactions to settle outside standard banking hours, reducing the need for pre-funded balances that are not being used productively.
For securities settlement, the benefits can include fewer reconciliation breaks, faster completion and lower operational risk. DTCC’s move toward a blockchain-based minimum viable product in 2026 is important because it marks a shift from isolated experiments to infrastructure that could eventually sit alongside or connect with existing market systems.
Primary markets move faster
The effect of tokenization is also visible in primary markets, where bonds and other securities are first issued.
Traditional bond issuance can involve several separate stages, including subscription, allocation, payment, settlement and post-issuance custody. These stages often depend on manual checks, messaging between institutions and reconciliation across systems. Settlement can take several days.
Digitized issuance can automate many of these steps through predefined rules written into smart contracts. Subscription, allocation and payment can be connected more directly. The Hong Kong digital green bond showed that settlement could be reduced from T+5 to T+1, meaning the process moved from five business days after the trade date to one business day.
The larger change is what happens after issuance. If a newly issued bond exists on the same network used for repo or collateral management, it can be reused directly as collateral. That reduces the need for repeated verification, manual transfer instructions and separate onboarding processes across different platforms.
For treasurers and market desks, this can improve capital deployment. Assets that once sat in fragmented systems can become more mobile, provided the legal, regulatory and technical frameworks support the transfer.
Stablecoins and payment controls
Cash settlement remains one of the most important questions in tokenized markets. Securities can be digitized, but large financial institutions also need a reliable form of digital money to complete transactions.
Stablecoins are one option. These are digital tokens designed to maintain a one-to-one value with a reference currency, such as the U.S. dollar. In wholesale finance, stablecoins can support faster settlement, automated payment flows and cross-platform liquidity.
But stablecoins also raise concerns around transparency, privacy, compliance and systemic risk. Public blockchains can expose transaction data in ways that banks and corporate users may find unacceptable. Large institutions do not want sensitive trading, funding or client information visible to unrelated parties.
Canton-based payment systems attempt to address this by limiting transaction visibility to the relevant counterparties while still allowing supervised access for regulators. That structure is designed to give firms confidentiality without removing oversight. It also supports integration with enterprise accounting and compliance systems.
U.S. firm Bitwave has built a system that combines payment, ledger posting and compliance checks in one automated workflow. That kind of integration is important because institutions do not want digital payments to create separate back-office processes. To gain adoption, blockchain systems must fit into existing accounting, audit, risk and reporting operations.
Regulation is becoming clearer
Regulatory developments are helping define the path for tokenized markets.
In the United States, final rules implementing the Guiding and Establishing National Innovation for U.S. Stablecoins Act, known as the GENIUS Act, are expected by July 18, 2026. The legislation brings issuers of dollar-pegged stablecoins under the Bank Secrecy Act. That means issuers must follow anti-money laundering and sanctions compliance rules similar to those applied to traditional financial institutions.
The measure could provide a clearer framework for dollar-based digital payments, especially for institutions that require legal certainty before using stablecoins in settlement workflows. It also reflects a broader trend: regulators are not simply rejecting blockchain-based finance, but are seeking to bring it inside established supervisory structures.
Europe is moving along a similar path. The European Central Bank is preparing to launch its Pontes system in September 2026. Pontes is designed to provide a bridge for settling transactions from distributed ledger platforms in central bank money. The system is focused on wholesale markets and is developing alongside longer-term plans for a Digital Euro.
For market participants, central bank money settlement remains the gold standard because it removes commercial bank credit risk. If distributed ledger platforms can connect to central bank money, tokenized securities markets may become more attractive for regulated institutions.
Why Canton is gaining attention
Global banks and market operators have shown interest in Canton because it is designed around three requirements: transaction-level privacy, atomic settlement across applications and a public-permissioned structure that can fit within existing banking rules.
Privacy is critical. Many public blockchains broadcast transaction details to all network participants. That model is difficult for banks handling confidential client trades, financing arrangements or large collateral movements. Canton’s design restricts transaction data to parties involved in the transaction.
Interoperability is also important. A tokenized bond, a repo application and a payment system may be built by different institutions. If they cannot interact, the market becomes fragmented. Canton is designed to allow separate applications to connect while maintaining privacy and control.
Regulatory treatment may be the most important factor. Under Basel Committee standards, assets issued on permissionless chains can fall into Group 2, which carries a 1,250% risk weight. That treatment makes such assets costly for regulated banks to hold. Canton’s public-permissioned model is intended to qualify for Group 1 treatment, allowing tokenized assets to be held under standard capital rules if other requirements are met.
The network uses Daml, a smart-contract language that embeds authorization and data-access controls directly into contracts. Consensus is limited to the parties involved, rather than being broadcast to all nodes. Separate subnetworks can connect through a Global Synchronizer, which orders transactions across subnetworks without decrypting private data.
A technical standard known as Canton Improvement Proposal 56, or CIP-56, is also being developed. It is sometimes compared with ERC-20 token standards used in broader blockchain markets, but it includes features designed for regulated finance, including privacy, know-your-customer controls and atomic DvP support.
Asia expands adoption
Adoption is spreading across Asia as governments and financial institutions update legal frameworks and test digital asset infrastructure.
South Korea is preparing changes to the Capital Markets Act and the Electronic Securities Act that would give blockchain-based ledgers legal standing by 2027. Securities firms and banks have formed consortia to build compliant infrastructure. Hanwha Investment and other groups have also been recruiting Daml developers, reflecting demand for technical skills linked to institutional blockchain systems.
The Canton Foundation has signed agreements with Shinhan Investment and KB Securities to explore connections between South Korean assets and global digital market channels. Those partnerships could help domestic assets move across international networks if regulatory approvals and technical standards align.
Japan is also active. Japan Securities Clearing Corporation and Nomura have begun testing tokenized Japanese government bond collateral on Canton. The trial is focused on how government debt can be used more efficiently in collateral markets, a priority for institutions managing liquidity and funding risk.
In Hong Kong, the Financial Market Infrastructure entity under the Monetary Authority has integrated Canton into its government bond settlement system. Singapore’s Hydra X has also used the network under Monetary Authority supervision for structured product issuance.
These projects show that adoption is not concentrated in one country. Rather, several financial centers are testing forms of regulated tokenization that could eventually connect across borders.
From pilots to production
Institutions usually move through several stages before fully joining tokenized infrastructure. The path often begins with operating a validator node, then joining a foundation or governance structure, issuing assets, integrating infrastructure and eventually developing full applications.
Each stage can usually be completed in less than a year, with initial setup often taking about three months. The London Stock Exchange Group and SBI Digital Asset Holdings followed a similar route, moving from pilot work to production in roughly one year.
That timeline matters because financial infrastructure usually changes slowly. Core settlement and collateral systems are tightly regulated and deeply connected to existing operations. A move from testing to production within a year suggests that the technology and governance structures are becoming more standardized.
Still, the transition will not happen all at once. Traditional systems will continue to operate for years, and tokenized platforms will need to prove resilience, legal certainty, cybersecurity, operational controls and regulatory compliance at scale.
The direction, however, is becoming clearer. Blockchain-based infrastructure is moving into the regulated core of finance. Repo, securities settlement, bond issuance and payments are being rebuilt around shared ledgers, privacy controls and synchronized settlement.
For traders and institutions, the most important change may be that digital assets are no longer developing only as a separate market. They are beginning to merge with the infrastructure that supports traditional capital markets. As standards, governance models and regulatory pathways become more defined, early participants in these systems may gain a lasting position in the next cycle of financial market infrastructure.
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