Digital assets in 2026: key issues in play

In 2026, nine key issues are set to shape the future of digital assets, from bank strategy to regulation and developments in financial infrastructure. This year is expected to mark a shift for banks from isolated pilots to more coherent, enterprise-wide digital asset strategies. In this outlook, we also consider the evolving roles of stablecoins (and the dominance of the US dollar), tokenised deposits (the ‘sleeping giant’), and tokenised assets, exploring how these elements could combine to produce optimistic or pessimistic outcomes. Realistically, the result will likely fall somewhere in between.

Optimistic scenario

In the most positive scenario, 2026 becomes a breakout year for digital assets beyond just stablecoins. Banks, corporates and asset managers align strategically, creating a virtuous cycle of adoption and innovation. Regulatory clarity – especially in the US – accelerates institutional participation and unlocks new use cases. Stablecoins evolve from niche trading tools to mainstream payment rails, potentially reaching a multi-trillion-dollar market cap as adoption surges. Tokenised deposits gain credibility and scale, offering banks a trusted alternative to stablecoins and embedding digital money into everyday treasury and capital markets operations. Tokenised assets move beyond pilots, demonstrating real utility in liquidity management, collateral and private markets. Industry collaboration begins to address interoperability challenges and the narrative shifts towards digital assets as core financial infrastructure. Blockchain-based settlement and programmable money become part of the financial system’s ‘plumbing’. The dominance of US dollar infrastructure – often referred to as ‘USD rails’ – may be challenged as alternative currencies and payment systems gain traction. The result is an innovative ecosystem where digital assets are a core component of global finance, not just a niche curiosity.

Pessimistic scenario

Conversely, a pessimistic scenario sees progress stall due to persistent challenges. Strategic uncertainty and risk aversion keep banks and corporates limited to pilots and small-scale projects, with fear of fee erosion and cannibalisation of existing revenue streams outweighing the fear of missing out (FOMO). The cost and complexity of integrating digital assets into legacy systems deter investment. Regulatory fragmentation worsens as international co-operation falters, resulting in a patchwork of rules that stifles cross-border activity and institutional adoption. Stablecoins fail to break into mainstream payments due to operational complexity, high costs and poor integration with traditional finance, remaining largely confined to crypto trading. Tokenised deposits struggle to scale, hampered by technical and legal barriers, while tokenised assets remain stuck in proof-of-concept mode, leading to institutional scepticism. Interoperability and legal certainty are seen as structural barriers and the ‘tokenise everything’ narrative loses credibility. US dollar rails remain dominant and the transformative promise of digital assets remains unfulfilled.

Most likely outcome

The most probable outcome for 2026 lies between these extremes: a year of meaningful but uneven progress. Most banks, corporates and asset managers will have a digital asset story, with pilots and limited production use cases becoming more common. Regulatory clarity will improve in some regions, with prospects for US digital asset market structure legislation, but fragmentation and uncertainty will persist elsewhere. Stablecoins will see increased use in payments, especially cross-border and wholesale, but trading and liquidity will remain primary drivers. Tokenised deposits will build credibility through targeted pilots, laying groundwork for future scale, while tokenised assets find traction in areas such as government debt, commodities and private credit. The shift towards digital assets as infrastructure will continue, but progress will be evolutionary, not revolutionary. The dollar will remain dominant, but discussions about alternatives will intensify. Ultimately, 2026 will be a year of incremental advances, extending excitement beyond stablecoins, but not yet delivering full transformation.

The nine key issues

Institutional strategy: FOMO decision time

In 2026, digital assets have already become an integral part of the global banking narrative. Most major banks and financial institutions will be able to point to a range of initiatives – pilots, proofs of concept and even limited real-world transactions conducted via blockchain technology. Yet, despite this visible progress, it would be premature to declare 2026 as the year of true scale for digital assets. The real story is not about widespread execution, but about the strategic crossroads that banks now face, with decisions increasingly shaped by FOMO.

The transformation began in earnest in 2025, when digital assets shifted from being a niche technology project to a central topic in boardrooms and executive committees. The surge in discussions around stablecoins during bank earnings seasons made it clear that digital assets could no longer be sidelined. This shift means that, as banks look ahead, the challenge is less about proving the technology and more about making strategic choices amid uncertainty. FOMO is now a powerful driver, pushing institutions to address a series of complex questions about their future direction.

One of the most pressing debates is about the pace of adoption. Banks must decide whether digital assets will follow a slow, steady trajectory, reminiscent of previous financial market upgrades, or whether certain use cases will accelerate rapidly, perhaps spurred by regulatory clarity. This judgement is critical: if adoption is gradual, incremental investment may suffice; but if the market is nearing an inflection point, underinvestment could mean missing out on transformative opportunities. The risk of moving too slowly, especially as competitors and clients embrace new models, is a source of anxiety for many institutions.

Equally important is the question of revenue impact. Digital assets present both opportunities for new revenue streams and threats to existing ones. Banks are forced to confront uncomfortable possibilities: participating in the digital asset ecosystem could hasten fee erosion in established areas such as payments, custody or securities services. On the other hand, opting out could risk losing clients to more forward-thinking competitors. There is no single answer, and each bank must carefully consider which business lines to defend, which to reinvent and which might need to be cannibalised to stay ahead.

Leadership posture is another critical consideration. Banks must choose whether to lead, follow or abstain from the digital asset space. Leading does not necessarily mean being first in every area, but rather committing to shaping market standards and structures – a stance that invites greater scrutiny and risk. Following allows others to take the initial risks, but banks must be confident they can catch up before clients move on. Abstaining is also a strategic choice, betting that digital assets will remain peripheral to certain banking models. Most institutions will likely adopt a mix of these approaches, leading in areas that drive core revenues, while following or abstaining elsewhere.

Finally, the challenge of scaling up looms large. By 2026, many banks will have moved beyond pilots, issuing tokenised assets and launching deposit-token services. However, the risk is that these remain isolated successes. As client interest grows and internal confidence builds, banks will face mounting pressure to extend these activities, requiring increased investment, dedicated teams and expanded operating capacity.

Reframed narrative: plumbing, not profits

In 2026, the narrative surrounding digital assets and blockchain is set to shift fundamentally. Rather than being viewed primarily as vehicles for alpha generation or portfolio optimisation, digital assets will increasingly be recognised for their role as foundational elements of financial infrastructure. While cryptocurrency markets will continue to attract attention – especially as institutional investors deepen their involvement – the most significant changes are expected to occur behind the scenes, in the ‘plumbing’ that underpins financial systems.

The critical question for financial institutions is evolving. Instead of focusing on whether digital assets can deliver outsized returns, attention is turning to how quickly and effectively these technologies can be embedded into the systems that move money, settle trades and mobilise collateral. This marks a transition from speculative interest to practical, functional integration.

Institutional engagement is now gravitating towards tangible use cases for blockchain technology. Banks, asset managers and corporates are ramping up experiments that involve real value exchange. These initiatives include the development of digital forms of cash, deposits and money market funds, building on momentum from previous years. Tokenised deposits and stablecoins are being trialled as settlement assets for traditional securities, albeit within controlled and limited networks. Projects focused on tokenised collateral are advancing, as are those exploring programmable corporate actions – such as automated coupon payments and dividends – via smart contracts. There is also renewed interest in tokenising trade documentation, especially now that these documents can be directly linked to tokenised payments.

As digital assets become more embedded in financial infrastructure, the criteria for evaluating their merit are shifting. Reliability, governance, interoperability with legacy systems and control are now at the forefront. The key question is whether digital asset ‘plumbing’ can deliver better outcomes than existing infrastructure, and whether tokenised solutions can be seamlessly integrated with current systems. This cost-benefit analysis is expected to intensify in 2026.

Importantly, the true measure of digital asset success may not be found in headline metrics like the market capitalisation of crypto-related products or the size of the stablecoin market. Instead, success will be defined by the extent to which digital assets are embedded and normalised within specific financial functions – such as cross-border payments. The transition is likely to be evolutionary, rather than revolutionary, with hybrid models emerging that combine on-chain settlement with off-chain legal claims.

Finally, as traditional finance (TradFi) absorbs the best elements of digital asset technology, the original vision of disintermediated, peer-to-peer finance is becoming less central. Rather than replacing TradFi, digital assets are being woven into its fabric, signalling a ‘reverse takeover’, where established financial institutions adopt and adapt blockchain innovations to enhance their own infrastructure.

Institutional adoption: the power of three

Institutional adoption of digital assets is poised for a significant shift in 2026, not because of a single breakthrough, but because three key groups – buy-side institutions, corporates and banks – are moving forward in tandem. While regulatory changes in 2025 sparked cautious optimism and led to incremental growth in digital asset adoption, the scale remained limited. The coming year, however, could mark a co-ordinated acceleration across the financial sector, as these groups transition from pilot projects to more widespread, operational integration.

Buy-side institutions, such as asset managers, are expected to expand both their market access and operational integration of digital assets. The proliferation of exchange-traded products linked to major tokens like bitcoin, ethereum and solana is broadening access for institutional portfolios and private-wealth clients. Tokenised money market funds, which are gaining traction, offer benefits such as instant settlement and round-the-clock transferability, serving as on-chain collateral. The legitimacy established by early adopters is likely to entice more asset managers to enter the space, further building scale. Operationally, these institutions are increasingly leveraging digital asset infrastructure to improve liquidity management, reduce cash drag and streamline post-trade processes. Advances in compliance and custody are expected to ease the transition from pilot schemes to full-scale production in 2026.

Corporates, meanwhile, are seeking blockchain solutions to address challenges in cash management and cross-border payments. In 2025, many corporates questioned how blockchain technology could help resolve issues such as trapped cash, expensive and slow cross-border transfers, and fragmented capital across jurisdictions. Stablecoins, tokenised deposits and deposit tokens have provided some answers, but broader adoption hinges on regulatory clarity and the participation of major banks. The positive outcomes from pilot schemes and growing bank involvement are building confidence, suggesting that the shift from niche deployments to embedded infrastructure will accelerate, even if it won’t be completed within a single year.

Banks occupy a central position in this evolving landscape, facing dual pressures from client demand and internal efficiency imperatives. Clients increasingly expect banks to support digital asset activities, including digital custody, tokenised assets and digital forms of money. Internally, banks are motivated by the same operational logic as their clients: improving liquidity management, optimising balance-sheet resources and reducing operational friction, particularly in areas like trade finance.

The combined momentum from asset managers, corporates and banks may trigger a tipping point for mainstream digital asset integration. While each group’s motives might suggest steady but contained progress, their simultaneous engagement creates a self-reinforcing dynamic that could embed digital assets more deeply in mainstream financial activity. Buy-side scale encourages banks to invest in infrastructure, which lowers barriers for corporates, fostering further bank investment and normalising tokenised payments and assets. Although 2026 may not deliver a fully embedded digital asset infrastructure, it could mark the inflection point where institutions must engage to avoid falling behind.

Regulatory landscape tensions point to a bumpy 2026

The regulatory landscape for digital assets is entering a pivotal phase, shaped by two central tensions that will drive uneven outcomes across jurisdictions but ultimately foster greater adoption. In 2025, the spotlight fell on stablecoin regulation, with frameworks like the Markets in Crypto-Assets Regulation (MiCA) in the European Union, the Genius Act in the US, new licensing regimes in Hong Kong and progress in the UK. These efforts focused on reserve requirements, investor protection and redemption rights – essentially the ‘low-hanging fruit’ of digital asset regulation. However, as the sector matures, regulators face more complex challenges.

The first major tension is between international co-operation and regulatory competition. Digital assets are inherently cross-border, demanding co-ordination to prevent regulatory arbitrage and systemic risk. But as tokenisation, stablecoins and blockchain infrastructure become strategically important, jurisdictions are incentivised to compete for capital, innovation and industry growth. This dynamic creates a patchwork of regulatory approaches, with each region seeking to balance global standards against local priorities.

The second tension is the familiar balancing act between innovation and safety. Regulators are under pressure to enable new market models and financial products that often defy traditional frameworks. At the same time, they remain anchored to mandates around investor protection and financial stability. While high-level principles – such as anti-money laundering (AML)/combating the financing of terrorism (CFT) controls, market integrity and operational resilience – are broadly shared, the strategies for achieving these outcomes diverge significantly.

In 2026, much of the regulatory focus will again centre on the US. The priority is to clarify the market structure for digital assets, particularly the division of responsibilities between the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). The Clarity Act, passed by the House in 2025, lays much of the groundwork, with Senate committees refining variants. With the nation’s mid-term elections approaching, the window for legislative action is narrowing, but substantial political funding from the crypto sector is likely to galvanise momentum. Greater regulatory clarity is expected to drive institutional and corporate adoption, and the US regulatory environment is now more sympathetic to digital assets than in previous years.

Meanwhile, the EU’s MiCA enters its second year of enforcement, limiting internal regulatory arbitrage through passporting provisions. However, concerns persist that MiCA prioritises financial stability and consumer protection at the expense of innovation and growth. If enforcement continues to push capital and talent to other jurisdictions, pressure for reform may re-emerge. The European Securities and Markets Authority (Esma) could see its oversight expand, potentially sparking new regulatory turf wars.

The UK maintains an intermediate stance, criticised for slow progress and for integrating digital assets into existing financial services law, rather than crafting bespoke regulations. Nevertheless, 2026 will be a busy year, with the Financial Conduct Authority set to publish final policy statements and rules for trading venues, custody and stablecoins, alongside input from the Bank of England. Legislation is expected in 2027. The UK’s approach trades speed for coherence, betting that institutional capital will value alignment with current market infrastructure. While some proposals, such as caps on stablecoin holdings, are stricter than elsewhere, UK regulators have shown flexibility during consultations, suggesting further concessions may bring the UK closer to a regulatory ‘sweet spot’.

The tension between innovation and financial stability is most pronounced in prudential regulation, particularly the Basel III digital asset framework. Designed to limit systemic risk and prevent regulatory arbitrage, Basel III’s punitive capital treatment for unbacked crypto assets has been adopted by the EU, making bank exposure to crypto uneconomic. The UK and US, however, have signalled they will not fully implement Basel III, citing concerns that its calibration is outdated and overly conservative. Basel III is thus evolving from a global rule book to a competitive factor in fostering local digital asset ecosystems, with revisions expected in 2026.

Another emerging source of regulatory tension is how to address decentralised finance (DeFi). Regulatory approaches range from treating DeFi like centralised providers to a ‘hands-off’ stance, given DeFi’s structural resistance to central regulation. TradFi players advocate for a level playing field, while the DeFi industry argues that traditional regulations are unworkable. Sandbox testing may help define regulatory boundaries, especially as tokenised equities gain prominence.

Despite these debates, one area of consensus is clear: digital assets, blockchain, crypto and tokenisation are set to grow, and will be integral to capital market modernisation. For both businesses and regulators, inaction is not an option.

Stablecoins: from crypto liquidity to payment rails

2025 was a landmark year for stablecoins, as regulatory clarity in major markets like the US, EU and Hong Kong propelled them into the mainstream digital asset conversation. The US Genius Act, the EU’s MiCA framework and new Hong Kong regulations gave stablecoins much-needed regulatory legitimacy, leading to a surge in transaction volumes and embedding them more deeply in global digital asset markets. This regulatory momentum caught the attention of TradFi, with stablecoins becoming a notable topic during earnings announcements and strategic discussions.

Despite this rapid growth, the majority of stablecoin transactions in 2025 were still tied to crypto trading liquidity, rather than real-world economic activity. Estimates suggest that between 60% and 80% of stablecoin transaction value was related to crypto market activity. However, there are clear signs of change: transactions for economic value – excluding bot and artificially inflated activity – grew by 89% year on year, indicating a shift towards more mainstream payment use cases.

Several barriers have historically limited the adoption of stablecoins for traditional payments. High on- and off-ramp costs, operational complexity, and the lack of integration with existing banking and treasury systems have made it difficult for corporates and financial institutions to use stablecoins for everyday transactions. These users require high confidence in redemption, legal enforceability and service continuity – areas where stablecoins have not always delivered. Furthermore, traditional payments are deeply embedded in established workflows and compliance processes, while stablecoins have largely operated outside these systems. As a result, stablecoins have not benefited from the network effects that drive adoption in crypto trading.

However, the landscape is shifting. The regulatory clarity achieved in 2025 is prompting compliance teams to update policies and governance frameworks, making it easier for institutions to consider stablecoins for economic transactions. Even restrictive regulation can be enabling if it reduces uncertainty around key issues like redemption rights, reserve composition and supervisory oversight. As compliance departments adapt, the universe of potential stablecoin users is set to expand.

Operational integration is also improving. Payment providers, banks and custodians are increasingly offering user-friendly interfaces that shield customers from blockchain complexities. For example, Visa’s support for multiple stablecoins across several blockchains, with conversion to over 25 fiat currencies, and PayPal’s expansion of its PayPal USD (PYUSD) stablecoin and merchant acceptance for 100 cryptocurrencies, are making stablecoins more accessible to mainstream users.

While widespread network effects may still be limited in 2026, stablecoins do not need to dominate global payment systems to be successful. Their value in cross-border payments, internal treasury transfers and settlement between financial institutions lies in their reliability and repeatability between known parties, rather than mass adoption. As these use cases become more embedded, stablecoins will gradually move from niche to mainstream within institutional payments.

In summary, 2026 could mark a turning point for stablecoins, with real economic use cases gaining ground and transaction volumes shifting away from pure crypto-market liquidity. While stablecoins are still some distance from dominating global payments, the direction of travel is clear: regulatory clarity, operational improvements and growing institutional interest are setting the stage for stablecoins to play a much larger role in the future of finance.

Stablecoins: scale and competition

Stablecoins have moved beyond the question of relevance in the digital asset ecosystem; the conversation now centres on their potential for scale and the intensifying competition they face, particularly from TradFi institutions. The market capitalisation of fiat-backed stablecoins is growing rapidly, reaching around $280 billion by the end of 2025, more than doubling from $120 billion at the close of 2024. Ambitious forecasts published in 2024 and 2025 suggest the stablecoin market could reach between $2 trillion and $4 trillion by 2030. Even US Treasury secretary Scott Bessent has noted the possibility of a tenfold increase, with the market potentially hitting $3 trillion by the decade’s end.

While these projections are theoretically plausible – given the vast addressable markets such as cross-border payments, interbank transfers and the expanding universe of tokenised assets – current growth trends may not fully support the most optimistic scenarios. For example, the 133% increase in stablecoin market cap during 2025, if repeated annually, would only yield a market just over $1 trillion by 2030. Some observers argue that the $160 billion rise in demand seen in 2025, although impressive, does not yet signal an imminent leap to multi-trillion-dollar scale.

The key to unlocking this next phase of growth lies in institutional adoption. Linear growth, driven primarily by crypto market settlement, will not be sufficient. Instead, stablecoins must become widely held by corporates, financial institutions and payment intermediaries for non-speculative purposes. While the share of stablecoin transactions is expected to shift in this direction, there is no guarantee of a decisive inflection point in 2026. For the more ambitious forecasts to materialise, adoption must accelerate significantly, especially through institutional channels.

Competition is set to intensify as trust, distribution and regulatory alignment become central to the stablecoin value proposition. Early leaders like tether and circle benefited from first-mover advantage and deep integration with crypto markets, but these advantages are less relevant as the market matures. Now, the focus shifts to which issuers can best deliver on compliance, distribution and regulatory expectations. Traditional banks and payment networks are entering the space, offering tokenised deposits, bank-issued stablecoins and deposit tokens. These products allow banks to maintain customer relationships and protect their deposit base while leveraging blockchain-based settlement.

Payment service providers such as Visa and Mastercard are not necessarily competing head-to-head with stablecoin incumbents, but are instead integrating stablecoins into their payment rails. Their established merchant networks, robust know-your-customer (KYC) processes and sanctions-screening offer institutional investors and corporates a compelling, lower-risk proposition. As a result, these TradFi-backed solutions are likely to appeal to a different segment of the market, particularly those seeking compliance and trust.

This competitive pressure could, paradoxically, drive broader adoption of stablecoins, especially as institutional channels open up. While TradFi solutions will intensify competition, they also help legitimise blockchain-based payments, potentially expanding the customer base for incumbent stablecoin issuers.

It’s important to recognise that different stablecoins serve different audiences. For example, tether remains the largest by market capitalisation and transaction volume, despite not meeting certain US regulatory standards. Its appeal is strongest in emerging markets, offshore venues and capital-controlled economies, where regulatory alignment is less of a priority. In contrast, TradFi ‘on-chain’ offerings will target more regulated, compliance-focused users.

Looking ahead, the stablecoin market is poised for redistribution and differentiation. Growth will become more selective, competition will intensify, and success will increasingly be measured by who uses stablecoins and for what purposes, rather than by sheer market size alone.

Tokenised deposits: the sleeping giant wakes up (a little)

In 2025, tokenised deposits transitioned from theoretical concepts to early-stage implementation, becoming a credible component of banks’ digital money strategies. While it may be premature to expect these instruments to achieve significant scale immediately, 2026 is shaping up to be a pivotal year for building their credibility and practical relevance within the financial ecosystem.

The strategic focus on tokenised deposits in 2025 was largely a response to the rapid rise and disruption caused by stablecoins. Stablecoins captured much of the public and industry attention, but tokenised deposits quietly gained momentum in the background, particularly as banks sought to defend their client relationships and balance sheets against these new ‘on-chain’ competitors. Although some banks had been experimenting with tokenised deposit technology for years, 2025 marked a turning point, with more pilots, proof-of-concept transactions and a growing emphasis on blockchain-based payments – even if these initiatives were mostly confined to individual banks’ infrastructures. Collectively, these developments signalled a clearer strategic intent among banks to explore and invest in tokenised deposits.

Tokenised deposits offer several advantages over stablecoins and central bank digital currencies (CBDCs). They leverage the vast, regulated deposit bases of major economies such as the US, EU, Japan and the UK, representing a much larger pool of money than what is available for retail or wholesale CBDCs, or the current market capitalisation of stablecoins. Legally and operationally, tokenised deposits remain commercial bank deposits, benefiting from established regulatory frameworks, central bank clearing and lender-of-last-resort facilities. Issued in domestic currency, they do not threaten monetary sovereignty and can potentially be yield-bearing.

Despite these strengths, the current volumes of tokenised deposits remain low, primarily because they are used in institutional, permissioned settings, rather than the open, high-velocity markets where stablecoins thrive. Stablecoins serve as a universal source of crypto market liquidity, facilitating constant trading and arbitrage, while tokenised deposits are currently limited to institution-to-institution net settlement. This makes direct volume comparisons somewhat misleading. However, if tokenised deposits are scaled, even a modest migration of global bank deposits into tokenised form could significantly narrow the usage gap with stablecoins. Still, in the near term – particularly in 2026 – tokenised deposits are expected to remain focused on final settlement, rather than market liquidity.

Success for tokenised deposits will not be measured solely by transaction volumes. Instead, it will be defined by the broadening of use cases, integration into banks’ core systems, and the embedding of this technology into everyday treasury functions. The more routine and widespread the use of tokenised deposits becomes, the more meaningful their adoption will be. Key indicators of progress will include the number of clients using or permitted to use tokenised deposits, the extent to which banks integrate them into risk, liquidity and reporting systems, and the level of investment that banks commit to this ecosystem.

Looking ahead to 2026, the focus will be on building credibility and developing practical use cases for tokenised deposits, laying the groundwork for future mainstream adoption. While 2026 may not be the ‘year of tokenised deposits’ in the same way that 2025 was for stablecoins, it will be a crucial period for establishing trust, demonstrating value in specific transactions and treasury functions, and setting the stage for broader shifts in the years to come.

Tokenised assets: managing expectations to drive gains

The vision of ‘tokenising everything’ in financial markets is compelling, but the journey from pilot projects to widespread adoption will be gradual and measured. While the long-term potential is significant, the immediate future will likely see tokenisation efforts concentrated in areas where tangible, measurable benefits can be demonstrated. These include assets related to liquidity and collateral, select private assets, and internal institutional use cases.

Tokenisation is often touted as a game-changer, promising real-time settlement, always-on markets, and seamless interoperability across institutions and borders. The idea is to create a hyper-efficient capital market where assets and money move frictionlessly. However, there’s a real risk that expectations are running ahead of reality. If the narrative overshoots what’s feasible in the near term, disappointment and institutional scepticism could set in, echoing past experiences with blockchain in supply chain and trade finance, where early enthusiasm faded as large-scale deployment stalled.

A key challenge is that persistent issues – such as interoperability between platforms and legal certainty across jurisdictions – are proving stubbornly difficult to resolve. These are not just teething problems; they risk becoming seen as structural barriers. Interoperability is often promised as a future fix, but timelines remain vague, and credible settlement assets are still largely confined to pilot projects. Legal certainty, meanwhile, is highly jurisdiction-specific, adding further complexity. The danger is that, without visible progress, these challenges will erode executive attention and support, as happened with earlier blockchain initiatives.

Success in tokenisation will depend on managing expectations and focusing on real, addressable frictions, rather than trying to overhaul markets that already function efficiently. Capital markets are, by and large, highly efficient. Where inefficiencies exist, they may serve a purpose, such as maintaining stability during periods of market stress. Therefore, the most promising use cases for tokenisation are those that offer clear operational improvements without requiring wholesale system redesigns.

Liquidity and collateral assets stand out as prime candidates. Tokenising instruments like money market funds or government bonds could deliver measurable gains in intraday mobility and liquidity management, all without the need for new governance frameworks. This is about boosting efficiency, not reinventing the wheel.

Private assets, where liquidity is often patchy and access is limited, are also ripe for tokenisation. Here, the technology can streamline processes and reduce friction. Additionally, large financial institutions may find value in using tokenisation internally to enhance treasury and liquidity management, where interoperability and regulatory concerns are less pronounced.

Looking at the current landscape, growth in tokenised assets is concentrated in government debt, commodities and private credit. Tokenised government debt already makes up half of the total value of distributed tokenised real-world assets, with commodities and private credit accounting for significant shares as well. While the overall market for tokenised assets remains small compared with traditional financial markets, this should not be mistaken for irrelevance.

Increasingly, institutions will need to ensure they are equipped to handle tokenised assets, whether for client services or internal operations. As more players build these capabilities, interoperability may improve organically. The bottom line: waiting for scale is not an option. Institutions that prepare now will be best positioned for the future.

Digital assets and the politics of dollar dominance

As digital assets become an increasingly significant layer within global finance, the reliance on US dollar rails has shifted from being a niche technical detail to a matter of strategic importance. The dominance of the dollar in the digital asset ecosystem is most visible through stablecoins, which serve as the reference asset in 99% of cases. This means that nearly all on-chain transactions – whether on centralised exchanges, decentralised protocols or cross-border settlements – are fundamentally underpinned by the dollar. Dollar stablecoins and tokenised US Treasuries have become the primary ‘risk-free’ collateral for on-chain leverage, lending and structured products, effectively importing US monetary policy into the blockchain world. The depth of dollar liquidity pools further cements this dominance, reducing transaction costs and reinforcing powerful network effects that make the dollar not just dominant, but indispensable in digital finance.

From a US policy perspective, there is little incentive to disrupt this status quo. In fact, maintaining dollar dominance is a clear political and fiscal priority. Stablecoin issuers already hold significant amounts of US government debt, and as the market capitalisation of stablecoins grows, so does the importance of the dollar’s role in digital assets. This dynamic strengthens arguments against launching a Federal Reserve-backed digital dollar, as the private sector’s stablecoins already serve the purpose of digital dollar liquidity. Moreover, dollar dominance in digital assets extends US soft power, especially in emerging markets and underbanked regions, and provides US authorities with new tools for sanctions enforcement. The US is therefore well positioned to shape global digital asset regulation and pre-empt the rise of rival digital monetary blocs.

However, other regions are not standing still. The EU is actively promoting euro-denominated digital money, supporting euro stablecoins, and moving towards a digital euro to ensure the euro’s relevance as finance becomes increasingly tokenised. China, meanwhile, is pushing the e-CNY (digital yuan) to create a digital payments ecosystem that could bypass the dollar in international trade and cross-border capital flows, while also meeting domestic demand for digital currency. Other jurisdictions are also exploring strategies to foster local currency relevance and autonomy in the digital realm. Despite these efforts, few expect any significant displacement of the dollar in the near term.

One potential avenue for challenging dollar dominance lies in tokenised deposits, which could help local currencies gain ground on-chain. These instruments integrate smoothly with existing banking systems and regulatory frameworks, making them more palatable to traditional financial institutions. While dollar-denominated stablecoins are likely to retain their near-monopoly in crypto trading for now, tokenised deposits could become increasingly relevant for cross-border capital movement, asset trade settlements and on-chain trade finance. The main hurdle remains liquidity: currently, tokenised deposits do not operate at a scale that can rival dollar digital liquidity, but this could change as the market matures.

At present, the digital asset sector remains small relative to traditional financial markets, so dollar dominance is not yet a pressing global issue. Most dollar stablecoins simply substitute one form of dollar liquidity for another. However, as the sector grows and regulatory scrutiny intensifies, the question of the dollar’s continued dominance will become more important. Other players may emerge, seeking to avoid US jurisdictional reach, potentially setting the stage for a more multipolar digital currency landscape in the future.

Conclusion

For central banks, 2026 represents a pivotal moment – not one of wholesale transformation, but of strategic engagement and forward-looking preparation. The evolution of digital assets is steadily reshaping the landscape of payments, settlement and monetary policy. As these technologies mature, central banks are called upon to play a proactive role in guiding their safe and effective integration into the broader financial system.

The coming year will require central banks to champion regulatory harmonisation and foster cross-border co-operation, ensuring that the growth of digital assets does not lead to fragmentation or systemic vulnerabilities. At the same time, central banks must remain vigilant in monitoring the impact of stablecoins and tokenised deposits, particularly as these innovations touch on core issues of monetary sovereignty, payment system integrity and financial stability.

Supporting legal clarity and operational integration for tokenised assets will be essential, as will ongoing engagement with industry participants and international peers. By shaping standards and encouraging responsible innovation, central banks can help ensure that the benefits of digital assets are realised without compromising the resilience and trust that underpin the financial system.

Looking ahead, central banks must also prepare for a more multipolar digital currency environment. This means balancing the imperatives of innovation with the enduring need for stability and public confidence. By taking a leadership role now, central banks can help chart a course where digital assets enhance, rather than undermine, the long-term health and effectiveness of the global financial system.