The trend towards on-chain infrastructure in Wall Street's financial systems is gaining momentum. According to Jason Rosenthal, an operating partner at a16z crypto, the industry is undergoing its largest infrastructure upgrade since the transition to electronic trading three decades ago.
Rosenthal notes that the primary driver of this migration is the anticipated increase in velocity of money. He draws parallels with the introduction of ECNs and online brokerages in the 1990s, which transformed trading by collapsing spreads, reducing commissions, and increasing market participation.
Tokenization, he explains, offers a similar opportunity across global financial markets, enabling 24/7 trading, instant settlement, cross-border distribution, fractionalized access to previously high-minimum assets, and real-time collateral movement. Tokenized assets are digital representations of real-world assets, recorded on blockchain networks as programmable tokens.
Institutional players such as the Depository Trust & Clearing Corporation (DTCC) and the New York Stock Exchange have already initiated practical steps towards this migration. The DTCC has received a No-Action Letter from the US Securities and Exchange Commission to tokenize real-world assets on approved blockchains, while the NYSE has announced a platform for continuous on-chain trading and settlement of US equities and ETFs.
Rosenthal emphasizes that regulatory clarity is another key enabler of this trend. He notes that reforms such as the CLARITY Act could facilitate mainstream adoption of tokenized financial markets, similar to prior stablecoin legislation.