For years, tokenization occupied an awkward corner of capital markets conversation — technically interesting, commercially promising, but frustratingly abstract. The idea was straightforward enough: take real-world assets like Treasuries, private credit funds, or equity securities, represent them on a blockchain, and make them easier to move, settle, and hold. What was harder to demonstrate was what any of that actually did for investors.
That question is now being answered, and May 2026 is a reasonable place to mark the shift.
On May 4, the Depository Trust & Clearing Corporation (DTCC) announced that its DTC Tokenization Service is targeting limited production tokenized security trades in July 2026, with a broader rollout planned for October. The DTCC is not a crypto startup. It is the organisation that currently handles the clearing and settlement of most U.S. equity and fixed income trades. When the existing post-trade infrastructure begins moving tokenized assets into regulated production workflows, the story changes from “Can we issue this?” to “What can investors actually do with it?”
Phase 1 was about issuing tokenized assets. Phase 2 is about making those assets usable.
The Yield Stack: When Assets Start Doing More Than One Job
One of the clearest early examples of Phase 2 utility is collateral mobility — the ability to keep earning yield on an asset while simultaneously using that asset to support trading activity.
On April 28, Standard Chartered, BlackRock, and OKX launched a framework allowing qualified investors to use BlackRock’s BUIDL fund — a tokenized short-term U.S. Treasury product — as collateral for trading on OKX. The mechanics matter here. Under the traditional model, an investor faces a straightforward trade-off: hold a yield-bearing instrument and earn income, or convert it into cash or stablecoins to trade. Capital is either productive or liquid, but managing both at once requires juggling separate positions.
Tokenized Treasury products create a third option. A qualified investor can hold a yield-bearing instrument, pledge it as collateral, and deploy that value in the market without liquidating the underlying position. The asset does not simply sit in a portfolio generating a coupon. It becomes a working tool.
This is what some analysts are beginning to call the “yield stack” — a single asset generating return, supporting collateral requirements, and enabling market access at the same time. It is worth being precise about the current scope of this: the BUIDL collateral framework is aimed at institutional and qualified investors, not retail participants. The plumbing exists for a specific tier of the market. But the principle is established, and the infrastructure tends to broaden over time.
Wallet-Native Fund Ownership: The Brokerage as Interface
The second major Phase 2 development concerns how investors hold fund exposure. The conventional ETF structure involves several layers: the ETF sponsor, a transfer agent, clearing infrastructure, a custodian, a brokerage account, and a market maker. For the end investor, this is largely invisible — the experience feels simple. But each layer adds friction, cost, and dependency.
The regulatory and product conversation around tokenized ETF share classes has accelerated in 2026. In late 2025, the SEC approved Dimensional Fund Advisors to add ETF share classes to 13 mutual funds, and broader applications around ETF share-class structures have become a significant area of regulatory focus. The direction of travel is toward more flexible, portable fund ownership — though mass-market tokenized ETF products have not yet been approved.
If tokenized ETF share classes do receive broader regulatory clearance, the structural implication is significant. Fund ownership becomes more portable. Instead of an ETF existing only inside a brokerage account, a tokenized representation of that fund exposure could theoretically be held in a wallet, moved across platforms, used in collateral workflows, or integrated into automated portfolio tools.
The disruptive point is not that ETFs disappear. It is that the brokerage account’s role shifts — from acting as a kind of vault, to functioning more like an interface layer. Other interfaces become possible.
Regulatory Clarity: From Experimental to Investable
Neither of the above developments matters much at scale without a clearer legal framework. Tokenized assets currently occupy an ambiguous space. A tokenized private credit fund may be economically similar to a security, technically represented on a blockchain, and operationally used as collateral — sometimes all three at once. Existing regulation was not written with that combination in mind.
The CLARITY Act debate in the U.S. Congress is directly relevant here. Specifically, Section 505 of the Senate Banking Committee’s amendment addresses how tokenized securities and real-world assets should be classified and treated. Some market participants have raised concerns that parts of the approach could impose constraints that slow adoption rather than enable it. The bill remains part of an active legislative process, so its final shape and practical implications are not yet settled.
The broader regulatory trajectory, however, appears to be moving from the first-wave question — “Is this tokenized asset legal?” — toward the second-wave question: “How should this asset be classified, protected, and incorporated into a portfolio?” That is a more productive conversation. Regulation, done carefully, does not eliminate tokenization’s potential. It converts a speculative area of experimentation into a category that institutional and eventually retail allocators can treat as investable.
Hybrid assets — instruments that combine the economic characteristics of securities with blockchain-native utility — probably require hybrid rules: securities-grade investor protections alongside the programmability that makes tokenization worth doing in the first place.
The Portfolio Convergence Argument
The longer-term implication of Phase 2 is portfolio convergence. Historically, retail investors accessed a simplified menu: public equities, government bonds, ETFs, and cash. Private credit, structured products, and collateralized strategies were largely the preserve of family offices, endowments, and institutional allocators. The constraint was not just regulation — it was access infrastructure. These products were difficult to hold, difficult to transfer, and difficult to integrate into standard portfolio tools.
Tokenization compresses that access gap. Consider an illustrative allocation model (presented here as a structural example, not as investment advice):
|
Public equities |
50% |
Tokenized ETF or index exposure |
|
Private credit |
20% |
Tokenized private credit funds |
|
Gold |
10% |
On-chain gold-backed instruments |
|
Liquid alternatives |
20% |
Tokenized market-neutral or structured yield strategies |
This kind of multi-sleeve structure, combining public and private market exposure with collateral-capable instruments, has been a standard approach for larger institutional portfolios for years. Tokenization’s potential contribution is to make the building blocks accessible and interoperable at a lower minimum investment threshold.
That said, broader access carries real trade-offs that should not be overlooked. More portfolio complexity means more risk of liquidity mismatches — particularly in private credit or alternative sleeves that may not be redeemable on short notice. It means more responsibility for custody decisions, since wallet-native ownership shifts some of the operational burden to the investor. And it means more due diligence requirements, since the range of available products will include structures with meaningfully different risk profiles sitting alongside each other.
The old access model was restrictive, but it also simplified decision-making. The shift does not automatically produce better outcomes — it produces more options, which places a greater premium on understanding how to allocate.
What Phase 2 Actually Means
The first wave of tokenization demonstrated that real-world assets could be placed on-chain. The second wave is demonstrating that they can do something useful once they are there.
The DTCC’s move into production tokenized settlement brings legitimacy and existing market infrastructure. The BlackRock, Standard Chartered, and OKX collateral framework shows a practical yield-stack use case in operation. The regulatory conversation around ETF share classes and the CLARITY Act points toward a clearer legal map for hybrid assets.
Taken together, these developments suggest that tokenization is no longer primarily a story about asset issuance. It is becoming something closer to a portfolio operating system — a layer of infrastructure through which different asset types can be held, moved, pledged, and combined in ways that were previously difficult or impossible for most investors to access.
The pace will depend heavily on regulatory outcomes, institutional adoption, and whether the infrastructure proves reliable under real market conditions. Phase 2 has started. The results are not yet written.
