1. MACRO VIEW
#- Global central banks are increasingly prioritising wholesale Central Bank Digital Currencies (CBDCs) and tokenised commercial bank liabilities over retail CBDCs. The Atlantic Council’s CBDC Tracker highlights that while 146 countries are exploring CBDCs, advanced economies are retreating from retail applications, with significant focus now on wholesale infrastructure like the ECB’s Project Pontes and Singapore’s live wholesale CBDC issuance.
- Tokenisation is proving critical for enhancing wholesale cross-border payments and achieving atomic settlement. The Bank for International Settlements’ (BIS) Project Agorá has successfully demonstrated multi-currency settlement utilising tokenised central bank reserves and commercial bank deposits, moving towards real-value testing and highlighting the efficiency gains of smart contract-enabled Delivery versus Payment (DvP).
- The UK is actively building a robust framework for institutional tokenisation in financial markets. The Bank of England’s Deputy Governor for Financial Stability, Sarah Breeden, outlined the responsible adoption of tokenisation to enhance financial stability and growth, with a new Wholesale Digital Markets Champion appointed to convene industry efforts.
- Regulatory bodies are intensifying scrutiny on prudential standards for cryptoassets and liquidity risk management within the banking sector. The Basel Committee on Banking Supervision is progressing its cryptoasset targeted review and evaluating updates to its Principles for Sound Liquidity Risk Management and Supervision, reflecting a maturation of oversight frameworks for digital asset exposures.
- The market is witnessing a convergence of traditional financial infrastructure with Distributed Ledger Technology (DLT) to enable more efficient post-trade services. Paxos Securities Settlement Company has achieved a temporary DLT-based clearing agency registration from the SEC, signalling a significant step towards tokenised securities and DvP settlement for conventional assets.
- Interoperability and common standards are emerging as foundational requirements for scalable institutional digital asset adoption. Fireblocks-founded Open Transaction Layer (OTL) and BIS’s Project Aperta are both focused on developing open standards and network-of-networks models to address integration complexity and facilitate cross-border data portability.
- The debate on stablecoin regulation and central bank competition remains central to the future of digital payments. Federal Reserve Governor Chris Waller champions stablecoins for payment competition, while the ECB’s Isabel Schnabel posits the digital euro as crucial to counter stablecoin risks and preserve the euro’s international role, underscoring divergent approaches in major jurisdictions.
2. CORE PILLAR DEVELOPMENTS
#- Banking Infrastructure & Commercial Rails: The ECB plans to extend its TARGET settlement infrastructure hours to enable 24/7 DLT settlement via Pontes, focusing on tokenised central bank money. Federal Reserve Governor Chris Waller continues to advocate for stablecoins and tokenised deposits as a competitive force in the payments landscape, emphasising their potential to disrupt established networks here. Brazil’s Drex is progressing as a tokenised credit pilot, showcasing the diverse applications of DLT in banking.
- Institutional Asset Management & RWAs: WisdomTree has appointed John Whelan as its head of digital asset strategy, leveraging his extensive experience from Banco Santander, where he led the bank’s digital asset initiatives, including a tokenised bond issuance. WisdomTree itself is an early mover in tokenised money market funds and is a shareholder in the wholesale DLT settlement platform Fnality.
- Sovereign Infrastructure & CBDCs: BIS-led Project Agorá successfully prototyped multi-currency wholesale cross-border payments using tokenised central bank reserves and commercial bank deposits, with participation from seven central banks and over 40 private financial institutions. The European Central Bank is advancing its digital euro initiative, aiming for readiness by 2029, and its Project Pontes is set to launch in September 2026 for wholesale DLT settlement. China’s e-CNY, the world’s largest retail CBDC pilot, has been reclassified as deposit liabilities, indicating a potential strategic shift here.
- Regulatory & Legal Frameworks: Paxos Securities Settlement Company has secured a temporary DLT-based clearing agency registration from the SEC, establishing a new pathway for DvP settlement of tokenised securities and cash. The Basel Committee is actively pursuing a targeted review of its prudential standard for banks’ cryptoasset exposures and is considering updates to its Principles for Sound Liquidity Risk Management and Supervision. The UK has appointed a Wholesale Digital Markets Champion to accelerate the responsible adoption of tokenisation within its financial markets. The G20 Roadmap for enhancing cross-border payments continues to be monitored by the CPMI and FSB, with a focus on interoperability, data exchange, and legal/regulatory frameworks.
3. STRUCTURAL & OPERATIONAL PAIN POINTS
#- Interoperability Silos: The proliferation of distinct DLT platforms and institutional participants necessitates open standards to prevent integration sprawl. The Fireblocks-founded Open Transaction Layer (OTL) initiative explicitly addresses the challenge of building bespoke connections, aiming for a shared coordination layer to streamline inter-institutional value transfer. The BIS’s Project Aperta similarly focuses on a “network of networks” approach to bridge existing domestic open finance ecosystems via APIs, highlighting the need for common protocols.
- Balance Sheet & Liquidity Friction: The current architecture of central bank operating hours creates a significant mismatch with the 24/7 nature of DLT payment systems. This can fragment liquidity pools and impact interest income if funds are held on DLT platforms outside conventional RTGS hours, as noted by the ECB and BIS in the context of Project Pontes and Project Agorá.
- Post-Trade Plumbing Constraints: Despite the promise of DLT for streamlining post-trade processes, the path to adoption still faces challenges in establishing clear, regulated pathways for tokenised assets. The temporary nature of Paxos’ DLT-based clearing agency registration underscores the evolving regulatory landscape and the need for new operational models to mature within established market structures.
4. NEW HIGH-SIGNAL TARGETS FOR TRACKING
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