Morgan Stanley pushes back tokenized equity trading to 2027

While the firm remains bullish on the long-term potential of blockchain to streamline administrative burdens for private shares and investment funds, institutional adoption currently faces a supply-side bottleneck. Oldenburg noted that the lack of available tokenized products limits client demand, forcing the bank to wait for a more robust ecosystem before fully launching its alternative trading system services. The bank’s Digital Asset Lab continues to test stablecoins and decentralized finance vaults, aiming to integrate these digital formats into its existing suite of equity and derivative offerings.

Market infrastructure is also evolving to meet these demands. The Depository Trust & Clearing Corporation (DTCC) is set to launch a service in October that allows institutions to convert securities held in custody into tokenized representations, a move Morgan Stanley is monitoring closely. Concurrently, the Office of the Comptroller of the Currency has granted preliminary approval for Morgan Stanley Digital Trust, which would provide the necessary framework for custody, sales, and collateral administration. As firms like Citi report that nearly 77% of financial institutions plan to utilize tokenized collateral by 2026, the industry is increasingly focused on reducing the capital currently trapped in idle, non-yielding cash positions.