Asset tokenization and round-the-clock trading could shift the competitive balance among financial centers by moving price discovery, liquidity and settlement beyond conventional banking hours, according to Xiao, a speaker at a Shanghai event on Sept. 23. His remarks followed a U.S. Treasury market conference in New York where the Commodity Futures Trading Commission chair said tokenization, on-chain finance, stablecoins and 24×7 trading could produce more change in the U.S. financial system over the next decade than the previous several decades.
Xiao’s argument was less about cryptocurrency trading alone than the possible redesign of market plumbing: how securities are issued, traded, cleared and paid for. In his framing, tokenized securities paired with tokenized forms of money could allow transactions to settle continuously, reducing dependence on the batch processing schedules and weekday operating hours that still underpin much of global finance.
From longer exchange sessions to continuous settlement
Nasdaq plans to begin 23×5 trading on Dec. 6, Xiao said, allowing trading for 23 hours a day across five weekdays. That model extends access without fully resolving the payment problem that comes with true 24×7 markets. Securities may trade overnight, but conventional bank transfers generally remain unavailable on weekends and holidays.
Xiao argued that tokenized money would be needed to close that gap. Stablecoins, tokenized bank deposits and central bank digital currencies could, in theory, provide a payment leg that moves when commercial-bank payment systems are closed. A tokenized security and a tokenized payment instrument could therefore settle in the same transaction, an arrangement commonly described in digital-asset markets as atomic settlement.
The approach resembles the mechanics already used by many crypto markets, where assets trade continuously and settlement occurs on blockchain networks using stablecoins. Extending that model to stocks, bonds, funds and derivatives would create far more demanding requirements around liquidity, market surveillance, disclosure rules, custody and legal ownership.
Xiao said a single tokenized instrument could trade across multiple platforms in different jurisdictions, much as Bitcoin currently trades globally and is commonly quoted against USDT or USDC. That structure could draw order flow toward venues offering deeper liquidity and lower execution costs, potentially weakening the ability of individual exchanges or financial centers to concentrate trading activity within their own hours.
He illustrated the point through slippage, the difference between an expected trade price and the price actually received as an order moves through available liquidity. A venue where a large trade causes 2% slippage would struggle to retain users if another venue can execute the same order with 0.1% slippage, he said. Liquidity tends to reinforce itself: tighter execution attracts more orders, and more orders can deepen the market further.
Legacy market infrastructure was built around operational limits
Xiao placed the tokenization debate in the context of earlier changes to financial record-keeping and market operations. He described blockchain-based ledgers as a third major bookkeeping transition, following early records in Mesopotamia around 3500 BCE and the development of double-entry bookkeeping in Italy around 1300 CE. Bitcoin’s launch in 2009 marked the beginning of distributed-ledger bookkeeping, he said.
The history of U.S. securities infrastructure shows why operational capacity has often shaped market design. During the 1960s paperwork crisis, the New York Stock Exchange closed on Wednesdays because brokers and back-office firms could not process the volume of paper certificates and trade records generated during the rest of the week.
Over subsequent decades, U.S. post-trade functions were consolidated through mergers among custody, registration and settlement organizations. That process culminated in the creation of the Depository Trust & Clearing Corporation in 1999. Centralized infrastructure reduced operational friction, but it also developed around defined trading calendars, intermediaries and settlement cycles.
Tokenization proposes a different arrangement: a digital representation of an asset could carry ownership records and transfer rules on a shared ledger, while payment moves on the same or an interconnected network. The model would not eliminate intermediaries or regulation, but it could change where those functions sit and how quickly they operate.
Banking stress remains central to the debate
Xiao also used recent and historic banking stress to argue that financial markets cannot be treated as separate layers. Central banks, commercial banks, money markets, capital markets and derivatives markets remain tightly connected through funding and collateral.
He cited an estimate that U.S. banks incurred nearly $600 billion in capital losses as interest rates rose and the market value of lower-yielding Treasury holdings declined. He also pointed to Circle’s reserves at Silicon Valley Bank during the bank’s failure, saying the episode showed the risk of relying on conventional deposit arrangements for large stablecoin reserve balances. U.S. deposit insurance has coverage limits far below the multibillion-dollar scale of such reserves.
In discussing the 2008 financial crisis, Xiao said major Wall Street firms depended on hundreds of billions of dollars in daily borrowing through markets such as repurchase agreements, or repos. He said funding costs rose sharply before emergency measures were introduced and that several firms became bank holding companies, gaining access to Federal Reserve facilities.
Those examples complicate claims that always-on tokenized markets would automatically make finance more resilient. Continuous settlement could reduce some timing and reconciliation risks, but it could also mean stress is transmitted faster across venues and time zones. The availability of 24-hour trading does not create liquidity by itself, particularly during market shocks.
Stablecoins place payments at the center of market competition
Xiao described stablecoins, CBDCs and tokenized deposits as forms of money tokenization. Stablecoins began gaining use around 2014 with USDT, he said, and generally function as blockchain-based payment instruments that can be transferred peer-to-peer without moving funds through a conventional bank account at the time of payment.
He cited a stablecoin market capitalization of roughly $309.27 billion by September 2026 and said stablecoin transaction volume reached $8.8 trillion in the first half of the year. Those figures point to the scale at which blockchain-based dollars are already used in digital-asset markets and cross-border transfers, though transaction volume does not necessarily measure retail payment adoption or economic activity.
The potential impact reaches beyond payment speed. If stablecoins and tokenized deposits become widely accepted settlement instruments, financial centers could compete more directly over the currencies, compliance frameworks and infrastructure used to support them. Xiao compared offshore RMB liquidity of about 1.5 trillion yuan with a dollar market he put at $50 trillion, arguing that liquidity depth can influence the viability of currency-linked instruments and exchange-rate arrangements.
Tokenized markets could shift offshore price discovery
Xiao also cited activity in Hong Kong, which he said had completed more than HK$70 billion in tokenized bond issuance. He said tokenization had expanded into funds and derivatives as issuers test whether blockchain-based records can reduce administrative costs and broaden distribution.
One example involved ChangXin Memory, whose price was referenced through an instrument trading on the decentralized exchange Hyperliquid before the company listed on China’s A-share market, according to Xiao. He said the subsequent A-share opening price was close to the offshore trading price, illustrating how on-chain venues can generate market signals before a domestic listing begins.
That possibility raises difficult questions for regulators and issuers. If a tokenized reference asset attracts substantial trading before or alongside a conventional listing, price formation may emerge outside the jurisdiction where the underlying company raises capital. Disclosure standards, accounting rules and the legal rights attached to tokenized claims would determine whether such markets become recognized extensions of existing capital markets or remain speculative side venues.
Xiao linked the push toward tokenization to the enormous financing demands of AI infrastructure, estimating that power capacity, data centers and related projects could require $10 trillion over five to 10 years. Whether tokenized markets supply meaningful funding for those projects will depend less on continuous trading hours than on legal clarity, credible disclosures, institutional liquidity and reliable settlement assets.
Curious how tokenized markets work in practice? Explore tokenized equities and how they work in real-world trading.
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