2026 Predictions

As blockchain heads into 2026, the conversation is shifting from big promises to hard realities. In the latest episode of “From the Block,” PYMNTS CEO Karen Webster chats with Citi Treasury and Trade Solutions Global Head of Digital Assets Ryan Rugg about why the year ahead will be defined by whether digital assets can integrate into the operational, regulatory and risk frameworks of mainstream finance.

Transcript

Narrator 0:03

Welcome to From the Block, where Ryan Rugg, Citi's Global Head of Digital Assets, and Karen Webster, CEO of PYMNTS, unpack the real questions CEOs and CFOs are asking about stable coins. From infrastructure to innovation, it's the practical path from concept to competitive advantage. In this episode, Karen Webster and Ryan Rugg discuss, 2026 Predictions.

Karen Webster 0:30

Hey Ryan, we're back for another episode of From the Block. Are you excited? I'm very excited. Are you excited? Before we get into this week's episode, I want to know here we are in the new year. Are you the one of the 84% who's given up your own New Year's resolutions by the end of January? Or are you one of the 9% that sees it all the way through to the end of the year?

Ryan Rugg 0:51

I'm still in the 9%. Let's ask me next episode.

Karen Webster 0:55

Okay. All right. Well, we'll we'll we'll we'll do that. It depends on what you set to as the as the resolution or the prediction about what it is you're going to do at the end of the year. You have to set up. We can talk about that later. We can talk about that later. Okay. So so kind of on that theme, we thought we would take a different approach to 2026 predictions, not by giving our own, but by rounding up those that other people have established as the tent poles for 2026 as it relates to digital assets and stable coins. We have an opinion about those predictions. We're not going to disclose who actually said them, but we'll talk about the concept. So, Ryan, if you're ready, are you ready?

Ryan Rugg 1:37

I'm ready. And I love this approach because there's so many great ones out there that to kind of do a roundup on them to give everyone a quick, you know, overview and you know, add our insight. So there's five of them, starting with this one.

Karen Webster 1:51

So here we go. This is 2026 is the year that digital assets become a standard part of institutional portfolios. Those making this prediction say that across asset managers, banks, research firms, et cetera, there's this growing consensus that digital assets move from curiosity to a routine part of institutional allocation. What do you think?

Ryan Rugg 2:16

What I do think is we start to see a shift in the conversation. Not like should we or should we not, but more like how much? So, you know, current research that I've been seeing shows average allocation around like one or two percent. I think that becomes the normal dialogue, not rather than should we do this at all? Should we look at digital assets? Should we not? More about like how much of our portfolio should we be in it? Like, you know, you're starting to see the infrastructure mature. It's becoming much more normalized, like a kind of across the board. And you're seeing signals that the risk models, the custody approvals, the accounting treatment is really starting to mature. So I think that we'd, I don't know if I would use the word standard or normal, but I do think it becomes part of the daily dialogue that a lot of these investment committees are having now.

Karen Webster 3:05

But it sounds like it's not going to increase, but maybe more people will make it part of their portfolio.

Ryan Rugg 3:15

I agree. I definitely agree. You know, it's do you see all these headlines like the suits and ties have arrived. It's not just the hoodies anymore. And you're seeing that kind of signaling across the board in like headlines out there about the institutions that are starting to adopt it and have, you know, more confidence around this. Um, so I do think that it becomes more normalized, but to your point, like I still don't think it's a large percentage of anyone's portfolio in the near future until kind of that compliance and regulatory framework is really shaped up.

Karen Webster 3:46

Yeah. And I and I think as more people learn from the experience and the returns that they're getting, um, I think that will have a lot to do with it. So let's go to prediction number two. Tokenization of real world assets finally breaks through in 2026. Those who make this claim say that tokenized uh tokenized bonds, private credit, real estate move from pilots to real trading this year. We've been talking about this for years and years, but 2026 say those who believe it to be true that this will in fact be the year. Do you agree? And if so, what makes 2026 different?

Ryan Rugg 4:28

So I think one thing that makes 26 different than prior years, and you know, I've been doing this a decade now and tokenizing everything from bonds, equities, real estate, as you mentioned. But what was always missing was cash on chain. And now we've seen the proliferation of stable coins and tokenized deposit and really making it an efficient way to settle RWA on, you know, kind of trad by rails. So I think that's what's making, you know, 2026 very different than you know, prior years that we've seen. And you know, these regulatory signals are really paving the way for key differences for institutionals to start looking for this efficiency and capital relief and operational simplicity that hasn't been there. But I think what makes 26 different and is like really the growth of like cash on chain, so you can truly have that DVP. Because what really has happened in the past is they've kind of been shadow systems. They haven't been the system of record. You weren't truly able to have DVP delivery versus payment, because that's what this technology does. The benefit of tokenizing all these assets, bonds and equities and real estate is be able to have that instantaneous settlement, to be able to have cash and assets move frictionless, frictionlessly across the system. Because traditionally, you know, we've talked about before we have our cash accounts or investment accounts. Now you're bringing that together. So this is a fund foundational shift. But without cash on chain, and like there's various forms of that, tokenized deposits, stable coins, you weren't really able to do that. So I think that's what makes 26 very different than prior years. So what asset asset class do you think will go first at scale? At scale, I think it's set tokenized money market funds. We've already seen a lot of growth in what's called TMMFs right now. And if you think about, you know, it's really moving up the complexity scale. You know, if you cash, you can argue is one of the most simplistic assets. So, you know, tokenizing that, then going to tokenized money market funds, which is another, you know, pretty simplistic asset and moving up kind of the uh risk curve as you do, you see that. But I think that's the next one that we start to see, and you've seen several of the large asset managers out there issuing them and you know, continuing to grow their teams, growing their portfolios, maturing and how they're, you know, they're you know, TP providers, all that it's it's definitely maturing. I think that's the next one that really starts to scale.

Karen Webster 6:51

What has to happen in order for that to really become a significant reality by the end of the year?

Ryan Rugg 6:58

Well, I think a lot of enterprises have to be able to adopt for real time. You know, all everyone says, I want real time, you know, but moving that friction away, moving that T plus one, removing all that, moving away from batch settlement is a change. It's a change we've talked about in the past, like the treasury management ERP systems. It's a change. So like that has to adjust also before you see massive adoption across like large corporates. Like the asset manager asset managers are charging ahead, but the corporate adoption, I think, will take time for the infrastructure to develop on their side.

Karen Webster 7:33

But that is this, that is the forcing function against scaling or for scaling all of these things too, right? There's the interest, there's the technology, there's the cash on chain, as you point out. But there is that missing, that, that missing ingredient that will keep this from becoming the reality that everyone predicts it to be, unless that real-time capability is part of it.

Ryan Rugg 7:57

If you think about it, like we're kind of in the early 1990s of what digital money was, right? Technically foundational, economically promising, but institutionals were still developing, right? They still weren't, there was still, you know, issues with you know competing protocols, dial-up versus broadband, uh, you name it, security, centralized control versus decentralized, and like the business models were still developing. So like it's very reminiscent of that to me, of where we are now. Very promising. A lot of technology is definitely maturing, but still continuing to mature. Privacy, multiple protocols. Doesn't that sound kind of like where we are right now with digital assets?

Karen Webster 8:36

Yep. Yeah, true. Which means, you know, in the 1990s, that took that took a long time to evolve. We'll develop now. It's not gonna take that long. No. All right. Well, we'll uh we'll see how that prediction goes. Here's one that's sort of related. DeFi goes enterprise in 2026, moves away from retail use cases to the enterprise. I mean, the question is is this really a prediction or is this an observation of things that are already starting to happen?

Ryan Rugg 9:06

DeFi goes enterprise. I'm a bit skeptic about that one. True permissionless, decentralized protocols becoming mainstream without controls and regulations. And I don't know, seems unlikely to me. I see more of like a hybrid solutions. So not pure permissionless, right? I see where enterprises adopt like compliance-oriented, permission DeFi inspired solutions. So they can borrow, you know, smart contracts, tokenization, but with that governance of KYC, AML, controls, I just don't see highly regulated institutions going into that DeFi world. And you've kind of started to see that. Like an example is like, you know, ETFs, you know, a regulated product that sit on or alongside the blockchain rather rather than directly using the protocols. So it's kind of the core reason I think that we'll see hybrid, not necessarily like pure permissionless, like in the near term, especially in 26. I think that we'll have enterprise will have more of the adoption of blockchain tech with tokenized approximates, but regulated, if that makes sense.

Karen Webster 10:14

Yeah. Well, yes, I I agree with you, particularly given all the things that we talked about, which which are the gating factors for not only the infrastructure that's required, but the confidence and the trust that is essential to getting enterprise to adopt.

Ryan Rugg 10:30

I mean, it's a shift in how the financial plumbing works.

Karen Webster 10:34

Yeah.

Ryan Rugg 10:34

Right. It's not just like, you know, I think sometimes people are like, oh, it's a rebranding. It's not. I mean, it's a complete shift in the way that we've seen things, you know, underneath and the way that's going from batch to real time to a network being on 24-7. And I think that it's going to be, you know, an iterative process. Like, you know, we always talk about it's an evolution, not a revolution. And it's going to take time to kind of adopt us. And that's why I think that, you know, to go purely to like the DeFi space, I think that it has to have kind of those, you know, compliance and regulatory guardrails for large enterprises to feel comfortable for they, you know, even enter that space.

Karen Webster 11:12

Yep. All right. Here's one that's kind of interesting. When was the last time you heard CBDCs in the conversation?

Ryan Rugg 11:21

You know, it's funny. It's been very quiet, especially since like the EO came out in the US. But it's this was the first project I worked on in 2016. It was a CBDC project with like Bank of Canada. So, and at the time, you know, working at R3, we had 80 plus of the central banks working on this various different initiatives. So, you know, but it's been it's been quiet of late. I think stable coins have kind of taken, you know, I would say, you know, the headlines of late.

Karen Webster 11:51

But the well, the pr the predictions are that governments and central banks kind of rally now around CBDCs and this idea of digital minting their own digital money. You know, we saw the CBC, CBDC revolution as a as a consequence of Libra, remember? That was, I think, what got everyone focused on. Well, we need to do our own digital currency because we need to control our monetary supply. So that is what the 80 projects that you talked about really were were all about. But is there a there there right now?

Ryan Rugg 12:29

You know, it's interesting. Everyone's like, you know, what is the problem that we're actually solving with digital digital currency? What is like the you know, the core of it? And like to your point, like a lot of the projects that I initially started working on were, you know, with the private sector actors, if it's fintechs or stablecoin issuers or big tech issuing money like instruments, you know, central banks were trying to prevent like, you know, the mismatch between how money moves, right? And how the monetary control is enforced. So you saw that. And you know, you've seen cash supply across the globe collapsing in many countries, right? The people that actually using it. So this was, I would say, one way that, you know, various central banks wanted to remain competitive. But that being said, when I was at R3, the use cases that they were going after, wholesale, retail, hybrid, were all very different. But the one thing was that they realized a lot of central banks realized they had to update their infrastructure, right? They were built for batch settlement based, right? They weren't meant to be 24-7, 365. So you saw a lot of them looking at this as a way to update their infrastructure, kind of to move into the more digital evolution that we are now. So it'll be interesting to see what the year kind of brings, um, you know, across the globe with CBDC and who kind of leapfrogs and where it ends um at the end of this year. Or if it ever starts.

Karen Webster 13:53

I mean, there's a 2026 deadline for the digital euro. So we'll see, we'll see how that ends up playing out. But but don't tokenized deposits kind of allay some of the central bank concerns about losing control of monetary policy if you're just putting deposits on chain?

Ryan Rugg 14:09

Yes, because they have to meet all the regulatory requirements, LCR requirements within each country. You know, having launched Citytoken Service, you know, we are not circumventing any of the regular monetary policies within each of the countries we launched in. So yeah, 100%. But more the evolution of like stable coins that, you know, and that and like the big able to move money instantaneously. And anyone with uh internet access can, you know, upload a wallet. So that's a very different kind of fear that they have out there.

Karen Webster 14:40

Yeah. It just, yeah, I we'll we'll we'll see how it ends up. But all of these things require time, investment, integration. You know, we're still talking about making real time domestic real time interoperable. Yeah, exactly. There's just a lot of things that everyone has to think about prioritization and and where to put the time in the focus. And I'm not sure that CBDC's really become that project.

Ryan Rugg 15:07

It'll be fine to say yeah.

Karen Webster 15:09

No, it I think time will tell. Yep. All right, last prediction regulation stops being the headline and starts shaping use the word shaping, winners and losers. So that you know, we have regulation. Now it really becomes part of the the the how the ecosystem behaves as opposed to the regulation itself. Do you do you agree with that?

Ryan Rugg 15:36

I agree. I think regulation is going to become a framework, not the backdrop. So, like, you know, in earlier years you had headlines focused on uncertainty, enforcement actions, and fears, you know, what is allowed? What is that? I think we move away from that to like who can operate right sustainably under these new rules, where everyone is on a much more defined playing field, right? But everyone can, you know, but not everyone's gonna be able to afford to stay. I think that's gonna be a big question on, you know, the cap requirements, the custody standards, the disclosure, the audibility, the risk management. There's a lot. So I think the winners in my eyes are gonna be the compliant first movers and infrastructure.

Karen Webster 16:17

Yeah.

Ryan Rugg 16:18

So you're gonna see licensed entities versus unlicensed exchanges, you know. So under Mika in the EU or the state, federal US, you know, with this clear regulatory clarity, it's gonna become a competitive advantage. So I think that that's gonna be a big shift. It'll be a competitive advantage, not a constraint. So I think that yes, it becomes more of a framework, not a headline. It'll be in the backdrop about really framing the way that we can kind of shape the future with this.

Karen Webster 16:47

I think in in much the same way as in the fintech ecosystem, those who invested in compliance and you know respected regulation really ended up doing very well because it was going to be something they had to focus on either at the beginning or the end. And those who you know really did invest in compliance and regulation and and and all of that ended up being better off for it. Um, but there's who can absorb these costs, right? Right. That's what I'm so but but we still don't know the rulemaking has yet really to be decided. So there's still uncertainty. It has to be a little bit of the headline.

Ryan Rugg 17:28

Agreed, agreed, but I think it will become much more of a backdrop. But you know, who's gonna be able to, once these regulations are enacted, who's gonna be able to absorb these compliant costs and institutions that you know how to operate in really heavily in bior in regulated environments? Like we're talking financial services, right? Safety and soundness is like a huge like tenant with across like you know, our regulators, and that's really important. And like who can absorb these costs and putting these systems into place to ensure that for their clients?

Karen Webster 17:56

Well, who can absorb these costs and create a margin for the business, right?

Ryan Rugg 18:02

Yes, absolutely. These business models and revenue, you know, is a big, you know, open-ended question.

Karen Webster 18:10

So what do you think some of these predictions have missed? I mean, there are hundreds. We picked five. Um there are you know, every day there's 10 more predictions. Um what do you think thematically is missing from some of what you've seen, read, and and heard people talk about with respect to this space?

Ryan Rugg 18:33

Yeah. Having been building in this industry for quite some time now, I think that you know, the prediction that progress is going to be linear, which is a huge, huge, I think, misconception. You know, the reality from what I've seen is it's gonna be much messier, right? Uneven adoption, fragmented across jurisdictions, you know, so you'll have stalls and leaps and backs, you know. So I think more about reframing it versus linear kind of like, you know, adoption, like what part worked? Where? Under what controls? You know, again, this is a fundamental shift from account-based to wallet-based to, you know, so we have to think about the progress that we're gonna see kind of across the board. And I really think that, you know, one of the predictions that is gonna miss is that progress will be linear. I don't think it will be at all. I think it's gonna be much messier um and kind of uneven across the board.

Karen Webster 19:29

Do you think we'll notice a big difference by the end of 2026? I do. What will be what will be different in your in your view? What is that one prediction?

Ryan Rugg 19:40

So I think what's gonna be different, and like I kind of alluded to at the beginning, like this is gonna be part of a normal dialogue, right? About how clients are adopting and what they're doing. I think clients will have different progress, different enterprises will have different kinds of adoption across the board, but I think it'll be much more, I would say, Of the normal dialogue versus kind of like this outlier on you know emerging technology. I think it's going to become much more mainstream and like kind of how the internet didn't necessarily like, you know, I would say take away the old systems initially day one and kind of reshape them. And that's what we're doing. We're going through this reshaping, this always-on digital economy that we're moving towards. So I think that's going to be one of the big differences.

Karen Webster 20:24

Do you think we're underestimating some of the risk? I mean, none of the predictions really focused on anticipating risk or things that relate to safety and soundness as part of the fabric of what needs to move in lockstep with innovation and progress. How do you how do you feel about that?

Ryan Rugg 20:45

I don't think that, you know, from a risk standpoint, and again, being in a highly regulated institution, you know, anything that has to do with digital assets goes through the traditional checks and balances, but it's even more enhanced. Yeah. So because I mean, this is a funded foundational shift. I mean, like monitoring a network that's on 24-7 is very different than, you know, calculating NAVs on a minutely hourly basis first end a day. It's a it's a shift. And I would say that, you know, from my perspective, you know, I would say it's even more scrutinized than the traditional assets, right? Because it has that enhanced um, because it's a new technology.

Karen Webster 21:24

A prediction, and then we'll, and then we'll wrap. A prediction is how does this affect the profile of the corporate who's now looking at digital assets as part of the portfolio that they're managing? I mean, that that seems to me interesting too, right? Because it's not just the technology, it's the business of the business that's also being being reframed and shaped alongside of this new way of doing business.

Ryan Rugg 21:55

Yeah. And I think that that's a really good point. Like their portfolios are going to look very different. And again, this is a gradual, like this is a gr, it's not gonna happen overnight, right? A lot of the conversations we're having now, we'll be having next week and a few weeks after about how do you start to adopt this technology? How do you do it in a safe and sound way? What does it mean to your business model? What does it mean to have always on assets and cash? How does that reshape your suppliers? How does that reshape what you're doing with your end users? Like, you know, I had uh on a I did a webinar last last year with uh Derek, the treasurer of uh Pioneer, talking about how being able to pay, you know, his suppliers in Thailand real time, it's gonna change the way that business is done, reshaping the way that their portfolio is, but also their business. And I think that's what a lot of enterprises need to start thinking about.

Karen Webster 22:46

Yeah. And and planning for. And um, you know, the technology is there, the use cases and the business application needs to need to catch up because the regulatory framework is in place, as you point out. All right, Ryan. Well, here we did.

Ryan Rugg 23:00

We we actually got through number three. Amazing. Always fun catching up and talking about predictions and talking about what's going on in the market. We'll see you. Uh we'll see everybody in a week.

Karen Webster 23:12

Thanks. Bye now.

Narrator 23:16

That's it for this episode of the PYMNTS Podcast, the thinking behind the doing. Conversations with the leaders transforming payments, commerce, and the digital economy. Be sure to follow us on Spotify and Apple Podcasts. You can also catch every episode at PYMNTS.com/ podcasts. Thanks for listening.