Wall Street Accelerates Migration To On-Chain Infrastructure, Says a16z Crypto’s Jason Rosenthal  

In Brief

Jason Rosenthal of a16z crypto said traditional financial institutions are actively moving onchain, using tokenization to increase transaction speed, reduce friction, and create opportunities for new financial infrastructure.

According to his latest post on social media platform X, Wall Street is no longer merely exploring blockchain; it is actively moving onchain. Jason Rosenthal described the trend as the largest infrastructure upgrade in capital markets since the transition to electronic trading three decades ago, cautioning that most market participants will not recognize the shift until it is largely complete.

The executive explained that the primary driver of the migration is the anticipated increase in the velocity of money. Drawing a parallel with the electronic trading revolution of the 1990s, he noted that the introduction of ECNs and online brokerages transformed trading by collapsing spreads, reducing commissions, and dramatically increasing market participation. He argued that tokenization 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.

He further clarified that tokenized assets are digital representations of real-world assets, including Treasury bonds, company shares, or real estate deeds, recorded on blockchain networks as programmable tokens. Unlike traditional systems where ownership is tracked through centralized databases, these assets can be transferred, programmed, and settled instantly across time zones. He described tokenization as “not a derivative, but the real asset with better plumbing.”

Institutional Players Drive Tokenization Of Financial Markets, Unlocking Opportunities For New Infrastructure

Jason Rosenthal highlighted that several institutions have already initiated practical steps toward this migration. In December 2025, the Depository Trust & Clearing Corporation (DTCC) received a No-Action Letter from the US Securities and Exchange Commission authorizing it to tokenize real-world assets on approved blockchains. The DTCC, which processed $3.7 quadrillion in transactions in 2024, is planning to launch a tokenization service for US Treasury securities in the first half of 2026. In January 2026, the New York Stock Exchange announced a platform for continuous on-chain trading and settlement of US equities and ETFs, in partnership with BNY Mellon and Citi, allowing fractional shares, instant settlement, and stablecoin funding. Tradeweb executed the first fully on-chain U.S. Treasury financing against USDC in August 2025, involving Bank of America, Citadel Securities, DTCC, and Virtu Financial. The executive observed that the scope of these initiatives is expanding quarterly, including cross-border and intraday settlements, suggesting a broader migration rather than isolated experiments.

Furthermore, the executive addressed the inefficiencies of current market structures, describing the existing financial system as “structured around intermediaries rather than markets.” He explained that a typical securities transaction involves multiple fees extracted by brokers, prime brokers, exchanges, transfer agents, custodians, and clearinghouses. While US markets have recently transitioned to T+1 settlement, capital often remains idle overnight. According to the executive, smart contracts and atomic settlement on blockchain can collapse this cost structure, enabling instant, on-chain finality. He added that the margins captured by existing intermediaries represent opportunities for new entrants to build foundational infrastructure.

Regulatory clarity was identified as another key enabler. The executive noted that the momentum of reforms such as the CLARITY Act could facilitate mainstream adoption of tokenized financial markets in a manner similar to prior stablecoin legislation. He emphasized that the institutions moving quickly are unlikely to build the middleware, compliance tools, or cross-border distribution systems themselves, positioning them instead as customers for new infrastructure providers. Drawing a historical comparison, he cited the 1990s when exchanges provided the foundations but did not build platforms such as E*TRADE or Bloomberg, which were created by independent founders who anticipated market needs.

The A16z Crypto partner concluded that tokenization will result in faster transaction velocity, lower friction, increased liquidity, and larger markets. He urged builders and entrepreneurs to seize the opportunity to develop foundational infrastructure for the emerging tokenized financial system while the market window remains open.