The digital asset space is dynamic – with new and evolving technology solutions along with increasing adoption. Much of this momentum originates from crypto-native projects aiming to create market efficiencies through decentralized finance (DeFi), as well as innovative fintech firms seeking to disrupt traditional sectors such as asset management, transfer agents, and post-trade operations. These firms are introducing financial products that enable faster clearing and settlement, primarily through innovations in tokenized instruments.
The emergence of various digital financial products—such as stablecoins, tokenized treasuries, tokenized U.S. government securities, and other high-quality liquid assets—aims to create fungible instruments that can improve liquidity provisioning. These instruments also serve as new asset classes with yield profiles and seek to democratize access to financial opportunities that were previously limited to institutional investors or constrained by availability.
Beyond new instruments, these innovations are driving the broader tokenization of existing assets, or real-world assets (RWAs), including bonds, private credit, commodities, and funds. As tokenization moves from an experimental phase to integration with traditional finance (TradFi), critical legal and regulatory questions are emerging.
Amid these questions, it’s worth considering whether tokenization is merely another digital trend—or whether it is a disruptor similar to initiatives like AI, data modernization, and cybersecurity. The challenge lies in balancing resource allocation while navigating competing priorities across industry and regulatory agendas. Over the past few months, there have been legal and regulatory developments regarding digital assets within the financial services sector.
Below are highlights of notable movements:
Turning Point in U.S. Digital Asset Regulation
1. Executive Order 14178: A Paradigm Shift
Signed on January 23, 2025, President Trump's Executive Order 14178 – “Strengthening American Leadership in Digital Financial Technology” replaced the previous administration’s more cautious stance with a new vision. This Executive Order:
- Banned the creation of a retail U.S. Central Bank Digital Currency (CBDC)
- Encouraged the development of dollar-backed stablecoins
- Called for technology-neutral regulations
- Promoted open access to public blockchain networks
- Established a President’s Working Group on Digital Assets, tasked with proposing a comprehensive federal regulatory framework within 180 days
2. OCC’s Updated Crypto Activities Guidance
The Office of the Comptroller of the Currency’s (OCC) recently updated its guidance on banks’ crypto-related activities, reflecting a more permissive approach for national banks and federal savings association. The new guidance reaffirms that national banks can actively engage in digital asset custody, settlement, and tokenization—provided they maintain robust risk management, operational integrity, and supervisory oversight.
This policy evolution likely opens the door for:
- Banks to custody digital assets for clients
- Deployment of tokenized deposits and stablecoin payment rails
- On-chain settlement and clearing infrastructure integrated with existing banking systems
This clarity from the OCC could allow for a bridging of institutional trust with technical innovation, potentially allowing for broader financial adoption of blockchain-based infrastructure. Additionally, it will likely allow for increasing bank participation in the digital asset ecosystem, creating more connections between traditional financial institutions and blockchain technology. By explicitly permitting national banks to engage in digital asset custody, settlement, and tokenization (with appropriate risk controls), the OCC has effectively removed a critical barrier to institutional adoption.
3. Legislative Momentum: FIT 21 and Stablecoin Acts
Congress has also shown bipartisan alignment:
- The FIT 21 Act, passed by the House in May 2024, offers a framework for crypto asset securities and commodities oversight, creating separate regulatory responsibilities for the SEC and CFTC based on asset characteristics (decentralization and use-case). It is likely there will be a new iteration of FIT 21 soon and the bill will continue to be a priority for Congressional Republicans.
- The Guiding the Enhanced Needs of Innovative and Unique Startups (GENIUS) Act, aims to create a regulatory framework for the issuance and regulation of payment stablecoins. It provides a dual-track regulatory model, with stipulations regarding issuer regulation at the federal and/or state levels.
The bill has received strong bipartisan support from the Senate Banking Committee and will now move to the full Senate for broader consideration. In parallel, the House Financial Services Committee released a similar proposal, the STABLE Act, which passed out of the Committee with bipartisan support. Both chambers of Congress will coordinate to reconcile differences and advance the bill through the legislative process.
Clarity Drives Adoption – US Regulatory Reset for Digital Assets
The recent coordinated U.S. regulatory shift in digital assets could also allow for the development of market infrastructure needed for institutional adoption, investor protection, and market integrity.
Key Trump Administration regulatory proposals could:
- Provide greater legal certainty for custodians, token issuers, and trading platforms
- Improve access to traditional finance, particularly from banks, asset managers, and family offices
- Create a foundation for secondary markets, especially for tokenized RWAs (real-world assets), treasuries, and stablecoin-based financial instruments.
As fiduciary institutions seek compliant ways to enter digital markets, clarity around asset classification, custody, taxation, and risk disclosure will enable a more structured onramp to new innovative financial technologies and products.
Global Harmonization Taking Shape
As the new administration recalibrates its regulatory posture to digital assets, foreign jurisdictions are also making progress:
- MiCA and DORA, now fully enforceable in the EU, provide uniform rules for crypto assets across member states. The objective of DORA is to harmonize the risk management practices of financial institutions and their use of information communication technologies and third-party service providers. DORA provides a common set of technology, outsourcing requirements for financial institutions in the EU.
- The FSB has finalized high-level international recommendations on crypto oversight, promoting consistency and risk mitigation globally.
- Countries across Asia, along with the UAE, and the UK, continue to refine tokenization frameworks in collaboration with financial institutions and international standards bodies.
What This Means for the Industry
Together, these actions represent a shift in regulatory posture towards digital assets, resulting in:
- Increasing federal government coordination from the Executive branch
- Potential passage of legislation such as FIT 21 and the GENIUS Act
- Regulatory clarity for traditional finance like the rescinding of SAB 121
- International coordination via MiCA, DORA, and FSB recommendations
These activities demonstrate that the digital asset ecosystem is no longer on the periphery but instead becoming increasingly intertwined with traditional finance. This convergence of technology and regulation could enable the creation of robust, secure, and compliant financial infrastructure that integrates tokenized assets, stablecoins, and new financial rails with traditional financial systems. It could also ensure the modernization imperative does not come at the cost of market integrity or investor protections.
Shifting from Innovation to Adoption
Tokenization, once viewed as speculative or fringe, is now poised for institutional mainstreaming. And unlike trends such as AI or cybersecurity, which often dominate budgets for risk mitigation, digital assets now present a transformative opportunity for financial product innovation, liquidity expansion, and market efficiency—backed by a maturing legal and regulatory environment.
Regulatory clarity is paving the way for banks to play a central role in the digital asset ecosystem. Institutions can now develop institutional-grade custody solutions that meet the compliance and security expectations of large investors, addressing a longstanding gap in the market. Banks are also positioned to issue tokenized deposits and stablecoins, blending the trust and oversight of traditional banking with the programmability and efficiency of blockchain—particularly valuable for cross-border payments and wholesale settlements. As banks begin to bridge traditional and digital financial infrastructure, they can create hybrid settlement systems that enhance speed and regulatory alignment. Additionally, corporate clients will benefit from on-chain treasury and liquidity tools, including programmable deposits and instant settlement. These advancements open new revenue opportunities for banks through tokenization, custody, and digital asset services, extending their value proposition in the evolving financial landscape.
Despite regulatory headwinds, the path forward for banks and financial institutions entering the crypto space holds clear commercial promise. Opportunities abound in crypto payments, stablecoins, custody services, and related activities like staking and collateralized lending—areas where only a few global banks have already unlocked new revenue streams and operational efficiencies.
Yet, these advancements come with critical operational and security risks that demand tailored, resilient frameworks. Given the 24/7 nature of digital assets and their dependence on time and trust, institutions must ensure interoperability with legacy systems while adhering to robust risk mitigation practices. Regulatory frameworks—such as FFIEC guidelines, SR 20-24, SEC rules, and Europe's DORA—provide a comprehensive blueprint for digital operational resilience.
To safely capitalize on blockchain’s potential, financial institutions must adopt a forward-looking operational risk approach, ensuring high availability, disaster recovery, and cybersecurity, all through a digital asset lens. The era of digital asset clarity is here—and with it is the genesis for widespread adoption and innovation in global financial markets.