The $145 Trillion Bond Market Hasn’t Changed Much in 50 Years. Tokenization Aims to Improve It.
How tokenization is cutting the cost of issuing and trading fixed income and what it means for every institution in the market.
By Sagar Shah, Chief Business Officer, Evernorth
Every generation or so, financial markets restructure around better technology. It's rarely loud when it starts. It was quiet when stock exchanges began migrating from trading floors to electronic systems in the 1990s. Quiet when algorithmic execution began replacing voice brokers in fixed income in the 2000s. Those transitions felt incremental until, suddenly, they weren't.
Something similar is happening now in the bond market — one of the largest financial markets in the world by value, and also the one that has changed little in the past fifty years. The mechanism for issuing a corporate bond today looks remarkably similar to how it looked in 1975. Multiple intermediaries, weeks of process, and fees totaling 2-5% of deal value on a typical securitization.
Tokenization is helping change that arithmetic. And unlike the projections that dominated conversations about this three years ago, the evidence is now being measured by the institutions that set the standards.
The European Central Bank published empirical analysis of tokenized bond underwriting fees in May 2026. The Hong Kong Monetary Authority has documented tighter bid-ask spreads in tokenized versus traditional bond issuances. The WEF and GFMA have put hard numbers on the savings.
The debate is no longer about whether tokenization is coming. It's about who — and which infrastructure layer — does it best.
The Numbers Are No Longer Projections
Here's what the research shows. According to WEF and GFMA data cited by SettleMint, tokenized bonds can reduce underwriting fees by 0.22% of par value and tighten bid-ask spreads by 5.3% compared to traditional equivalents. Over 2,000 workflow tasks can be automated, saving up to 1,000 person-hours per issuance. The GFMA finds that tokenizing an investment-grade bond can reduce operating costs by 40-60% compared to traditional issuance.
The ECB's May 2026 Macroprudential Bulletin examines whether tokenization could reduce costs for issuers through lower underwriting fees and deliver meaningful liquidity improvements. The finding: the efficiency case is real, and the liquidity dynamics in tokenized bond markets differ from traditional markets in ways that matter for institutional participants. The Hong Kong Monetary Authority's review, cited in peer-reviewed analysis published in Frontiers in Blockchain, documented reductions in underwriting costs and tighter bid-ask spreads relative to comparable traditional bonds.
To put the fee number in context. On a $500 million bond issuance, 0.22% is $1.1 million in direct underwriting savings — on a single transaction. Multiply that across a program of issuances and the number becomes material quickly.
The spread compression matters too, and perhaps more for the long run. A 5.3% reduction in bid-ask spreads means more of the return stays with the investor at every point of secondary trading. At the scale of institutional fixed-income portfolios, that's not a rounding error.
Why Bond Issuance Is So Expensive in the First Place
To understand why tokenization changes this, it’s important to understand why traditional issuance costs so much. A bond doesn't just have an issuer and an investor. It has an investment bank that structures and prices the deal, a transfer agent that maintains the ownership registry, a paying agent that handles coupon and principal payments, a trustee that represents bondholder interests, and a clearing house that provides settlement finality.
Each party performs a function. Each party charges a fee. And each handoff between parties introduces latency.
According to Liquid Mercury's 2026 RWA tokenization analysis, a traditional commercial mortgage-backed securities issuance takes three to six months to complete and costs 2-5% of deal value in aggregate fees. A tokenized issuance can reduce these intermediary layers significantly, compressing both the cost stack and the timeline.
Tokenization doesn't eliminate the economic functions these parties perform. Bondholders still need representation. Settlement still needs finality. But the architecture changes. When a bond is a programmable digital instrument on a settlement layer capable of real-time execution, several of these intermediary layers become redundant. Ownership records update automatically. Coupon payments execute on a schedule. Cross-border settlement that used to require correspondent banking chains can happen in seconds.
"Intermediaries have served a real purpose, and as technology compresses the middle, the new economics will reward those who add genuine value - not just access."
Who This Actually Helps
When people talk about cost savings in capital markets, the instinct is to think about it as a story for the institutions already in the market. That's part of it. But the more important implication is about who gets into the market.
Today, there's a significant floor on viable bond issuance — a minimum deal size below which the fixed cost of engaging five intermediary layers simply doesn't pencil. That floor effectively excludes mid-market companies and smaller issuers who could benefit from fixed-income capital but can't justify the issuance infrastructure cost.
Tokenization changes that math. When issuance costs drop 40-60%, the floor drops with them. Issuers who were previously priced out become viable. The market gets broader. Access widens for a larger range of institutional issuers. And the cost of capital — which ultimately flows through to the real economy — comes down.
This is the market modernization argument that doesn't get made often enough. Electronic trading democratized equity markets by making execution cheaper and access wider. Tokenization has the potential to do the same for bond markets — not just making them more efficient for existing participants, but materially widening who can participate.
The Infrastructure Question
None of this delivers at scale without a settlement layer capable of handling it. Programmable payment logic, institutional-grade custody, near-instantaneous settlement, regulatory frameworks, and compliance infrastructure. These are institutional requirements, not generic blockchain capabilities.
In May, JPMorgan, Mastercard, Ondo, and Ripple publicly announced the first live cross-border redemption of a tokenized U.S. Treasury fund on the XRP network — clearing in under five seconds. The XRP network now hosts over $3 billion in tokenized real-world assets — including $418 million in tokenized U.S. Treasuries, up 8x year-over-year — with settlement finality at a fraction of a cent per transaction.
That's what institutional-grade tokenization infrastructure looks like in practice: a live transaction settling in real time on a public blockchain.
What Comes Next
Markets tend to underestimate the pace of structural transitions until they're well underway — and then they catch up fast. The floor-to-electronic transition in equities looked incremental for years and then accelerated sharply once the institutional standards were set.
Tokenized bond issuance may be approaching a similar transition. Central banks are measuring it. The early data points are substantive. The first live institutional transactions have cleared.
This content is for informational purposes only and does not constitute investment advice, an offer to sell, or a solicitation of an offer to buy any securities or digital assets. Evernorth and its affiliates hold positions in digital assets discussed in this post, including XRP. See Evernorth's SEC filings for additional information. Certain statements in this post may constitute forward-looking statements. These statements involve risks and uncertainties, including the possibility that regulatory developments, market conditions, or technological adoption may not proceed as described. Evernorth undertakes no obligation to update any forward-looking statements. Digital assets are speculative and involve a high degree of risk, including the potential for total loss of principal. Past performance is not indicative of future results. Learn more about Evernorth: https://www.evernorth.xyz/press-release-10-20-2025