Imagine a future where major US stocks, such as Tesla and Nvidia, can be traded continuously, with transactions finalized within mere seconds. This vision is gradually becoming a reality, as the cryptocurrency sector, alongside leading financial institutions, aims to popularize tokenized stocks—digital counterparts of traditional shares that are recorded on a blockchain. Recently, Nasdaq sought regulatory approval to allow the trading of tokenized stocks on its exchange. Should the Securities and Exchange Commission (SEC) grant this request, it would represent a significant advancement in integrating traditional finance with blockchain technology. The SEC has opened the proposal for public input, with a ruling anticipated within 45 to 90 days.
Tokenization: A Transformative Force
“Tokenization is like a freight train. It can’t be stopped, and eventually, it’s going to eat the entire financial system,” stated Vlad Tenev, CEO of Robinhood, at a recent crypto conference in Singapore. Over the summer, Robinhood introduced over 200 US stock and ETF tokens in Europe. Meanwhile, prominent Wall Street firms, including Goldman Sachs and BlackRock, have begun offering tokenized money-market funds, with BlackRock reportedly considering the introduction of tokenized ETFs.
Revolutionizing the Investment Landscape
Robinhood’s launch of more than 200 US stock and ETF tokens in Europe has not yet been mirrored in the United States. BlackRock’s CEO, Larry Fink, emphasized in his annual newsletter that “every stock, every bond, every fund — every asset — can be tokenized. If they are, it will revolutionize investing,” suggesting that markets could operate without closing and transactions that typically take days could be completed in seconds.
Enhancing Accessibility for Investors
Proponents of tokenized stocks argue that they enhance trading accessibility for investors, facilitate asset exchanges through a single blockchain transaction, and broaden their potential applications in lending and as collateral. Kevin Rusher, founder of RAAC, remarked, “These are financial tools that the retail investor is not used to. It lowers the barrier to entry.” According to a report by Boston Consulting Group and Ripple, the market for tokenized real-world assets—including stablecoins, bonds, real estate, and commodities—could grow from approximately $600 billion in 2025 to nearly $19 trillion by 2033.
Challenges in the Market
However, the international rollout of tokenized equity products has encountered hurdles. In Europe, tokens linked to popular stocks like Apple and Amazon have experienced low liquidity, resulting in price discrepancies with their actual stock counterparts. Additionally, concerns regarding third-party issuers have arisen. For instance, when Robinhood announced it would offer tokenized shares of private companies OpenAI and SpaceX to European clients, OpenAI quickly clarified that those shares were not representative of its equity and that it did not endorse the offering.
Regulatory Scrutiny and Future Considerations
In August, the World Federation of Exchanges, which includes Nasdaq, called for enhanced regulatory oversight of tokenized stock offerings, warning that these products are being marketed as equivalents to stocks even when they are not. Nasdaq’s proposal in September highlighted that the tokenized securities it plans to list would maintain the same value and shareholder rights as their traditional equivalents. Experts believe that for digital assets to gain widespread acceptance in the US, a more thorough regulatory framework is essential.
The Need for a Unified Regulatory Approach
“Currently, a lot of token-related investment products and services are being regulated kind of on an ad hoc basis at the state and federal level,” noted Jerry Comizio, an associate director at American University’s Washington College of Law. He added that there is no comprehensive regulatory overview akin to what exists in other sectors, such as banking, posing a significant challenge for the industry. The SEC has asserted its regulatory authority over tokenized stocks, affirming in a July statement that “tokenized securities are still securities.”
The Surge in Tokenization and Future Prospects
This year, the tokenization trend has gained traction, coinciding with new legislation that has led to an uptick in stablecoins—digital tokens tied to the US dollar. Cryptocurrencies like Ether and Solana have also seen price increases as interest in real-world assets transitioning to blockchain platforms grows. Many experts in the cryptocurrency field foresee a future where major corporations such as Tesla and Amazon issue shares directly on blockchain networks. “Eventually, all financial markets will be based on the same technology as crypto is today,” predicted Kevin de Patoul, CEO of Keyrock, a blockchain liquidity provider based in Brussels.
