Imagine a future where leading US stocks such as Tesla (TSLA) and Nvidia (NVDA) can be traded continuously, with transactions finalized in mere seconds. This vision is becoming increasingly feasible as the crypto sector, in collaboration with major players on Wall Street, pushes for the integration of tokenized stocks—digital representations of conventional shares recorded on blockchain technology—into the mainstream financial landscape. Last month, Nasdaq (NDAQ) submitted a request to regulators seeking permission to facilitate the trading of listed stocks in tokenized formats on its exchange. Should the Securities and Exchange Commission (SEC) approve this request, it would signify a major milestone in the convergence of traditional finance and blockchain technology. The SEC has opened the proposal for public feedback, with a decision anticipated within 45 to 90 days.
Tokenization’s Irresistible Momentum
“Tokenization is like a freight train. It can’t be stopped, and eventually it’s going to eat the entire financial system,” remarked Vlad Tenev, CEO of Robinhood (HOOD), during a recent crypto conference held in Singapore. This summer, Robinhood expanded its offerings by launching over 200 US stock and ETF (exchange-traded fund) tokens in the European market. Concurrently, prominent Wall Street firms, including Goldman Sachs and asset management titan BlackRock, have already introduced tokenized money-market funds, with BlackRock reportedly considering the launch of tokenized ETFs as well.
The Potential of Tokenization in Finance
“Every stock, every bond, every fund — every asset — can be tokenized. If they are, it will revolutionize investing,” stated Larry Fink, CEO of BlackRock (BLK), in his annual newsletter released in July. He emphasized that if tokenization were to become widespread, markets would operate continuously, and transactions that presently take days to settle could occur within seconds. Advocates argue that tokenized stocks enhance trading accessibility for investors, allow for asset exchanges through a single blockchain transaction, and broaden their applicability in lending and collateralization scenarios. “These are financial tools that the retail investor is not used to,” noted Kevin Rusher, founder of RAAC, a firm specializing in real-world asset borrowing and lending. “It lowers the barrier to entry.”
Market Growth and Challenges
The market for tokenized real-world assets—including stablecoins, bonds, real estate, and commodities—is projected to expand dramatically, climbing from approximately $600 billion in 2025 to nearly $19 trillion by 2033, according to estimates from the Boston Consulting Group and Ripple. However, the initial rollout of tokenized equity products abroad has faced challenges. In Europe, tokens linked to well-known stocks such as Apple (AAPL) and Amazon (AMZN) have encountered issues with low liquidity, causing their prices to diverge from the actual stock values. Questions regarding third-party issuers have also emerged; for instance, when Robinhood announced in June its intention to offer tokenized shares of private companies like OpenAI (OPAI.PVT) and SpaceX to European users, OpenAI quickly clarified that these offerings were not representative of actual OpenAI equity.
Regulatory Scrutiny and Future Prospects
In August, the World Federation of Exchanges, which includes Nasdaq, called on regulators to intensify their oversight of tokenized stock products, asserting that many are marketed misleadingly as stock tokens or equivalents. Nasdaq’s September proposal stressed that the tokenized securities it plans to list would hold identical value and shareholder rights as their traditional counterparts. For tokenized stocks to gain widespread adoption in the United States, experts suggest that a more robust regulatory framework is essential. “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,” explained Jerry Comizio, associate director of the business law program at American University’s Washington College of Law. “There’s no central consolidated overview of this, the way there is in other industries like banking. That’s going to be the challenge.”
The Future of Tokenization in Financial Markets
The SEC has indicated that tokenized stocks fall under its jurisdiction, asserting in a statement issued in July that “tokenized securities are still securities.” In the US, the momentum behind tokenization has accelerated in parallel with new legislation this year that has spurred a rise in stablecoins—digital tokens linked to the value of the US dollar. Cryptocurrencies like Ether (ETH-USD) and Solana (SOL-USD) have seen price increases as enthusiasm for integrating real-world assets into blockchain networks grows. Many within the crypto sector foresee a future where major companies such as Tesla or Amazon (AMZN) could issue shares directly on blockchain. “Eventually, all financial markets will be based on the same technology as crypto is today,” stated Kevin de Patoul, CEO of Keyrock, a Brussels-based blockchain liquidity provider.
