NYSE Builds The Parallel Exchange for Tokenized Securities

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Introduction

Welcome to the Tokenized newsletter, brought to you by the creators of the Tokenized Podcast - Simon Taylor of Fintech Brainfood, Pet Berisha of Sporting Crypto, and Shwetabh Sameer of Molten Ventures.

We are the newsletter for institutions that need help preparing for a Tokenized future.

We run through the headlines every week, what it means for you and a market readout. Always with an institutional, business-focused perspective. 

Join us every week as we meet your Tokenization needs.

In This Week's Edition:

💬 Simon's Market Readout - Brian Armstrong takes his stablecoin-versus-banks argument to Davos, misunderstanding fractional reserve banking along the way. Meanwhile, the White House is frustrated with Congress over the stalled CLARITY Act, and large banks quietly position themselves to benefit from stablecoin legislation while using smaller banks as a regulatory shield.

💸 Gusto Taps ZeroHash for Instant Global Contractor Payouts - Main Street's payroll platform adds stablecoin settlement, signaling that blockchain rails have moved from early adopter territory into baseline infrastructure. When the software running payroll for your local dentist office settles on blockchain, the infrastructure debate is over.

🏛️ NYSE Builds Parallel Exchange for Tokenized Securities -  NYSE isn't retrofitting blockchain onto existing infrastructure - it's building a completely separate venue designed for 24/7 operations, instant settlement and stablecoin-based funding. A direct challenge to crypto-native platforms like Figure and Superstate.

🏛️ Bermuda Becomes the World's First Fully Onchain National Economy - Premier David Burt announces that Bermuda (a reinsurance powerhouse) will run on USDC rails with Circle and Coinbase infrastructure. This isn't a sandbox experiment. It's a sovereign infrastructure decision that gives Circle a nation-state reference case.

🏛️ FDIC Opens Comment Period on Bank Stablecoin Subsidiary Framework  - The proposed rule is now in the Federal Register with a February 17 deadline. 2,802 state banks have a formal pathway to evaluate stablecoin issuance through subsidiaries. The window to shape the final rules is open now.

Simon’s Market Readout 💬 

The CEO of Coinbase, Brian Armstrong, is currently busy telling anybody who listens in Davos that banks are not as safe as stablecoin deposits. His argument: you don't get the yield on your deposits, or in most cases, you get a fraction of what you would get if you held stablecoins. And of course, he then goes on to explain that banks are more risky because they lend out your deposits.

Minor misunderstanding of how fractional reserve banking works aside, I think on the surface there are bank CEOs who might have to educate him on how fractional reserves really work.

Number one: the insurance. Since 1933, when the Federal Deposit Insurance Corporation was created, no consumer who held deposits at an FDIC-insured institution has ever lost their funds due to a bank failure. Stablecoins are bankruptcy-remote and privately insured because they do not have access to the same sources of funding that give banks the privileges they have.

Number two: the privilege of collateral. Banks get access to the Federal Reserve as a source of funding, allowing them to create credit and also fund themselves in ways that stablecoins simply cannot. The drawback is that banks are also regulated, and being quite so regulated is quite painful. They have to deal with capital requirements and are among the most regulated types of companies.

Against the backdrop of this comes the White House, who are quite displeased with Congress walking away from the recent attempt at passing the CLARITY Act over concerns they had around Trump's involvement in crypto. The Treasury is quite happy with that outcome because it means the current framework would continue to conform - or maybe not conform.

So, where we stand today is a one-man PR tour trying to convince people that banking doesn't work the way it does, and a room full of banks that know how it really works. And indeed, a bunch of legislators who would benefit from understanding that small banks and large banks are two very different animals with two very different perspectives on how they might benefit or face risks from the passage of stablecoin legislation.

The large banks would win quite substantially, and they're using the smaller banks as a shield.

Stories You Can't Miss 📰

💸 Gusto Taps ZeroHash for Instant Global Contractor Payouts

Payroll platform Gusto has partnered with crypto infrastructure provider ZeroHash to offer stablecoin-based payouts for international contractors. The integration (currently in beta) allows contractors outside the US to receive earnings in dollar-denominated stablecoins with settlement in minutes rather than ~3-7 days.

Key Points:

• Gusto's scale: 400k+ small business employers. Tens of billions in annual payroll. This is mainstream America's payroll infrastructure - dentist offices, landscaping companies, local retailers, adding blockchain rails.

• The labor market math: Full-time independent contractors in the US doubled from 13.6 million (2020) to 27.7 million (2024). Gusto's own research shows 11% of US small businesses employed international contractors in 2025.

• ZeroHash powers the integration: ZeroHash provides the crypto infrastructure layer for Stripe's fiat-to-crypto onramp - handling liquidity, custody, and settlement while Stripe manages the user experience. They also power Morgan Stanley's upcoming E*Trade crypto trading (launching H1 2026) and Interactive Brokers' live trading.

• Mastercard acquisition: ZeroHash recently is planning to walk away from Mastercard's $1.5-2bil acquisition offer, opting to remain independent. Mastercard is now reportedly pursuing a strategic investment instead.

• Gusto isn't first. They're catching up: Deel partnered with BVNK in Spring 2024 and now has 10,000+ contractors across 100+ countries receiving stablecoin payouts. Remote launched USDC payments via Stripe in December 2024 across 69 countries.

The Tokenized Take:

Deel moved first. Remote followed. Now Gusto.

When the payroll platform serving Main Street small businesses adds stablecoin settlement, the capability has crossed from early adopter territory into baseline infrastructure. Now the question has shifted from "should we offer this?" to "why haven't we yet?"

Let’s have a look what's being replaced: businesses either rely on slow, expensive cross-border transfers to pay contractors directly, or they pre-fund local subsidiaries to access domestic payment rails. Each domestic rail comes with its own rules, banking holidays, cutoff times, formats, and fees.

One ledger. Sub-cent fees. Seconds to settle.

ZeroHash possibly walking away from Mastercard's $2 billion tells you where they see this heading. Their infrastructure now touches wealth management (Morgan Stanley), payments (Stripe) and payroll (Gusto). That's horizontal platform economics, and they're betting the option value exceeds what Mastercard put on the table.

The real signal here is who Gusto serves. Deel and Remote cater to tech companies hiring globally. Gusto serves the accountant down the street running payroll for a 15-person construction company. When that accountant's software starts settling on blockchain rails, the infrastructure debate is settled.

Stablecoins aren't replacing payroll. They're replacing the 3-7-day settlement window that banks built for a workforce that no longer exists.

🏛️ NYSE Builds Parallel Exchange for Tokenized Securities

The New York Stock Exchange isn't adding blockchain to its existing infrastructure. It's building a completely separate venue.

ICE announced Monday that NYSE has developed a platform for trading and onchain settlement of tokenized securities (subject to regulatory approvals). This isn't a back-office upgrade. It's a new trading venue designed from the ground up for digital securities.

Key Points:

• New venue architecture: 24/7 operations, instant settlement, fractional share trading, orders sized in dollar amounts, and stablecoin-based funding  (these don’t exist on the traditional NYSE)

• Native digital issuance: The platform will support both tokenized versions of traditionally issued securities AND tokens natively issued as digital securities. This will create fungible swaps between the two

• Major bank partnerships: BNY Mellon and Citigroup are partnering to support tokenized deposits across ICE's infrastructure, providing the liquidity layer for 24/7 settlement outside traditional banking hours

• Global clearing integration: ICE plans to extend tokenized collateral support across all six of its clearinghouses globally, including commodities, derivatives and securities

• Regulatory foundation: The announcement follows December's SEC no-action letter creating a three-year DTC pilot for tokenizing Russell 1000 stocks, US Treasuries, and major ETFs - the first formal pathway for exchange-level tokenization

• Market context: Bernstein estimates onchain value locked in tokenized assets (treasuries, private credit, real estate and securities) will reach $80 billion by end of 2026, roughly doubling from current levels. Tokenized equities represent a growing share as traditional exchanges enter the market

The Tokenized Take:

Nasdaq filed last September to tokenize every stock and ETF on its exchange. Their approach: give users a choice at execution. Same AAPL, same shareholder rights, same order book - just settled on blockchain rails. The DTC handles everything behind the scenes. Blockchain as an option within existing infrastructure.

NYSE is doing something else. They're building a parallel venue that starts as blockchain-native.

Two exchanges. The old one: 9:30-4:00 EST, T+1 settlement, bank wires. The new one: 24/7, instant settlement, stablecoin rails.

In short, Nasdaq is adding tokenized settlement as an option. NYSE is building both a new way to bring equities onchain AND the venue to trade them.

That will put NYSE in direct competition with Figure's OPEN exchange and Superstate - the native digital issuance platforms that have been operating while traditional exchanges figured out their strategy.

The sequencing makes sense. Stocks are standardized, highly liquid, and already held at DTC. That's what makes them easier to tokenize than real estate or private credit: the infrastructure already exists, it just needs new rails.

The Citi and BNY Mellon partnerships signal something specific. Both banks are building their own digital asset stacks - Citi with crypto custody launching in 2026 and stablecoin exploration, BNY Mellon went live with tokenized deposits earlier this month, giving institutional clients blockchain-based access to collateral, margin, and payment management around the clock. Their involvement here isn't experimental. It's infrastructure positioning for the next decade.

Two regulatory unlocks made this announcement possible. The GENIUS Act (signed July 2025) established federal stablecoin legitimacy. Without it, "stablecoin-based funding" wouldn't be viable for a major exchange. The SEC's DTC no-action letter (December 11, 2025) created the pilot program for tokenizing DTC-custodied assets. NYSE isn't waiting for perfect regulatory clarity. They're building while the rules get finalized.

On timelines, the DTC pilot is expected to go live later this year. NYSE's venue likely follows its own regulatory approval cycle - 12-18 months from filing seems reasonable given the SEC's recent posture toward tokenization.

Today, the question for every institution watching this – “Shall we digitize our existing business, or build the business that replaces it?

NYSE answer: both. Run the traditional exchange that generates current revenues. Build the parallel venue that captures future volumes. Let the market decide which one wins.

🏛️ Bermuda Becomes the World's First Fully Onchain National Economy

A nation just chose stablecoin rails.

At Davos on January 19th, Bermuda Premier David Burt stood alongside Circle CEO Jeremy Allaire and Coinbase CEO Brian Armstrong to announce something unprecedented: Bermuda will become the world's first fully onchain national economy.

USDC for payments. Coinbase wallet infrastructure. Government agencies piloting stablecoin transactions. Public fees payable onchain. This isn't a sandbox experiment -it's a national infrastructure decision.

Key Points:

• The infrastructure stack is complete. Bermuda is building on USDC with Circle's enterprise infrastructure handling institutional integration, while Coinbase provides wallet and onramp capabilities. Government agencies will begin piloting stablecoin payments, with public fees and vendor settlements on the roadmap.

• This follows proven traction. At the 2025 Bermuda Digital Finance Forum, the partners airdropped 100 USDC to every attendee for use with newly onboarded local merchants. Since then, additional Bermudian businesses have started accepting digital payments. The 2026 forum (May 11-14) will expand with broader business participation and a larger consumer stimulus.

• Circle's federal charter is in motion. On December 12, 2025, the OCC granted conditional approval for First National Digital Currency Bank, N.A. - a trust bank that will oversee the USDC Reserve once fully licensed. That's five months from GENIUS Act signing to conditional charter approval, though final approval and GENIUS Act rulemaking are still ahead

• The numbers behind Circle's credibility. USDC processed $18.3 trillion in transaction volume during 2025, leading all stablecoins. Total stablecoin volume hit $33 trillion for the year, up 72% from 2024.

• Bermuda isn't a crypto experiment, it's a financial services powerhouse. The island holds ~35% of global reinsurance capacity, with commercial insurers and reinsurers writing $72.6 billion in net premiums last year. Per capita income sits at ~$120,000 (fourth highest globally). This is serious money choosing stablecoin rails.

The Tokenized Take:

Bermuda choosing stablecoin rails isn't about being crypto friendly. It's about a jurisdiction that underwrites catastrophic risk for the entire planet deciding that this infrastructure is ready for production.

The regulatory credibility is important here. Bermuda passed the Digital Asset Business Act in 2018 - one of the world's first comprehensive frameworks for digital assets. The Bermuda Monetary Authority has spent seven years building FATF-compliant AML/ATF standards for crypto. When Premier Burt announces a national onchain economy, he's backed by regulatory infrastructure that institutional counterparties actually trust.

But the real story is the playbook Circle just validated:

GENIUS Act (July 2025) → OCC Conditional Federal Charter (December 2025) → Sovereign Adoption (January 2026)

That's a six-month sprint from federal legislation to a nation-state choosing your infrastructure as the backbone of their economy. The boring compliance work (the licensing, the reserve attestations, the banking relationships) created the foundation for a sovereign to say yes.

Bermuda also presents a useful alternative to the CBDC model that larger economies are still debating. Rather than spending years and billions building proprietary monetary technology, Bermuda is leveraging existing regulated infrastructure. USDC already exists. The compliance frameworks are already built. The liquidity is already there. For a small open economy, adopting proven rails beats building from scratch.

The obvious caveat: Bermuda's population is 64,000. This is a proof of concept, not scale validation. Everything from merchant adoption to government payment flows will get stress-tested in a 64k-person sandbox before anyone tries this at scale.

But here’s how things get interesting: Circle and Coinbase now have a sovereign-backed reference case. Every conversation with treasury ministries, central banks and financial regulators worldwide now includes "and we're already running a national economy." That's a different sales pitch than pilot programs and sandbox experiments.

It will be fascinating to see whether other small open economies will follow. Singapore has its stablecoin framework advancing. The UAE has been aggressive on digital asset regulation. Various Caribbean nations have explored CBDCs with mixed results. Bermuda just demonstrated that you can skip the CBDC development cycle entirely by partnering with regulated stablecoin issuers.

🏛️ FDIC Opens Comment Period on Bank Stablecoin Subsidiary Framework

As we covered in December, the FDIC announced it would move quickly on GENIUS Act implementation. And they have. The proposed rule is now in the Federal Register, the comment period is open and 2,802 state banks have a formal pathway to evaluate.

Key Points:

• Comment deadline: February 17, 2026. Banks and trade groups have roughly four weeks to submit feedback before the FDIC finalizes the rule.

• Applies to FDIC-supervised state nonmember banks and state savings associations seeking to issue stablecoins through a subsidiary (not directly). The subsidiary becomes a "Permitted Payment Stablecoin Issuer" (PPSI).

• Unanimous board approval. No dissent signals regulatory alignment on the approach - notable given the FDIC's historically cautious posture toward crypto-adjacent activities.

• First of several rulemakings. The OCC still needs to finalize rules for non-bank issuers. Capital and liquidity rules are next. The FDIC, Fed, and OCC are each developing prudential requirements for PPSIs under their supervision - all due by July 2026.

The Tokenized Take:

This isn't new policy - it's the formalization of what we covered in December: ring-fenced subsidiaries, three-year projections, full prudential scrutiny. But formalization matters. A proposed rule in the Federal Register means banks can now engage their legal and compliance teams with something concrete rather than speeches and press releases.

The strategic question for state banks: do you submit comments to shape the final rule, or wait to see what larger institutions push for? Community banks that want favorable treatment on application complexity or compliance burden should be engaging now - not after the rules are locked.

For those tracking the broader timeline: GENIUS Act rules must be finalized by July 2026, with the law taking effect by January 2027 at the latest. The window between "proposed" and "final" is where the details get negotiated. That window is open now.

📰 Some More News:

🏦 Tokenization, Stablecoins & Finance

• Galaxy Tokenizes First CLO on Avalanche (Read more here)

• Ondo Finance Brings 200+ Tokenized U.S. Stocks and ETFs to Solana (Read more here)

• Chainlink launches 24/5 onchain data streams for tokenized US stocks and ETFs (Read more here)

• Delaware Life partners with BlackRock to offer bitcoin exposure through fixed index annuity (Read more here)

• Bitpanda to launch stock and ETF trading as crypto exchanges pivot to full-stack financial apps (Read more here)

• Crypto payment cards hit inflection point as daily transactions surge 22x since late 2024 (Read more here)

• Noble blockchain shifts from Cosmos to launch its own EVM chain (Read more here)

• Binance to add Ripple's RLUSD stablecoin on Ethereum, XRP Ledger support is coming (Read more here)

• Bhutan to deploy Sei validator in Q1, eyes tokenization collab (Read more here)

• Steak 'n Shake to Pay Hourly Workers in Bitcoin Starting March (Read more here)

• Nansen launches AI-powered crypto trading tools on Base and Solana (Read more here)

🤑 Funding and M&A

• Argentinian payments player Pomelo raises $55m (Read more here)

• Galaxy to launch $100M hedge fund (Read more here)

• Mastercard said to weigh Zerohash investment after crypto company ends takeover talks (Read more here)

• Solayer launches $35 million ecosystem fund on the heels of alpha mainnet launch (Read more here)

• Aave Hands Lens to Mask Network, Doubles Down on DeFi Ambitions (Read more here)

• Winklevoss Brothers Donate $1.2M ZEC to Shielded Labs to Support Zcash Network (Read more here)

💼 Government & Policy

• Hong Kong to issue first batch of stablecoin licenses in Q1 (Read more here)

• White House Crypto Council Director Says Operating Without Market Rules Is 'Fantasy' (Read more here)

• Trump's crypto advisor calls for compromises to pass crypto bill (Read more here)

• Bank of Italy chief says banks, not stablecoins, anchor digital money (Read more here)

• New SEC submissions press on self-custody and DeFi regulation (Read more here)

• CFTC Faces Tough Crypto Mandate With Fewer Staff, Inspector General Says (Read more here)

• Vietnam Moves Crypto Exchanges Out of Legal Gray Area With Pilot Licensing (Read more here)

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