Highlights:
- Stablecoins are emerging as the missing layer for tokenized stocks: as both the asset that settles a tokenized-stock trade and the operating money businesses use once their capital sits on-chain.
- As US equities typically settle one business day after the trade (T+1), this delay drives counterparty risk, pre-funding, collateral, and reconciliation costs that a tokenized share keeps if its cash leg stays off-chain.
- Through atomic delivery-versus-payment (DvP), settlement is executed by a smart contract, which can remove the settlement delay, but only if the cash exists as an on-chain token.
- Stablecoins are the most practical settlement instrument for tokenized markets today. As the most widely used on-chain cash, their supply passed $315 billion by mid-2026 and the US GENIUS Act now backs them with a federal framework.
- Beyond settlement, businesses increasingly hold stablecoins as treasury and operate on them, which makes the operating layer a second place stablecoins are becoming essential to the tokenized-stock stack.
Introduction
The tokenization of public equities has advanced quickly over the past two years, yet most of the attention has gone to the asset itself. A more basic question has received less: what cash do these on-chain markets actually run on? A tokenized share without an on-chain settlement asset still depends on conventional rails to complete the trade, and a business whose capital sits on-chain still has to pay suppliers, spend, and manage treasury, which today usually means converting back to fiat unless it can transact in on-chain cash directly. Stablecoins are emerging as that missing layer: the cash that settles tokenized-stock trades, and the operating asset for businesses whose capital now lives on-chain.
The asset side has advanced faster than the cash side
By most measures, the market for tokenized equities has expanded rapidly since the asset class effectively launched in mid-2025. According to rwa.xyz, the on-chain value of tokenized stocks grew from roughly $2 million in June 2025 to approximately $487 million by the end of the first quarter of 2026. Monthly spot trading volume, which began near $2.3 billion at the asset class's launch in July 2025, has recently held above $4 billion for several consecutive months (CoinGecko RWA Report 2026). xStocks, a single issuer, reports more than $20 billion in cumulative trading volume since its June 2025 launch.
Market infrastructure has begun to follow. The New York Stock Exchange has been developing a venue for 24/7 trading of tokenized stocks and ETFs, featuring instant settlement and stablecoin-based funding, supported by SEC no-action relief that permits the DTCC to tokenize major equities. Issuers such as xStocks have partnered with Nasdaq and launched on institutional trading platforms.
Why settlement remains the unresolved layer in tokenization
Settlement is the process by which an asset and its payment are exchanged to complete a trade. In traditional markets, that exchange is not instantaneous. US equities settle on a T+1 basis, meaning cash and shares change hands one business day after execution.
A simplified equity purchase illustrates where the interval arises:
- A buyer submits an order, and the exchange matches and executes it almost immediately. At this point the price is agreed, but nothing has changed hands.
- The executing broker routes the trade to a central clearing house, which steps in as counterparty to both sides and nets the day's obligations across the market.
- Over the following business day, the clearing and settlement system coordinates the actual transfer: shares from the seller's custodian and cash from the buyer's account, confirming both sides before either is finalized.
- Only at the close of this interval, one business day after execution, is the trade settled and ownership of the shares and the cash made final.
The interval carries measurable costs. Throughout it, neither party has received what it is owed, so the system holds collateral, imposes pre-funding requirements, and manages counterparty risk to cover the possibility that one side fails to deliver, along with the operational overhead of reconciliation between counterparties.
The interval exists because the asset and the cash reside on separate systems that were not designed to move in tandem. An intermediation layer developed over time to bridge those systems and absorb the associated timing risk. Tokenization is frequently presented as a way to compress that interval, but it can only do so if both sides of the trade are tokenized. When the security is represented as a token while the payment continues to move through conventional rails, the mismatch is reproduced rather than removed.
How on-chain cash enables tokenized stocks
Closing that interval requires the cash to move on-chain alongside the asset. Only when both the security and the payment exist as tokens on the same network can they settle through atomic delivery-versus-payment, or atomic DvP: a smart contract holds both sides of a trade and transfers the tokenized cash and the tokenized asset simultaneously, or neither at all. Atomic DvP removes the settlement interval, along with the reconciliation and counterparty risk the interval creates.
Atomic DvP settles the trade, but it does not remove every intermediary, and it is not the only point where on-chain cash is needed. A custodian must still hold the underlying security and issue and redeem the token, because a smart contract cannot hold an off-chain asset. Issuance and redemption involve a cash leg of their own, increasingly funded and settled in stablecoins, so on-chain cash is required not only when a tokenized stock trades but also when it is created and cashed out. Tokenized settlement reconfigures intermediation rather than eliminating it.
Why Stablecoins?
Today, the most liquid and widely held form of on-chain cash is the stablecoin. Total supply surpassed $315 billion by mid-2026 (DefiLlama, at time of writing), and the US GENIUS Act has established the first federal framework for payment stablecoins, making stablecoins a regulated instrument and highly adoptable one. Stablecoins are also already proven in commerce: cross-border business payments are a leading real-world use of them today, and Juniper Research projects business-to-business stablecoin payments will reach $5 trillion by 2035, roughly 85% of total stablecoin transaction value. In tokenized markets, that same settlement asset is as consequential as the security being traded.
In a 2026 Stable Dash interview, Yoshi Yokokawa, co-founder and CEO of Alpaca (a regulated clearing broker-dealer and DTCC member), called stablecoins the first priority for moving finance on-chain, before tokenized equities, and described stablecoin funding and multi-chain custody as integral to bridging traditional clearing with on-chain markets. Stablecoins proved themselves in payments realm; now tokenized-stock settlement is them reaching into capital markets.
Stablecoins are not the only candidate
It would be premature to conclude that stablecoins will serve as the sole settlement asset. Tokenized bank deposits are also a credible alternative for institutional settlement, and JPMorgan's deposit token has already been deployed on public networks. Wholesale central bank digital currencies are being piloted for comparable purposes. The more probable outcome, and the one many market-structure observers anticipate, is coexistence, in which stablecoins, tokenized deposits, and wholesale CBDCs settle different categories of transactions for different participants.
If that is the case, the central question is less about which settlement asset prevails and more about interoperability, legal finality, and common standards. Specifically, it concerns whether a tokenized asset on one network can settle against tokenized cash on another without rebuilding the layers of intermediation that tokenization is intended to streamline. That question remains unresolved and warrants closer attention than the asset side has received to date.
Stablecoins beyond settlement: the operating layer
Settlement is only one of the roles on-chain cash plays in this market. As more corporate capital comes to sit on-chain, the businesses holding it still have to run ordinary operations: paying suppliers, running payroll, issuing cards, managing expenses, and putting idle balances to work. Doing so today often means converting funds back to fiat and routing them through the banking system, which reintroduces the cost and delay that on-chain settlement was meant to remove. The same stablecoins that settle a tokenized-stock trade are the operating cash a business holds once the trade is done. The operating layer is therefore a second place where stablecoins are becoming foundational rather than optional, and it poses a different problem from settlement: not how a trade clears, but how a business runs on the balance it holds.
How Reap Can Help
Reap operates in the stablecoins space today. It lets businesses run day-to-day finance from a stablecoin balance: issuing corporate cards, making cross-border payments, and managing spend, without requiring a traditional bank account.
Access matters as much as the rails. Reap pairs those payment tools with built-in KYB and compliance, which makes it usable by crypto-native businesses that cannot reliably get or keep traditional bank accounts, a gap traditional banks rarely serve and most crypto tools are not designed to fill.
As more corporate value settles and sits on-chain in stablecoins, the layer that turns those balances into usable business finance becomes more valuable. That is the layer Reap focuses on.
Disclaimer
The information provided in this material is for general informational purposes only and does not constitute legal, financial, tax, or business advice. It should not be interpreted as a recommendation, offer, solicitation, or inducement to engage with Reap’s products or services. Any use of Reap’s services is at the user’s sole risk and discretion.
Reap makes no representation or warranty, express or implied, regarding the accuracy, completeness, or reliability of the information provided. Services are governed exclusively by Reap’s applicable legal agreements. Service availability, features, and eligibility may vary by jurisdiction and are subject to regulatory, card network, and operational limitations.
All trademarks, logos, and brand names are the property of Reap and/or their respective owners. References to third-party platforms or services are for descriptive purposes only and do not imply endorsement, partnership, or affiliation.
Reap’s services and information are provided on an “as is” and “as available” basis, without warranties of any kind. Reap shall not be liable for any loss or damage arising from the use of, or reliance on, this information or its services.
