Banks stand at a crossroads as the $16t tokenised asset market accelerates

By Puja Sharma

By now, the writing on the wall had become impossible to ignore. The global financial system had been undergoing a tectonic shift, echoed by growing central bank engagement with digital innovation. Recent industry research had made the stakes unmistakably clear: banks were not merely lagging behind the digital asset transition — they had been at risk of being locked out entirely.

The numbers had told a stark story. Stablecoins had already generated more than $46 trillion in transaction volume, much of it occurring outside the traditional banking system. Real-world assets — ranging from tokenised real estate to supply-chain receivables — had been projected to grow into a $16 trillion market by 2030. Within five years, digital asset turnover was expected to represent nearly 10 per cent of global financial activity. What once appeared experimental had evolved into a parallel financial ecosystem operating at scale.

The Market Had Moved Beyond Banks

The shift had no longer been theoretical. Decentralised finance platforms, FinTech innovators, and crypto-native custodians had already begun capturing flows historically dominated by regulated institutions. Mahin Gupta, founder of Liminal, noted, “The market was no longer waiting for banks to catch up; it was moving past them.” The longer banks hesitated, the more entrenched these new players had become, reshaping market dynamics once considered the exclusive domain of traditional finance.

Banks had long relied on regulatory oversight, fiduciary responsibility, and governance frameworks as their competitive moat. However, emerging blockchain architectures had demonstrated that these safeguards could be enforced directly on-chain. Controls once cited as reasons for scepticism towards decentralised systems had been replicated — and in some cases enhanced — within blockchain environments, weakening the argument that trust could exist only within legacy institutions.

Compliance Had Emerged as the Strategic Bottleneck

Compliance had been identified as the most formidable challenge. Integrating permissioned banking products into inherently open blockchain systems had proven complex, but unavoidable. Institutions that delayed engagement had effectively begun conceding market share, as infrastructure and liquidity had continued to migrate elsewhere.

Warnings from industry leaders had grown increasingly direct. Treating tokenisation as a future concern had already translated into lost ground. The infrastructure had existed, adoption had accelerated, and banks that failed to act had risked becoming spectators in a rapidly forming trillion-dollar market.

Fiduciary Standards Had Been Reimagined On-Chain

The appeal of newer models had rested in their ability to merge institutional trust with decentralised efficiency. Fiduciary standards, governance protocols, and compliance requirements had been embedded directly into blockchain workflows, allowing the principles of traditional finance to operate within digital-first systems.

Tokenised assets had ceased to be niche instruments. Capital markets had begun shifting towards on-chain issuance and near-instant settlement. Mortgages, bonds, and trade finance instruments had been positioned for execution in seconds rather than days — unlocking efficiencies while simultaneously raising the cost of non-participation for incumbent banks.

Delay Had Become the Greatest Risk

Many institutions had remained tempted to wait for regulatory clarity. Yet precedent had shown that innovation rarely paused for regulation. The stablecoin market had already demonstrated how new financial rails could scale rapidly, forcing oversight to follow rather than lead.

Workshops, pilot programmes, and controlled partnerships had emerged as the most immediate path forward. Banks that experimented early had preserved strategic flexibility; those that waited had risked erosion of relevance in an increasingly digital and borderless financial system.

 The Window Had Begun to Close

The $16 trillion tokenised asset market had not been hypothetical. It had already been built, traded, and scaled by players outside the traditional banking perimeter.

Banks had faced a stark choice. Digital assets could no longer be treated as peripheral innovation. Compliance had not been a constraint, but a differentiator. Governance had not been obsolete, but transferable. Tokenisation had not been a passing trend, but a structural shift.

Transformation had needed to begin immediately — or the future of finance would have been shaped without banks at its centre.