Imagine a world where prominent US stocks, like Tesla (TSLA) or Nvidia (NVDA), are traded without interruption, 24/7, and transactions finalize almost instantly.
This vision is gaining traction. The cryptocurrency space, alongside major players on Wall Street, are pushing to bring tokenized stocks into the mainstream. These are digital representations of traditional stocks, recorded on a blockchain ledger.
Nasdaq (NDAQ) recently sought regulatory approval to enable the trading of its listed stocks in tokenized form. A green light from the Securities and Exchange Commission (SEC) would be a significant step in integrating traditional finance with blockchain technology. The SEC opened the proposal for public comment in September, with a decision anticipated approximately 45 to 90 days after its publishing.
Robinhood (HOOD) CEO Vlad Tenev remarked at a Singapore crypto conference that “tokenization is unstoppable, ultimately encompassing the entire financial system.” This past summer, Robinhood introduced over 200 US stock and ETF (exchange-traded fund) tokens to its European user base.
Major financial institutions, from Goldman Sachs to BlackRock, the asset management firm, are already offering tokenized money market funds. Furthermore, BlackRock is reportedly considering the launch of tokenized ETFs.
· REUTERS / Reuters
“Tokenization is applicable to all assets – stocks, bonds, funds. It would revolutionize investing,” stated BlackRock (BLK) CEO Larry Fink in the company’s annual shareholder letter. “Markets would operate continuously, and transactions would settle within seconds, drastically reducing current processing times.”
Proponents believe that tokenized stocks democratize trading, facilitate asset exchange through single blockchain transactions, and broaden their usability in lending and collateralization.
Kevin Rusher, founder of RAAC, a firm specializing in real-world asset borrowing and lending, noted that “these financial instruments are unfamiliar to the average retail investor,” adding that tokenization effectively “lowers the barrier to entry.”
The market for tokenized real-world assets, encompassing stablecoins, bonds, real estate, and commodities, is projected to soar from approximately $600 billion in 2025 to almost $19 trillion by 2033, according to estimates from Boston Consulting Group and Ripple.
However, the introduction of tokenized equity products in some international markets has faced challenges.
In Europe, tokens mirroring popular stocks like Apple (AAPL) and Amazon (AMZN) have struggled with limited trading activity, resulting in price discrepancies compared to the underlying stocks.
Concerns have also arisen regarding the integrity of third-party issuers.
