As tokenisation and programmable infrastructure move closer to established financial activities, the definitions of digital finance and traditional finance may become less distinct.

For Europe, convergence between digital and traditional finance would mark a significant evolution from where the MiCA journey began. The immediate hurdle was to bring a rapidly developing digital asset market within a common regulatory framework. Now the focus is shifting from how Europe regulates a separate category of financial activity to how new technology can be integrated into the wider financial system.

Banks, asset managers, central banks, and market operators are exploring how core financial processes could operate on this infrastructure, signalling a shift beyond isolated experimentation.

The European Central Bank (ECB) estimated tokenised assets on public blockchains reached €38 billion globally in February 2026, compared with around €241 trillion in traditional financial assets at the end of 2025. More recent ECB data, using a narrower measure of tokenised traditional assets on public blockchains, also indicates strong momentum with that market increasing roughly fivefold between March 2025 and March 2026.  

The measures are not directly comparable, and public blockchains represent only part of the wider DLT landscape, but recent growth in tokenised finance is notable. However, it remains at an early stage compared to traditional finance, meaning it is still unclear which technologies and market structures will ultimately achieve scale.

Against that backdrop, now is a key moment to consider what could happen if Europe’s next chapter involves digital technology moving from the edges of finance into its core infrastructure.

From a common framework to financial convergence  

Europe provides a useful starting point for understanding how tokenisation is becoming more closely integrated with established financial markets. The European Union’s Markets in Crypto-Assets (MiCA) Regulation brings crypto-assets into a more established institutional framework, but crypto-assets represent only one application of tokenisation.  

Traditional financial claims can also be issued and managed using distributed ledger technology (DLT). This is beginning to reshape how financial assets and money are issued, transferred, settled, and serviced.

The Eurosystem’s Pontes and Appia initiatives show how this is moving from experimentation to infrastructure. Pontes began operating in September 2026, linking DLT-based market platforms with TARGET Services so wholesale tokenised transactions can settle in central bank money. Appia looks further ahead, exploring how an integrated European tokenised wholesale financial ecosystem could develop.  

Project Agorá adds an international dimension. Following its prototype work, the project moved into real-value testing in July 2026. Financial institutions and central banks completed transactions across several currencies using tokenised commercial bank deposits and central bank reserves. While this does not yet amount to market-scale deployment, it narrows the distance between technical proof and operational use.

Private-sector initiatives, such as Qivalis, are moving in parallel. Established by 37 European banks across 15 countries, the company is seeking authorisation as an electronic money institution and plans to launch a regulated euro-denominated stablecoin later in 2026. The initiative shows how established banks are collaborating to develop regulated on-chain payment and settlement capabilities.

Taken together, these public- and private-sector developments are beginning to connect tokenised finance with established market infrastructure. Since 30 March 2026, marketable assets issued in central securities depositories (CSDs) using DLT-based services can qualify as collateral in Eurosystem credit operations, while tokenised central bank money, commercial bank money, and traditional financial claims are being tested or deployed on programmable infrastructure.  

Liquidity, interoperability, common standards, and legal certainty remain significant barriers, however, leaving the eventual structure of tokenised financial markets far from settled.  

Tokenisation changes more than the asset

Early discussions about tokenisation often focused on representing an existing asset on a blockchain. Now its potential goes further. Traditional financial markets separate activities across institutions, infrastructures, and time, with different stages of the transaction lifecycle involving multiple systems, records, and reconciliations.

Programmable infrastructure could reorganise parts of that lifecycle. Atomic settlement can connect asset transfer directly to payment, while smart contracts can embed transaction logic, compliance conditions, and other processes closer to execution.

If financial logic moves into infrastructure, the economics and organisation of intermediation, liquidity, collateral, reporting, and control can change with it. Tokenisation is not transformative simply because an existing asset acquires a digital representation. Its greater significance would lie in changes to the infrastructure around that asset, including how transactions are executed and settled, how collateral moves, where records are maintained, and where financial and compliance logic resides.

Digital finance may therefore reshape the architecture of finance more profoundly than its geography. The relevant question isn’t how much financial activity becomes tokenised, but how deeply programmable infrastructure becomes embedded across the financial lifecycle.

Programmable infrastructure could redefine institutional roles

If contractual logic and settlement are increasingly executed through code, it is tempting to assume traditional institutions and intermediaries become less relevant. Current research points to a more nuanced outcome, however.

Work by the International Monetary Fund (IMF) suggests that activities such as record-keeping, settlement, collateral management, and reporting could increasingly be handled through code. However, institutions are likely to retain responsibility for functions involving legal certainty, accountability, governance, and discretion. Where a token represents an off-chain asset or claim, code alone cannot establish the legal reality behind it. Institutions will still need to ensure the link between the on-chain record and the underlying asset, ownership, or obligation is legally sound and enforceable.

A more plausible direction may be institutional redesign rather than wholesale replacement. In other words, finance could become programmable without becoming institutionless. Trusted money, legal certainty, governance, balance sheets, liquidity, and institutional expertise do not cease to matter because infrastructure changes. Instead, technology might alter how some of those capabilities are delivered and how institutions interact with the infrastructure around them.

This reinforces the argument from Part 2 of the Beyond MiCA series. Technological change does not necessarily displace the capabilities accumulated within established financial centres and institutions. But it takes that argument one step further. If parts of financial activity become embedded in programmable infrastructure, the roles performed by institutions, infrastructures, and technology — and the boundaries between them — could begin to change.  

Consequently, the focus expands beyond which intermediaries remain to include which functions still require an institution, which can move into infrastructure, and how responsibility is allocated between them.

Can Europe avoid rebuilding fragmentation into new financial infrastructure?

Europe is now at a turning point with its financial infrastructure. Its capital markets are fragmented across national legal frameworks, infrastructures, and pools of liquidity. According to the ECB, tokenisation has the potential to deepen European capital markets and support greater integration across national financial systems.  

Despite this, technology won’t provide a clean slate. It can’t harmonise insolvency, securities, or corporate law, nor does issuing an asset on new infrastructure create liquidity or investor demand. Fragmentation could even reappear in a different form if multiple networks, settlement arrangements, and technical standards develop without sufficient interoperability.  

The opportunity in Europe is to avoid embedding some of its existing fragmentation into new infrastructure from the outset.

Whether that translates into deeper, more integrated markets will depend on the legal, institutional, and market structures built around it. Technology and regulation create possibilities, but the surrounding financial ecosystem determines what can scale. In that sense, the architecture surrounding tokenisation will likely matter as much as the technology itself.

Risk and control move with the architecture

The same caution around fragmentation applies to risk. Atomic settlement can reduce certain counterparty exposures, but it also increases the need for liquidity to be available at the point of settlement. Programmable collateral can move faster, but automation risks transmitting stress more rapidly. Smart contracts can embed financial and compliance logic, but operational and governance weaknesses can affect transactions at source.

The Financial Stability Board (FSB) identifies familiar vulnerabilities, including liquidity and maturity mismatch, leverage, interconnectedness, and operational fragilities. These could become more important if tokenised markets scale. Similarly, the IMF emphasises safe settlement assets, legal certainty, and robust governance.

Programmability can move controls closer to the transaction, but it does not remove the need for control. Instead, it can change where, when, and by whom those controls need to be designed, operated, and assured. Product and technology decisions could have direct consequences for operations, treasury, finance, legal, compliance, risk, and assurance, while controls previously applied around a financial process may need to be considered earlier as part of the process and infrastructure design.

The implications will vary across technologies and activities, but organisations will likely need more coordination across traditional functional boundaries. As programmable finance develops, connecting financial, technological, legal, and risk expertise is set to be an even more important institutional capability.

How can boards prepare for convergence?

Boards considering the implications of digital and traditional finance converging will need to make decisions while technologies and market models are still developing. Three key steps can help provide direction:

1. Map the strategic exposure

Identify where programmability and new infrastructure have the greatest commercial and operational impact, assessing which areas are already seeing meaningful market activity, regulatory development, or client demand. This gives a clearer basis for deciding where to focus now and where to preserve flexibility until the market develops further.

2. Invest in capabilities that travel

Many of the capabilities needed to compete in a more programmable financial system are already core financial capabilities. With the eventual architecture potentially relying on stablecoins, tokenised deposits, central bank money, or an interoperable combination of these, boards should prioritise the capabilities that will remain valuable for different models. Strong governance, liquidity management, resilience, trusted institutional relationships, and specialist expertise provide a foundation for adapting as those models develop.

3. Implement strategy across functional boundaries

As tokenisation moves into core financial and market functions, boards may need to reflect this by bringing digital finance closer to the organisation’s broader financial strategy, rather than treating it as a separate agenda. Boards can create stronger links between the teams responsible for commercial strategy, technology, finance, and control. Earlier collaboration helps organisations assess the full implications of design choices before they become embedded.

Final takeaways

Across this series, we have looked beyond MiCA to explore how institutional quality and trust could shape Europe’s next phase of digital finance, and how capital, liquidity, infrastructure, and specialist expertise may influence where digital finance develops globally.  

Looking ahead, MiCA’s normalisation of digital assets as a regulated market could give way to a broader normalisation of digital technology in finance. That does not require every asset to become tokenised or every financial process to move onto distributed ledgers. Rather, digital capabilities may increasingly become embedded in the institutions, processes, and infrastructure that underpin traditional financial activity, making the distinction between digital and traditional finance progressively less meaningful.

Maturity will not look like a financial system replaced by digital assets, but one in which digital and traditional finance operate as part of the same integrated ecosystem.

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