De-Dollarization and Gold: Why Neutral Reserve Assets Are Gaining Ground

From paper certificates to electronic clearing to onchain settlement, the infrastructure of global capital markets has always been upgraded, never replaced. We are at the next inflection point.

In the summer of 1968, the New York Stock Exchange began closing every Wednesday. Not for a holiday, and not for a crisis, at least not the kind that makes headlines. The exchange closed because it was drowning in paper.

Trading volumes had grown past the physical capacity of the back office. Brokers could not process the certificates, confirmations, and physical delivery slips fast enough to keep pace with the market. The infrastructure, unchanged in its essential mechanics since the 19th century, had hit a hard ceiling. What followed was not a debate about whether equity markets were worth saving. It was an engineering problem, and it produced one of the most consequential pieces of financial infrastructure ever built.

The Depository Trust & Clearing Corporation, formed in 1973 and fully operational by the mid-1970s, replaced the physical movement of stock certificates with electronic records. Settlement that had taken five business days began its decades-long compression: T+5 to T+3 by 1995, T+2 in 2017, T+1 in the United States as of May 2024. Today the DTCC processes the equivalent of roughly $2.5 quadrillion in securities transactions annually. No paper changes hands.

The lesson of that episode is that finance, at its inflection points, upgrades its infrastructure, and those upgrades determine who can participate, at what cost, and at what speed.

We are at one of those inflection points now.

The Pattern, Not the Anomaly

It is worth being precise about what actually changed in 1973. The underlying assets (equities, bonds, money market instruments) did not change. A share of AT&T was still a share of AT&T. What changed was the settlement layer: the rails along which ownership was recorded, transferred, and verified.

The same pattern defined electronic trading in the 1990s. The proliferation of ECNs, the move to decimal pricing in 2001, the rise of algorithmic execution: none of these altered what a stock was. They altered how it moved, how quickly, and at what cost. Bid-ask spreads that once measured in eighths of a dollar compressed to fractions of a cent. Market access that once required a broker with a physical presence on an exchange floor became available to any institution with a network connection.

Each upgrade followed the same arc: a structural constraint in the existing infrastructure, a new technical solution, institutional resistance, regulatory accommodation, and then adoption so complete that the prior system becomes difficult to remember. Nobody today debates whether electronic clearing was a good idea. The question is simply how the next layer is built on top of it.

Tokenization is that next layer.

What Tokenization Actually Does

Strip away the marketing and the mechanics are familiar. A tokenized asset is a digital representation of a real-world financial instrument (a treasury bill, a money market fund share, a bar of gold) recorded on a programmable ledger. Ownership is tracked onchain. Settlement is near-instant. The asset itself is unchanged; the infrastructure carrying it is fundamentally different.

The implications follow directly. A tokenized US Treasury does not require a custodian relationship, a prime broker, and a two-day settlement window to change hands. It can be transferred in seconds, 24 hours a day, seven days a week, across any market that can read the ledger. It can be used as collateral in real time, without the manual margin calls and overnight exposure that characterize traditional repo markets. It can be held in fractional denominations without the administrative overhead that makes small-ticket fixed income economically unviable for most market participants.

These are the same category of improvement that T+3 represented over T+5: a measurable reduction in counterparty risk, capital lock-up, and operational friction. The difference is magnitude. Moving from T+5 to T+1 took fifty years. The move from T+1 to near-instant settlement is already here for assets issued onchain.

The Institutional Migration Has Begun

The benchmark for whether a new financial infrastructure is real is straightforward: are serious institutions building on it?

BlackRock's BUIDL fund, launched in March 2024, crossed $500 million in assets under management within weeks. Franklin Templeton's onchain money market fund has been operational since 2021. Standard Chartered's Libeara platform, built explicitly for institutional tokenization, is actively issuing regulated, onchain capital market instruments. The pipeline of sovereign wealth funds, asset managers, and global banks exploring tokenized fixed income is a pipeline of institutions that have modeled the operational savings and concluded the infrastructure is ready.

Boston Consulting Group projects that tokenized assets could reach $16 trillion by 2030. That figure is a model, not a guarantee, but the direction is consistent across every major institutional assessment. The question being asked inside global asset managers today is not whether to engage with tokenized instruments, but in what sequence and at what scale.

This mirrors, almost precisely, the institutional posture toward electronic clearing in 1974. The DTCC was not trusted immediately. Established broker-dealers worried about systemic risk, operational dependencies, and the loss of float that physical settlement provided. The arguments against change were credible. They were also, ultimately, irrelevant to the trajectory.

The Infrastructure Behind the Asset

thBILL, Theo's tokenized US treasury money market fund, built with Standard Chartered's Libeara and Wellington Management, is a new infrastructure layer for an existing one.

The underlying exposure is short-duration US government obligations: among the oldest and most liquid instruments in global finance. What thBILL changes is the access layer. Institutional-grade yield on T-bills, available onchain, with real-time settlement and the composability that comes from a programmable ledger. The same yield that previously required a prime brokerage relationship, a minimum subscription size, and a T+1 settlement window is now accessible to any market participant that can hold an onchain position.

This is the DTCC moment for fixed income. Not a replacement for the asset, and a structural improvement in the infrastructure that delivers it.

The Upgrade Thesis

There is a recurring temptation in periods of financial infrastructure change to frame the new system as a repudiation of the old. The DTCC preserved equity markets. Electronic trading preserved market makers. Tokenization preserves the assets it represents.

What each of these transitions shares is a compression of friction (settlement time, operational cost, access barriers, capital lock-up) that makes the underlying market more efficient and more liquid. The asset survives. The infrastructure around it is rebuilt.

Finance has always been an information system: who owns what, when it transferred, what it is worth. The paper certificate was one way to record that information. The DTCC's electronic ledger was a better one. An onchain ledger, with real-time settlement and global accessibility, is better still.

The 1970s did not get to choose whether electronic settlement would define modern capital markets. The institutions that understood what was happening built the infrastructure that everyone else eventually relied on. The window to make that choice about tokenization is open. It will not stay open indefinitely.

About Theo  Theo (theo.xyz) is an institutional-grade real-world asset platform founded by ex-HFT traders from Optiver and IMC. Its mission is to connect the world's capital through transparent, liquid, and composable onchain instruments, including thBILL (tokenized US treasury money market fund), thGOLD (tokenized yield-bearing gold), and thUSD (a yield-bearing stablecoin backed by a delta-neutral gold strategy).