Wall Street’s biggest balance sheets are quietly rebuilding the crypto stack under the banner of tokenization and custody. This shift is transforming the financial landscape, with major banks like Goldman Sachs and BNY Mellon launching tokenized money market funds, and Citi positioning itself as a tokenization agent and custodian on the Swiss SDX exchange.
Tokenization, which involves converting traditional assets into digital units, has become a significant trend in the financial industry. Since late summer, tokenized treasuries have become an $8.3 billion asset class, with the broader real-world assets (RWAs) now ranging between $24 billion and $30 billion. This growth is driven by the increasing adoption of blockchain technology and the need for more efficient and secure ways to manage assets.
The Silent Competition for Custody Fees
The competition for custody fees is heating up, with major banks and crypto custodians like Coinbase and Fidelity charging fees ranging from 0.05% to 0.15% of the value they hold. As tokenized cash and securities become mainstream, these percentages are beginning to resemble fund administration and collateral management fees, creating overlaps that did not previously exist.
BlackRock’s BUIDL fund, which holds tokenized treasury bills and represents them as programmable tokens, has seen its assets increase more than eightfold in 18 months. With $13.5 trillion in total assets and nearly $100 billion in crypto-related funds, BlackRock has the reach to transform tokenized products into standard portfolio components for institutions.
Politics Decides Who Holds the Keys
Regulation will play a crucial role in determining the future of tokenization. In Europe, the MiCA ( Markets in Crypto-Assets) regulation has introduced uniform rules for custodian banks and crypto asset service providers, allowing banks to distribute tokenized funds across the European Economic Area without facing different national requirements.
In the USA, the revised Staff Accounting Bulletin 121 (SAB 121) has removed the burden of reporting crypto assets as liabilities on balance sheets, making it more economical for systemically important banks to hold tokenized assets. However, the accounting treatment for crypto assets remains a challenge, and future guidance is needed to unlock the full balance sheet potential of tokenization.
As tokenized government bonds and money market products proliferate, the operational logic of banking begins to merge with the settlement mechanisms of blockchain. This shift has significant implications for the future structure of the balance sheet itself, and who will hold the keys to the next $100 billion of digital paper.
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