Tokenization positioned as a 'better, faster, cheaper' financial infrastructure upgrade

Overview

This report summarizes UBS's tokenization expert call held on 2026-05-18, covering tokenized cash, deposits, money market funds, custody and private assets. The central view is that tokenization is becoming a practical evolution of financial market infrastructure rather than a distant concept. By enabling verifiable digital ownership and transfer on the blockchain, it gives cash and other financial assets the ability to trade continuously, settle instantly, execute automatically and be used in composable ways. The report argues that regulatory clarity, especially the Clarity Act, is a key variable for broader participation by traditional financial institutions.

Core views

The report's core views are: first, tokenization primarily improves existing financial infrastructure, delivering better, faster, cheaper outcomes rather than simply replacing current products. Second, stablecoins, tokenized deposits and tokenized money market funds are the main early adoption areas, and tokenized cash may become the underlying foundation for 24/7 markets and real-time settlement. Third, if the Clarity Act advances, it could reduce the regulatory gray area and prompt more traditional financial institutions to move from waiting to building, acquiring or partnering. Fourth, competition in the industry may shift from simply competing on yield to competing on cash functionality, giving an edge to platforms that can make client cash more programmable, more usable as collateral and more composable. Fifth, the report also emphasizes that adoption speed remains uncertain because of system integration complexity, custody and private-key management, client reporting and tax accounting, regulatory classification, friction between DeFi and TradFi, and security risks.

Analysis framework

The report uses an expert-call minutes format and a thematic research approach to first distill ten core takeaways and then analyze the topic across dimensions such as financial infrastructure, regulatory catalysts, impacts on wealth and asset management, the yield paradigm, private-asset expansion and risk constraints. Its focus is not a single-stock valuation conclusion, but an assessment of the potential impact of tokenization on brokers, wealth management, traditional asset management and alternative asset management business models.

Methodology notes

• Thematic researchExpert call minutes

  Extract the key drivers, constraints and investment implications of industry change through expert interviews.

  The report distills expert views into ten takeaways and combines them with UBS research-team judgment to assess the rollout path of tokenization in financial infrastructure.

• Industry structure analysisInnovator's dilemma

  Incumbents face a tradeoff between protecting legacy profit pools and embracing new technology.

  Brokerage and wealth-management firms may hesitate because sweep-account, custody and intermediary revenues could be disrupted, but if they do not participate in tokenized infrastructure, they may be bypassed over the long run by more efficient entrants.

• Financial infrastructure analysisBetter, faster, cheaper

  Assess tokenization by its impact on efficiency, speed, cost and functionality in traditional financial workflows.

  Tokenized assets can support instant settlement, 24/7 operation, smart-contract automation, atomic settlement and composable asset usage, thereby reducing operational friction and improving the utilization of cash and assets.

• Valuation methodP/E and SOTP

  Brokerage, wealth management and traditional asset-management target prices use 2027E EPS P/E multiples; alternative asset managers use a 50% P/E and 50% SOTP blended framework.

  This valuation note comes from the report's general valuation and risk disclosures, and is not a specific target-price revision for any single company in this report.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Stablecoins

  An early key form of tokenized cash

  Strengths

  Can provide a one-to-one digital representation of fiat currency and support programmability, verifiability and 24/7 transfer.

  Weaknesses

  Affected by regulatory definitions, reserve transparency, issuance structure and market trust.

  Comparison

  Compared with traditional bank cash or sweep accounts, stablecoins are stronger on speed and composability, but the regulatory and custody framework is more complex.

  Risks

  Regulatory uncertainty, reserve and issuer risk, on-chain security incidents and swings in market confidence.

• Tokenized deposits

  A bank-system-internal path to cash tokenization

  Strengths

  May fit more naturally into traditional bank and institutional client relationships while preserving parts of the existing compliance framework.

  Weaknesses

  Requires deep integration among bank systems, payments and clearing, compliance and on-chain infrastructure.

  Comparison

  Compared with stablecoins, tokenized deposits are closer to bank liabilities and the traditional financial system; compared with ordinary deposits, they offer higher functionality and real-time capability.

  Risks

  Legal classification, account handling, cross-chain or cross-institution settlement and regulatory treatment still need to be clarified.

• Tokenized money market funds

  A tokenized delivery form for traditional yield assets

  Strengths

  Can combine low-risk yield instruments with on-chain transfer, collateral use and composability.

  Weaknesses

  Still depends on the underlying fund, clearing, share registration and compliance arrangements.

  Comparison

  Compared with traditional MMFs, tokenized MMFs have an advantage in settlement and composability; compared with DeFi yield products, the risk profile is closer to traditional finance.

  Risks

  Fund structure, yield transmission, compliance disclosure, liquidity management and investor suitability.

• U.S. brokers and wealth-management platforms

  The direct beneficiaries and also the most exposed to tokenized-cash and custody changes

  Strengths

  They have client cash, account infrastructure, compliance capabilities and distribution channels, and can participate in the new infrastructure through build, buy or partner strategies.

  Weaknesses

  Traditional sweep accounts and cash-management profit pools may be eroded by greater transparency and stronger client choice.

  Comparison

  Compared with DeFi-native platforms, traditional institutions have an advantage in client trust and compliance; compared with new entrants, they carry heavier legacy systems and business-model baggage.

  Risks

  Revenue erosion, client migration, system retooling costs, private-key and custody responsibility, and revenue pressure from regulatory reform.

• Traditional asset managers

  A potential beneficiary of tokenized funds and more efficient client-asset operations

  Strengths

  Can deliver existing fund products more efficiently and increase the usability of client assets.

  Weaknesses

  Product, distribution, reporting and operating processes need to be reconfigured for tokenized structures.

  Comparison

  The advantage of traditional asset managers lies in product management and compliant operations; the challenge is that DeFi or technology platforms may innovate faster on programmability.

  Risks

  Adoption slower than expected, insufficient client demand, compliance and operating complexity, and dependence on technology partners.

• Private equity and real estate and other private assets

  A longer-term expansion direction for tokenization

  Strengths

  In theory, tokenization can lower minimum investment thresholds, improve liquidity and support secondary-market participation.

  Weaknesses

  It involves more complex constraints such as ownership rights, legal documents, asset valuation, transfer restrictions and investor suitability.

  Comparison

  Compared with tokenized cash, private-asset tokenization has larger potential benefits but a longer rollout cycle and higher structural barriers.

  Risks

  Unclear property rights, insufficient liquidity, valuation disputes, regulatory constraints and high operating costs.

Key data

• Report date2026-05-18Published by UBS Global Research.
• Clarity Act passage probabilityapproximately 30%-60%Experts view passage of the bill as an important catalyst for traditional finance adoption of digital assets and tokenization.
• Call replay valid through2026-05-29The report says the replay will remain available through May 29.
• Types of tokenized cashStablecoins, tokenized deposits, tokenized money market fundsThe report sees these forms as the early focus, intended to improve the efficiency of existing tools rather than immediately replace them.
• Traditional finance yield pathU.S. Treasuries, repo, money market funds and other low-risk instrumentsThis path uses tokenization as a delivery and operating-efficiency layer, with a risk profile closer to traditional finance.
• Crypto-native yield pathDeFi lending, staking, liquidity provisionPotential returns are higher, but the risk structure is more complex and is harder to adapt directly to mainstream wealth-management platforms in the near term.
• Target-price investment horizon12 monthsUBS discloses that stock target prices typically correspond to a 12-month investment horizon.

Impact & implications

For brokers, wealth managers and asset managers, tokenization could change how cash is managed, how custody and settlement work, and how client assets are used. In the short term, the impact is concentrated in higher operating efficiency for cash, deposits and money market funds; in the medium term, cash may shift from a passive balance to an active asset that can be used in real time for lending, collateral and yield optimization; in the long term, the opportunity could extend to private equity, real estate and other less liquid asset classes. The competitive focus may shift from 'who offers the highest cash rate' to 'who can provide a more functional, lower-friction, more credible programmable cash and custody stack.'

Risks

• It is still uncertain whether the Clarity Act will pass, and even if the regulatory direction is supportive, yield generation, asset classification and compliance details may still remain ambiguous.
• Integration between traditional financial systems and on-chain infrastructure is complex and involves portfolio management, client reporting, tax accounting, clearing and risk-control processes.
• Custody and private-key control are key operating issues, and institutions will need to decide whether to build, buy or partner with third parties.
• There is still friction between DeFi and TradFi, including funding and withdrawal fees, settlement delays and breaks in the client experience.
• Security incidents involving smart contracts, exchanges and custody platforms may weaken trust among institutions and clients.
• It remains uncertain whether end clients will demand programmable cash, 24/7 settlement and composability at scale in the near term.
• Long-term technological changes such as quantum computing could create structural risks for cryptographic systems.
• Macro risks include an economic slowdown, a significant cooling in capital-markets activity, weaker-than-expected recovery in consumer and corporate spending, and heavier revenue pressure from regulatory reform.

What to watch

• The legislative progress of the Clarity Act and its impact on digital-asset definitions, regulatory jurisdiction and the participation boundaries for institutions.
• Whether large brokers, banks, wealth-management platforms and asset managers launch tokenized-cash and custody capabilities through build, buy or partner strategies.
• The real adoption speed of stablecoins, tokenized deposits and tokenized money market funds among institutional clients.
• Whether competition in cash yields shifts from interest-rate levels toward programmability, collateral use, composability and real-time settlement capabilities.
• Whether the risk-return tradeoff between DeFi yield mechanisms and traditional low-risk yield mechanisms is accepted by clients and regulators.
• The progress of adapting traditional portfolio management, client reporting, tax accounting and compliance systems to 24/7 assets.
• The impact of on-chain security incidents, custody mishaps and smart-contract vulnerabilities on institutions' willingness to adopt.
• Whether tokenization of private equity, real estate and other private assets can break through ownership-rights, liquidity and secondary-market constraints.