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 use cases require onchain settlement to enable instant, programmable transactions. In this environment, U.S. banks generally view tokenized deposits as a natural evolution of the existing deposit model.

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.

The transition to a fully digital, 24/7 financial market is expected to run on a hybrid model for a decade or more. This allows traditional and tokenized systems to operate in parallel while systems are updated. Incumbents like the Depository Trust Company (DTC) are already moving toward integration. In late 2025, the SEC provided no-action relief to pilot tokenizing certain DTC-held assets, including large-cap equities.

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.”

Financial incumbents are investing heavily now to avoid being caught flat-footed when the market shifts.