Tokenized Equities: The True Potential Lies in Composability

Tokenized equities have gained momentum, with the total value of all tokenized equities in circulation surpassing $465 million and a monthly transfer volume of over $287 million. This growth signifies a shift in how traditional assets are perceived and utilized within the digital economy. The real potential of tokenized equities lies in their composability within the DeFi ecosystem, unlocking new use cases for companies and investors.

Tokenized equities have gained significant momentum, with the total value of all tokenized equities in circulation surpassing $465 million and a monthly transfer volume of over $287 million. This growth signifies a shift in how traditional assets are perceived and utilized within the digital economy. The real potential of tokenized equities lies in their composability within the DeFi ecosystem, unlocking new use cases for companies and investors.

The tokenization of equities involves converting traditional stocks into digital tokens that can be traded on blockchain platforms. This process has been driven by the desire to streamline access across the entire asset lifecycle, making stocks more efficient and accessible. Companies like Robinhood, Kraken, and Coinbase have been at the forefront of this trend, offering tokenized stocks to their clients.

Robinhood, for instance, has launched tokenized stocks on the Ethereum Layer 2 solution Arbitrum, with plans to launch its own proprietary blockchain by the end of the year. The platform offers over 200 stocks and ETF tokens to its European client base, including names like Apple and Microsoft. Trades are commission-free and tradable 24 hours a day, five days a week. However, if users want to access tokenized stocks, the tokens remain locked within the Robinhood platform and cannot be transferred to external wallets or used in DeFi applications.

Kraken has taken a different approach with its xStocks product, offering over 60 tokenized US stocks on various platforms. Kraken's model allows tokens to be transferred to personal wallets and interact with DeFi protocols like Raydium and Kamino. However, similar to other offerings, xStock token holders do not have voting rights or direct legal ownership of the underlying shares.

The growth of tokenized equities has not been without challenges. One of the key issues is the lack of shareholder rights and voting privileges, which are essential for institutional investors. Additionally, liquidity remains a concern, with thin order books and price dislocations outside traditional market hours. Despite these challenges, the trend of tokenizing stocks continues to gain traction, with the support of leading TradFi institutions and regulators.

The future of tokenized equities lies in hybrid models that combine the benefits of both traditional and digital asset markets. As regulatory frameworks evolve and infrastructure for tokenized securities is established, the potential for tokenized equities to transform the capital markets becomes increasingly clear.

References:
[1] https://www.investopedia.com/the-race-to-launch-tokenized-stocks-is-on-heres-what-that-means-for-us-investors-11784560
[2] https://www.sygnum.com/blog/2025/08/13/tokenised-stocks-an-emerging-trend-or-hype/