BCG's Chris Schmid, Inderpreet Batra, and Roy Choudhury drop a verdict in their May 2026 flagship report1 that financial executives can't sit with quietly: digital assets aren't a side story anymore. They're rewriting the economics of banking itself.
The report's opening argument pulls no punches. "Digital assets should now be treated as a strategic infrastructure transition for banks, not as a niche innovation theme." The job for bank chief executive officers isn't picking the winning technology. It's staying relevant, trusted, and in control while money, assets, and settlement go programmable.
Three Asset Classes. Three Very Different Clocks.
Not all digital assets are created equal, and Schmid, Batra, and Choudhury make sure you know it. Crypto sits at roughly $3 trillion in market cap. Stablecoins have climbed to around $300 billion. Digital real-world assets, or RWAs, are at just $30 billion today.
But size right now isn't the point. Digital RWAs carry the deepest long-term weight for capital markets. Progressive scenarios project roughly 16% of global investable assets tokenized by 2035. Net new assets flowing into digital RWAs grew about 300% year-over-year in 2025. Crypto, by comparison, managed 2%.
Stablecoins are the immediate disruptor for transaction banking and foreign exchange. Still, the authors draw a hard ceiling: without a monetary regime change, roughly 15% of global M2 money supply, around $9 trillion at today's rates, is as far as stablecoin adoption realistically goes. The system corrects itself. As stablecoins pull deposits away, bank funding tightens, credit gets more expensive, and the appeal of sitting in a non-yielding instrument fades fast.
The digital money landscape breaks into three distinct forms. Central bank digital currencies, or CBDCs, are direct liabilities of central banks, issued in retail or wholesale formats. Tokenized deposits are digital representations of commercial bank deposits, still claims on bank balance sheets, still supporting fractional lending. And stablecoins are privately issued, bearer-like instruments pegged to fiat currencies and operating on public rails. Each looks similar from the outside. Each carries fundamentally different issuer risk, governance structure, and regulatory treatment at scale.
The Revenue Math Is Uncomfortable
The scenario modeling from Schmid, Batra, and Choudhury doesn't soften the blow. In a rapid digital expansion scenario, banks face roughly 10% smaller balance sheets, 14% lower revenues, 9% market share lost to non-bank financial institutions (NBFIs), an 8 percentage-point increase in the cost-to-income ratio (CIR), and 30% lower profits by 2035 against the baseline. Three forces drive that: tokenization cuts out intermediaries, value drifts toward platforms and asset managers, and running both legacy and tokenized rails simultaneously burns money during the transition.
The flip side is real too. For an average globally systemically important bank (G-SIB), digital asset engagement could unlock $340 million to $600 million in annual personal banking revenue, $200 million to $600 million in corporate banking, a 15% to 30% revenue lift for a $2 trillion asset manager, and up to 4% return on equity (RoE) improvement in trading, translating to more than $1 billion in additional profit.
Capital Markets Is Where It Gets Real
Wholesale settlement is the battleground the authors return to repeatedly. Broadridge's Distributed Ledger Repo (DLR) platform reported average daily volumes of $365 billion in January 2026, a 508% year-over-year jump. BlackRock's BUIDL fund, Franklin Templeton's FOBXX, and J.P. Morgan's Tokenized Collateral Network (TCN) aren't pilots anymore. They're production.
Schmid, Batra, and Choudhury draw a sharp analogy to exchange-traded fund (ETF) history. Early movers in tokenized funds could capture structural advantages the way State Street, BlackRock, and Vanguard came to control 75% to 80% of global ETF assets. The insight worth holding: the innovation wasn't the underlying asset. It was the operating model wrapped around it.
The capital markets value chain gets reshaped at every stage. Atomic delivery-versus-payment (DvP) using tokenized cash compresses settlement from days to near-instant, cutting counterparty exposure and reducing the need for prefunded margin buffers. Custody evolves from recordkeeping toward key management and digital risk control. Asset servicing, from coupon payments to corporate actions, becomes programmable logic embedded directly into the instrument rather than a manual, exception-driven process.
Risk Doesn't Work the Same Way Anymore
Here's the part that should make chief risk officers (CROs) and chief compliance officers (CCOs) take notice. In traditional banking, controls sit around the product. The CRO section of the report reframes that entirely: "In programmable markets, controls sit inside the product, not around it."
Anti-money laundering (AML) becomes about wallet flows and transaction patterns, not just customer onboarding. Full know-your-customer (KYC) coverage in secondary markets is often structurally impossible. Regulators increasingly expect institutions to compensate through wallet risk scoring and enhanced provenance analysis instead. Sanctions enforcement faces a new constraint: on-chain transactions cannot be rejected once executed, meaning compliance depends on custody-level intervention and ledger-based asset segregation.
Smart contracts need to be governed like high-risk financial models. Pre-deployment validation, continuous monitoring, and technically enforceable authority to pause or upgrade are non-negotiable. Shared infrastructure, from bridges and cloud providers to node operators and analytics vendors, creates concentration risk that regulators are beginning to treat as emerging financial market infrastructure (FMI), not ordinary vendor outsourcing.
Crisis response speed, the authors warn, is now a survival variable. Always-on markets compress decision windows to the point where governance uncertainty becomes a risk vector in its own right.
Regulation: One Framework Doesn't Fit All
Schmid, Batra, and Choudhury identify four regulatory archetypes shaping how jurisdictions approach digital assets. The United States, Canada, and Brazil lean on market-driven models, applying existing financial law rather than purpose-built rules. The European Union, United Kingdom, and Japan have adopted bespoke regime models, with the EU's Markets in Crypto Assets Regulation (MiCA) as the clearest example of a prescriptive, harmonized framework. Singapore, Switzerland, Hong Kong, and the UAE operate as competitive hub models, pairing clear licensing pathways with explicit strategies to attract international capital. Mainland China follows a sovereign-controlled model, restricting private crypto activity and prioritizing state-led digital finance.
The practical implication for institutions operating across borders: design not for a single global end state, but for a persistent multi-regime reality. Regulatory clarity, the report notes, tends to accelerate adoption by reducing legal ambiguity, but it simultaneously compresses the unregulated arbitrage models that gave early movers their margins.
Five Takeaways for Advisors and Investors
1 Digital RWAs are the long game. Small today, structurally important by 2035. Watch tokenized fund launches and post-trade infrastructure investment as your leading indicators.
2 Stablecoins have a ceiling. The 15% of M2 framework gives you a practical anchor for sizing disruption risk to deposit-funded institutions.
3 Capital markets offer the clearest near-term return on investment. Repo, collateral mobility, and tokenized money market funds (MMFs) already have measurable economics behind them.
4 Client interface control is the real prize. Whoever owns custody and wallet infrastructure owns the client relationship, regardless of which settlement rail eventually wins.
5 Governance lag is the hidden risk. Institutions that build control architecture after scale demands it will hit regulatory and operational walls exactly when growth opportunities are peaking.
Footnote:
Schmid, Chris, Inderpreet Batra, and Roy Choudhury. The Future of Digital Assets. Boston Consulting Group, May 2026.
