US Banks Brace for Tokenization Boom: Moody’s Predicts Slow-Then-Fast Shift

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US Banks Prepare for Tokenization Tipping Point, Moody’s Ratings Finds

A new report from Moody’s Ratings indicates that major U.S. financial institutions increasingly believe tokenized assets and digital money are the future. While these technologies are currently available in the U.S., their use is limited to a few specific areas. Experts predict a gradual increase in adoption before they become widely used.

  • Key Takeaways:

  • Moody’s reports that U.S. banks see a “slow then fast” shift to tokenized assets and digital money as inevitable.
  • DTCC plans to launch limited production trades of tokenized securities in July 2026 to modernize U.S. markets.
  • Tokenized MMFs reached $10 billion in 2026, signaling a growing institutional demand for onchain liquidity.

Digital Money Evolution: U.S. Financial Institutions Eye 24/7 Tokenized Markets

Currently, activity is concentrated in stablecoins, tokenized deposits, and money market funds (MMFs). Most of this volume stems from cryptocurrency trading and specific institutional use cases. Moody’s notes that retail and corporate demand for blockchain-based payments remains low.

Many companies continue to rely on traditional methods like paper checks, viewing payment technology upgrades as a secondary priority compared to artificial intelligence (AI). Market participants believe payments alone will not drive mass adoption. Instead, the real value is expected to emerge when tokenized versions of mainstream financial assets or agentic commerce take off.

These applications need transactions to settle directly on the blockchain for speed and flexibility. Banks in the U.S. see tokenized deposits as a logical next step from how deposits currently work.

The report notes that “conversations with major U.S. banks and financial market intermediaries, and a review of public disclosures, reveal a forming consensus that there will be a ‘slow, then fast’ transition to a more digitalized financial system.” By contrast, many banks view privately issued stablecoins warily. They see them as a potential threat from non-banks or tech firms that could bypass traditional regulated frameworks and funding structures.

For the next ten years, or even longer, the financial world is likely to shift to being fully digital and operating around the clock using a blended approach. This means traditional financial systems and new, token-based systems will work side-by-side as updates are made. Major players, like the Depository Trust Company (DTC), are already starting to combine these systems. In late 2025, the Securities and Exchange Commission (SEC) allowed a trial program to begin, tokenizing some assets held by the DTC, including shares of large, well-established companies.

On May 4, 2026, the DTCC announced it would facilitate limited production trades of tokenized securities in July 2026. A full-service launch is currently planned for October 2026. Key hurdles remain, including the need for clear legal ownership and settlement finality. Integrating distributed ledger technology into existing infrastructure requires a major restructuring of market processes.

Despite the challenges, Moody’s indicates that tokenized money market funds are growing quickly. These products currently have approximately $10 billion outstanding, addressing a need for onchain liquidity and yield. Insiders suggest that “once key building blocks (legal and regulatory clarity, proven and integrated technology and investor buy-in) fall into place, adoption could shift into a much higher gear.”

Traditional financial companies are making big investments now to prepare for changes in the market and avoid falling behind.

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2026-05-13 02:31