The US derivatives exchange operator is testing solutions for tokenized assets with the help of Google Cloud’s Universal Ledger (GCUL), a new distributed ledger specifically created for traditional financial institutions.
As per a March 25 announcement, the exchange has initiated the integration of GCUL to enhance the efficiency of capital markets and wholesale payments.
Chairman and CEO Terry Duffy mentioned that GCUL has the potential to “deliver significant efficiencies for collateral, margin, settlement, and fee payments as the global market transitions to continuous trading.”
Details regarding which assets will be tokenized have not been disclosed in the announcement. The testing phase of this technology will begin with market participants in 2026.
Image credit: CME Group
Prior to the announcement on March 25, there was little information available about GCUL. However, Google Cloud has been advancing into the blockchain domain over recent years, starting in 2018 with the addition of Bitcoin blockchain data to its data warehouse.
In 2023, Google Cloud expanded its offerings by adding 11 different blockchains to its data repository, which now includes Ethereum, Arbitrum, Avalanche, and Optimism.
Related: Expectations of $75B AI investment this year by Google leadership
Tokenization on the Rise
Tokenization, the method of transforming real-world and financial assets into digital tokens, has attracted considerable attention from prominent institutions.
A March 24 article from the World Economic Forum noted that the merger of traditional finance with blockchain is “becoming a reality” and that tokenization is increasingly taking the forefront.
“With only $25 trillion of securities currently eligible for collateral use—out of a $230 trillion potential—tokenization could significantly enhance liquidity and capital efficiency,” stated Yuval Rooz, co-founder of the New York-based company Digital Asset.
The tokenization sector is anticipated to flourish in the United States under President Donald Trump, who has vowed to position the country as the global hub for blockchain and cryptocurrency.
A tokenized securities platform has indicated that the SEC’s repeal of SAB 121 would be beneficial for the industry by allowing institutions to offer custody solutions for tokenized securities with reduced financial risk.
Excluding stablecoins, the RWA tokenization market is nearing $20 billion. Source: RWA.xyz
Additionally, the CEO of BlackRock has emerged as a supporter of the tokenized securities market. In a January CNBC interview, he urged the SEC to “rapidly approve” the tokenization of stocks and bonds.
Related: Launch of a tokenized real estate trading platform on Polygon