Real engine behind tokenized finance isn’t what investors expect

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At the 2026 Financial Industry Regulatory Authority (FINRA) Annual Conference in Washington, D.C., the tone of the blockchain discussion reflected a financial industry that is no longer debating whether tokenization will matter, but how it will be safely integrated into the global financial system.

• Stablecoins fills the gap in current market structures
• Tokenization’s real bottleneck
• Reshaping private markets
• New markets, new risk structures
• Private markets leading the shift
• Blockchain’s institutional turning point

What emerged from the panel on tokenization and blockchain was a mix of themes that define institutional crypto adoption: stablecoins as settlement infrastructure, tokenization as a capital formation tool, and a rising focus on risk, regulation, and controlled implementation.

The panel was moderated by Jason Foye, Vice President of FINRA’s illicit finance and fraud section, and included Justin Cohen, Managing Director, Global Head of Equity Derivatives and Strategic Index Product Development at JPMorgan Chase (NASDAQ: JPM); Junnette Alayo, CCO for Galaxy Digital Partners; Taylor Lindman, Chief Counsel of the SEC Crypto Task Force; and Jamie Udinson, Head of FINRA’s Crypto Asset Investigations team.

All panelists emphasized from the outset that their views were personal and did not reflect the positions of their respective companies, agencies, or staff.

While tokenization was the emerging theme, the discussion quickly centered on a growing reality: stablecoins are increasingly emerging as a key settlement layer enabling tokenized financial markets.

Stablecoins as the settlement layer of tokenized markets

For all the discussion around blockchain innovation and asset digitization, the most practical issue facing institutions is still settlement, how value actually moves once assets are tokenized.

Cohen made clear that stablecoins are already filling that gap in current market structures.

“Primarily, the number one way to settle these transactions today is with a stablecoin,” he said.

That statement signals a major structural shift in financial plumbing. Tokenized securities may represent the “asset layer,” but stablecoins are increasingly acting as the “cash layer” in on-chain transactions.

However, Cohen also challenged the assumption that stablecoins are uniform or risk-free instruments.

“There is no such thing as digital dollars,” he said.

That framing challenges one of the most common retail narratives in crypto, that stablecoins are simply digital equivalents of fiat currency. Instead, Cohen emphasized that stablecoins are private instruments with varying degrees of backing, liquidity, and credit exposure.

“Not all stablecoins are created equal,” he warned.

That distinction is becoming increasingly important as regulators and institutions evaluate how stablecoins behave when used at scale in securities settlement environments.

Tokenization and the re-engineering of capital formation

Beyond settlement mechanics, the panel also explored how tokenization may reshape capital formation itself, particularly in private markets and structured finance.

Udinson highlighted how blockchain-based programmability can reduce costs and expand access to capital.

“This sort of programmability that comes along with tokenization translates into lower costs of overhead, lower cost of raising capital in general,” she said.

That efficiency gain is not trivial. In traditional finance (TradFi), capital formation, especially in private placements, often involves high administrative costs, intermediaries, and geographic barriers. Tokenization introduces the possibility of more streamlined issuance processes and broader investor participation.

Udinson added that this shift could unlock new market participation dynamics. “I think the new market opportunities is the theme,” she said.

This reflects a broader institutional view emerging across financial markets: tokenization is less about replicating existing trading systems on blockchain, and more about rethinking how financial products are issued, distributed, and accessed globally.

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Risk does not disappear; it multiplies in new forms

“That settlement risk, and that default risk, and that implied credit risk of that transaction, needs to be modeled,” he said. “And that math and that process is non-trivial.”

As tokenized securities and stablecoins interact, institutions must now evaluate not only the underlying asset but also the stability and credit profile of the settlement instrument itself.

This represents an evolution in market structure. In traditional U.S. markets, settlement risk is handled by clearinghouses and fiat currency systems. In tokenized systems, those assumptions are no longer guaranteed.

Lindman reinforced this point by emphasizing that tokenization introduces familiar risks in unfamiliar packaging.

“These come with counterparty risks that are well understood by the broader securities market, but need to be translated for this new technology,” he said.

Lindman also noted that tokenization is not a universal solution.

“It’s not a panacea,” he said. “It’s a technology that has a place in our markets, but it’s not necessarily going to solve every problem.”

Instead, regulators are increasingly focused on identifying where tokenization improves efficiency, such as in fragmented or illiquid markets, while ensuring that risk frameworks evolve alongside the technology.

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Private markets as early testing ground for tokenization

One of the most important insights from the panel was that tokenization is likely to scale first in private markets before fully expanding into public securities infrastructure.

Alayo pointed to operational efficiencies already visible in private placements and transfer-restricted environments.

“The blockchain really does show you the movement,” she said.

In private markets, where transfer restrictions, KYC requirements, and investor eligibility rules are tightly controlled, blockchain systems can streamline compliance by embedding those rules directly into token logic and wallet permissions.

“Tokenization really does facilitate, at least in the private placement sphere,” she added.

This controlled environment makes private markets a natural testing ground for institutional blockchain adoption, allowing firms to experiment with compliance automation, wallet whitelisting, and programmable transfer restrictions.

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A regulated blockchain future, not a decentralized one

The key takeaway from the panel is that blockchain’s integration into financial markets is increasingly being shaped by regulation rather than disruption.

Stablecoins are not replacing fiat currency in a decentralized rebellion against TradFi. Instead, they are being absorbed into a regulated framework where they serve as settlement instruments under increasing scrutiny.

Tokenization is not eliminating intermediaries; it is reshaping their roles. And risk is not disappearing; it is being redistributed across new digital infrastructure that regulators and institutions are still learning to model.

Cohen captured this shift when describing how tokenized settlement begins to resemble global financial systems outside the United States, where currency and asset risk must be evaluated simultaneously.

“In order to settle those transactions… all of a sudden looks a lot more like things we already do outside the U.S.,” he said.

That observation may define the next phase of financial evolution. Tokenization does not remove complexity from markets; it globalizes it, digitizes it, and forces institutions to rebuild long-standing risk frameworks for a blockchain-based environment.

What the panel clearly conveyed is that the future of blockchain in finance will not be defined by speculation or ideology. It will be defined by infrastructure, regulation, and risk management, and at the center of that system, quietly but increasingly, are stablecoins acting as the settlement layer of tokenized finance.

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