U.S. markets face tokenization shift in stock access and collateral use

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U.S. markets tokenization shift

Highlights

SEC's temporary rules from September enable trading of tokenized stocks under strict conditions as regulators assess long-term guidelines for digital assets.
DTCC launched a tokenization service in October covering 34 securities, including major stocks and ETFs, by representing assets in tokenized form while retaining traditional custody systems.
Robinhood reports offering tokenized equities in over 120 countries, expanding global access to U.S. stocks and meeting demand for cross-border exposure outside U.S. market hours.

Hybrid infrastructure takes shape

As reported by CNBC, tokenization is emerging as a layered addition to existing market plumbing rather than a full replacement for traditional securities infrastructure. The Securities and Exchange Commission opened a temporary pathway in September for certain platforms to trade tokenized stocks under specific conditions, while it considers further action and more durable rules.

That model is already visible in products now in the market. Ondo Finance, a decentralized platform founded by former Goldman Sachs executives, issues tokenized notes backed by shares that remain held through traditional market infrastructure, allowing investors to hold and transfer the instruments on-chain while the underlying securities stay inside the conventional system.

Depository Trust & Clearing Corporation is moving from the opposite end of the market. Its tokenization service launched in October with 34 securities available to tokenize, including selected large-cap stocks, exchange-traded funds and U.S. Treasurys, letting assets held at DTCC be represented in tokenized form while still connected to existing custody and recordkeeping systems.

Global reach and financing efficiency

One of the clearest near-term use cases is broader international access to U.S. securities. For domestic investors, buying shares in companies such as Nvidia or Apple is already inexpensive and straightforward, but tokenization can lower access barriers for investors in markets where exposure to U.S. stocks is harder to obtain.

That pattern resembles the role stablecoins have played in widening access to U.S. dollars. Robinhood says its tokenized-equity offering is available in more than 120 countries outside the United States, with much of the demand coming from investors who previously needed more complex structures to gain exposure to U.S. securities, while Broadridge says the largest source of demand it currently sees is from global investors seeking access to U.S. shares during local market hours.

Private markets could become another important area for expansion. Tokenization can theoretically divide large private-market positions into smaller units for distribution through digital platforms, potentially reducing minimum investment sizes, although accreditation rules, disclosure requirements and the lack of automatic liquidity remain significant constraints.

The longer-term opportunity may lie in making securities more programmable after purchase. Once represented on blockchain systems, stocks or bonds can potentially be transferred more easily, pledged as collateral, used in lending transactions or moved across financial networks, improving capital efficiency in financing markets even as liquidity fragmentation and regulatory uncertainty remain key risks.

We recently wrote about Philippine bond reforms, which aim to modernize the market and broaden the investor base.

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