The next major winner of the tokenization boom may not be stablecoins or tokenized stocks themselves, but the decentralized finance infrastructure expected to process trillions of dollars flowing on-chain over the next several years.

That is the central thesis emerging from a new Standard Chartered research report published Monday, where the bank projected that tokenized assets will reach $4 trillion by the end of 2028, split evenly between stablecoins and tokenized real-world assets.

The report argues that once assets migrate on-chain, traditional financial infrastructure becomes inefficient for managing them. Instead, decentralized finance protocols such as lending markets, decentralized exchanges and tokenized vault systems may evolve into the native operating system for global capital markets.

“We estimate that USD 4tn of tokenised assets will be on-chain by end-2028,” wrote Geoffrey Kendrick, Standard Chartered’s Global Head of Digital Assets Research.

The bank said this transition could dramatically increase throughput across established DeFi protocols, benefiting protocol revenues and potentially lifting governance token valuations as institutional activity scales.

SC Says DeFi Becomes Native Infrastructure For Tokenized Markets

The report frames DeFi not as a speculative corner of crypto markets, but as infrastructure replacing many functions currently handled by traditional financial intermediaries.

According to Standard Chartered, tokenized assets gain entirely new capabilities once moved onto a shared blockchain ledger, including instant settlement, continuous global trading, permissionless issuance and simultaneous use across multiple financial applications.

The bank refers to this dynamic as “composability,” describing it as the defining feature separating decentralized finance from traditional finance.

“Composability lowers the cost of capital: a single position can simultaneously earn yield, collateralise a loan and remain liquid, increasing effective return without additional risk-taking,” the report stated.

The report highlighted BlackRock’s tokenized Treasury fund BUIDL as an example of how tokenized assets already interact across decentralized lending systems, collateral frameworks and stablecoin reserves simultaneously.

Standard Chartered also pointed to Coinbase’s integration with DeFi lending protocol Morpho as evidence that institutional finance is increasingly using decentralized protocols as backend infrastructure rather than building separate blockchain systems from scratch.

Why The Bank Believes Protocol Tokens Could Benefit

The report argues that DeFi protocol growth becomes multiplicative as more assets move on-chain.

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Standard Chartered identified three major drivers expected to increase protocol throughput.

More tokenized assets entering blockchain ecosystems A larger percentage of those assets being deposited into DeFi protocols Growing lending activity against tokenized assets

“All three are multiplicative in terms of their implications for DeFi protocol throughput and therefore token prices,” the report said.

The bank suggested established protocols with strong governance systems and risk controls are positioned to benefit most as institutional capital enters decentralized markets.

That distinction matters because institutional adoption increasingly depends on regulatory clarity, security audits and operational reliability rather than speculative token narratives.

The report noted that decentralized exchange activity has steadily increased relative to centralized exchanges while protocols like AAVE have grown large enough to rival mid-sized U.S. banks by asset size.

CLARITY Act Could Become Major Catalyst

Standard Chartered identified U.S. regulation as the next major catalyst for institutional DeFi adoption.

The bank said passage of the CLARITY Act, expected later this year, could accelerate the migration of traditional financial assets onto blockchain rails.

The legislation would establish clearer jurisdictional boundaries between the Securities and Exchange Commission and Commodity Futures Trading Commission while creating more formal regulatory pathways for tokenized assets and decentralized infrastructure.

“DeFi may come of age in H2-2026,” the report said.

Despite the optimistic outlook, Standard Chartered acknowledged that significant risks remain, including smart contract vulnerabilities, governance failures, oracle manipulation and unresolved regulatory fragmentation across jurisdictions.

Still, the bank argued that the broader direction of capital markets appears increasingly clear.

“There are currently about 1,000x more assets off-chain than on-chain,” the report noted, adding that tokenizing institutional-grade assets is likely to become the key growth driver for decentralized finance infrastructure over the coming years.

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