What does tokenization mean for treasurers?

Tokenization has moved from conference panels into live US markets. JPMorgan has issued a dollar deposit token on public blockchains, several large asset managers now run tokenized money market funds, and the Depository Trust Company has begun tokenizing securities it holds in custody, including US Treasuries. Federal stablecoin rules take effect in January 2027. For corporate treasurers, the key question is how this will change the way they hold and invest cash.

What is tokenization?

Tokenization means recording a financial asset as a digital token on a shared, programmable ledger. The asset could be money, a bond, a fund share, or a stock. The token does not create a new asset; it is a new way of recording ownership of one that already exists.

Most financial assets are recorded on separate ledgers held by banks, custodians, transfer agents, and central securities depositories. Each transfer requires messages between these parties, followed by settlement and reconciliation. On a shared ledger, these steps happen in a single event, so the ownership record updates as the transfer settles.

Each token runs on a smart contract, which is code that sets the rules for holding and transferring it. These rules can limit ownership to approved investors or release payment when certain conditions are met. They can also settle both sides of a trade at the same moment, known as atomic settlement, which removes the gap between delivery and payment.

How tokenization differs from cryptoassets

Tokenization and cryptoassets use the same technology, so people often confuse the two. Bitcoin and similar cryptoassets have no underlying asset, so their value depends on what buyers are willing to pay. A tokenized Treasury bill or deposit represents a claim that already exists in the regulated financial system, and its value is linked to that claim.

The distinction matters for treasury policy. Most investment policies exclude cryptoassets, but a blanket ban on anything recorded on a blockchain could also exclude tokenized versions of instruments the policy already permits.

Types of tokenized money and assets

Tokenized deposits

A tokenized deposit is a commercial bank deposit recorded on a distributed ledger. It remains a liability of the issuing bank, so the holder's credit exposure is the same as with a conventional deposit at that bank. Because it is a deposit rather than a stablecoin, it sits within existing banking regulation.

JPMorgan's deposit token, JPM Coin (ticker JPMD), launched for institutional clients on Coinbase's Base network in November 2025 and became available on Ethereum in October 2026. Each token represents one dollar held on deposit at the bank. Several large US banks have also announced plans for a shared tokenized deposit network operated by The Clearing House, targeting the first half of 2027, which would allow tokenized deposits to move between participating banks.

Stablecoins

A payment stablecoin is a token issued against a reserve of assets and designed to hold a stable value against the dollar. Holders have a claim on the issuer and its reserves, so their credit exposure is to that issuer rather than to a bank.

The GENIUS Act, signed into law on July 18, 2025, created the first federal framework for payment stablecoins. It takes effect on January 18, 2027, after which only permitted payment stablecoin issuers can issue payment stablecoins in the United States. The OCC published its final implementing rule on October 21, 2026, while the Federal Reserve's rules for the issuers it supervises are still at the proposal stage.

Two features of the regime matter most for treasurers. Issuers must hold reserves of at least one dollar for every token in circulation, limited to assets such as cash, demand deposits, Treasury securities with a remaining maturity of 93 days or less, and repo backed by Treasuries. Issuers are also prohibited from paying interest or yield to holders, so holding a payment stablecoin does not earn a return from the issuer.

Tokenized securities and funds

Tokenized securities are bonds, stocks, or fund shares that are issued on a distributed ledger or moved onto one from a conventional register. For treasurers, the most developed area is tokenized money market funds, where the fund's shareholder register is kept on-chain. Franklin Templeton's OnChain US Government Money Fund was the first US-registered mutual fund to use a public blockchain as its official system of record, and JPMorgan launched a government money market fund with a dedicated token share class in 2026.

Structure varies widely across products. Some tokenized funds are registered under the Investment Company Act of 1940 and subject to Rule 2a-7, while others are private funds restricted to qualified purchasers. Treasurers should confirm which framework a product sits under before treating it as equivalent to a conventional money market fund. The segment also remains small: tokenized Treasury products held around $16 billion in July 2026, according to RWA.xyz. US money market funds held nearly $8 trillion in September, based on Investment Company Institute data.

The Commodity Futures Trading Commission has confirmed that tokenized versions of assets already eligible as margin, including Treasuries and money market fund shares, can be used as derivatives collateral, provided the token gives the holder the same legal and economic rights as the underlying asset. Its September 2026 guidance extended this to tokenized money market fund shares posted as margin for uncleared swaps.

Where tokenization could change treasury operations

Settlement outside banking hours

Fedwire, the main US system for large-value payments, runs from 9:00 p.m. to 7:00 p.m. Eastern time, Monday to Friday, excluding holidays. Cash that arrives after the close often sits idle until the next business day, and weekend receipts wait until Monday. The Federal Reserve plans to add Sundays and weekday holidays to Fedwire's schedule, with implementation expected no earlier than 2028. Distributed ledgers run continuously, so tokenized money and assets can settle at any hour.

For groups with many legal entities, continuous settlement could reduce the cash buffer each subsidiary keeps to cover payment timing. Funding could move to the entity that needs it as soon as it is needed.

Collateral mobility

Collateral is one of the clearest use cases. Posting collateral today usually means moving cash or eligible securities through custody accounts, with settlement cycles and the risk of failed deliveries. Tokenized assets can move between approved counterparties in seconds, making it practical to pledge an existing investment without selling it.

This connects directly to the repo market, where cash is lent against high-quality collateral. Our guide to secured cash investments explains how collateral protects cash investors today. Faster collateral transfer would make that protection easier to use.

Programmable liquidity

Smart contracts can automate parts of a treasury policy. A rule could sweep operating cash above a set buffer into an approved tokenized instrument, as long as the counterparty stays within its limit. Today, many teams apply these rules manually across multiple systems.

This kind of automation needs strong governance. Treasury teams should keep clear controls over who can create, approve, and stop an automated rule, along with a full audit trail of every action.

What tokenization leaves unchanged

Tokenization changes how ownership is recorded and transferred, but a tokenized deposit is still an unsecured claim on one bank. A payment stablecoin is still a claim on one issuer and its reserves.

The same is true for funds. A tokenized money market fund holds the same portfolio as its conventional share class and pools investor cash in the same way. It carries the same maturity transformation, investing for longer than the liquidity it offers. Our guide to money market funds explains how this structure behaves under stress.

Treasurers should assess each tokenized product on its underlying exposure. The usual questions still apply: who the counterparty is, how strong its credit is, how the asset is held, and what happens if the issuer fails.

The US tokenization landscape

The US is building its approach largely within existing financial regulation, through agency rules, exemptions, and staff no-action relief. Two developments are especially relevant for dollar cash investors.

The DTC tokenization service

In December 2025, SEC staff issued a no-action letter allowing the Depository Trust Company to run a three-year pilot that records participants' entitlements to DTC-held securities on distributed ledgers. DTC processed its first production trades using tokenized securities on July 15, 2026, and planned a commercial launch in October 2026. Eligible assets include US Treasuries, and the tokens are designed to carry the same entitlements and ownership rights as the securities held in conventional form.

SEC and congressional action

The SEC issued an "Innovation Exemption" in September 2026, allowing permissioned on-chain trading of tokenized US-listed stocks for five years. The exemption does not extend to investment companies, so it does not apply to tokenized money market funds. Broader digital asset market structure legislation, the CLARITY Act, passed the House in July 2025 but failed a Senate procedural vote in September 2026 and is not law.

New risks for treasury teams

Tokenization brings risks that most current treasury frameworks don't cover. The biggest is interoperability, since a tokenized deposit on one bank's platform may not move easily to another. If each bank builds a closed network, treasurers could end up with fragmented digital ledgers in place of fragmented bank accounts.

Operational risk also changes as wallets, private keys, smart contract code, and network availability become part of the control environment. Many ledgers cannot reverse a transaction once it has settled. Some accounting questions are still open. In August 2026, the Financial Accounting Standards Board proposed guidance on when certain digital assets, such as stablecoins, meet the definition of a cash equivalent under ASC 230. The proposal would not change the definition itself, but it would require all companies to disclose the significant components of their cash equivalents. Comments are due by November 19, 2026.

How should treasurers prepare for tokenization?

Preparation starts with identifying where friction costs the business money today. Trapped liquidity, pre-funded accounts, failed settlements, and manual reconciliation all have measurable costs. Calculating them shows where tokenization could add value and where the current model already works well.

Review your investment policy. Many were written before tokenized instruments existed, so they may not clearly permit or exclude them. Our guide to writing an investment policy statement explains how to set eligible instruments and counterparty limits, and the same approach applies to tokenized assets.

Treasurers should also speak with their banks, custodians, and treasury management system providers about connectivity and custody. Key milestones to watch over the next year are the GENIUS Act's effective date on January 18, 2027, the Federal Reserve's final stablecoin rules, FASB's final cash equivalents guidance, and the planned launch of a shared bank tokenized deposit network.

TreasurySpring and tokenization

TreasurySpring's cash investments are designed to give investors direct, segregated exposure to a single high-quality issuer, with each investment matched to the maturity of its underlying instrument. Tokenization could make this structure more flexible, allowing an investment to move between approved parties while the holder stays fully invested. That remains a long-term aim, and TreasurySpring expects to develop it in a measured, client-driven way. No TreasurySpring cash investment has been tokenized, and nothing has changed for clients in how they invest or hold their cash.

However, TreasurySpring has joined the Canton Network industry working group to advance digital asset best practices in corporate treasury. Using its own node, it has also taken part in live proof-of-concept repo and reverse repo trades on the network. Our article on mobilizing cash investments on Canton explains the use cases, such as posting a cash investment as collateral without redeeming it early. This work is still in progress, and the current platform uses established, regulated infrastructure.

Preparing for tokenized money and markets

Tokenization offers treasurers new ways to hold, move, and invest cash. In the US, the stablecoin framework is set, tokenized deposits and funds operate under existing banking and fund rules, and core market infrastructure has begun tokenizing Treasuries. The technology can reduce settlement and collateral friction, but it does not change the underlying asset's credit and liquidity profile. Treasurers who measure their current costs and update their policies now will be better placed to see where tokenization adds value.

If you would like to discuss how tokenization could affect your cash strategy, please contact our team. 

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*TreasurySpring’s blogs and commentaries are provided for general information purposes only, and do not constitute legal, investment or other advice.