Tokenization has become one of crypto’s biggest promises. The idea sounds simple: take stocks, bonds or funds, and move them onto blockchain rails that operate around the clock.
Supporters say the result could reshape financial markets. Trading could happen 24/7.
Settlement could become nearly instant instead of taking days. Investors could move collateral across markets faster, and firms could cut back-office costs tied to legacy systems built decades ago.
When tokenized securities trade around the clock, it gives investors more flexibility to lend or pledge shares as collateral and provides issuers with better data on who owns and trades their stock. That visibility could attract stronger demand for shares and make it cheaper for companies to raise money in public markets.
But turning traditional securities into blockchain-based assets is proving much harder than simply creating digital tokens that mirror stocks. That distinction is becoming increasingly important across Wall Street.
Last week, Bullish (BLSH), the owner of CoinDesk, added another layer to that trend when it announced a $4.2 billion deal to acquire transfer agent Equiniti. The acquisition targets one of the least visible but most important parts of financial plumbing: shareholder recordkeeping.
Transfer agents maintain official ownership records for public companies. They track who owns shares, process stock issuances, handle dividend payments and manage corporate actions such as stock splits.
Bullish CEO Tom Farley argued during the company’s earnings call on Thursday that much of today’s tokenized equity market consists mainly of “wrappers” or IOUs rather than actual blockchain-native securities.
In many current models, tokenized stocks are synthetic products that mirror traditional shares held elsewhere. Investors gain exposure to the stock price, but the token itself is not necessarily the legally recognized share recorded on the company’s books.
Farley said owning the transfer-agent layer could allow tokenized shares to be issued directly into shareholder records from the start. That is a major structural difference, as it allows shareholders and executives of publicly traded companies to learn more about each other.
Issuers get insight into how often their shares are actually trading, who may be trading them, and how many investors are holding long-term, Farley said in the call.
“If you go talk to the [investor relations] and the [chief finance officers] of public companies, which I’ve done most of my career, frankly, the number one thing they will tell you is they’re in the dark, that the nested infrastructure that’s built up in this country over 200 years means that they get very, very little information,” he said. “We live it as a public company. It’s almost comical how little information we get about our own shareholders. So, the tokenization, the promise of more information, is very, very compelling.”
From an investor standpoint, tokenized equities provide greater opportunities to trade during weekends or hours when traditional U.S. markets are closed, he said, pointing to investors in Asia who may want to trade U.S. securities as an example.
Accounting for tokenized stocks
But for existing large financial firms, crypto companies and index providers are now grappling with other basic questions, like: what happens when tokenized shares begin mixing directly with traditional equity markets?
For FTSE Russell, the issue is no longer theoretical. Kristine Mierzwa, the firm’s head of digital assets, said tokenized equities are already forcing conversations around how markets calculate liquidity, market capitalization and index inclusion.
“As you’re seeing companies like Galaxy issue shares that were tokens, how do you account for those in the full market cap?” Mierzwa said in an interview with CoinDesk. “Do those shares go into full float?”
That question cuts to the center of how modern equity indexes work.
Indexes such as the Russell 3000 rank companies partly through float-adjusted market capitalization, which measures the value of shares available for public trading. If companies begin issuing some shares through traditional exchanges while other shares exist as blockchain-based tokens, index providers need to decide whether those tokenized shares should be included in official calculations.
The answer is not obvious. Today, many traditional asset managers still cannot directly custody tokenized securities. Pension funds, mutual funds and large institutional investors often rely on approved custodians and regulated market infrastructure that were not designed for blockchain-native assets.
Mierzwa said some of FTSE Russell’s advisory committees currently view tokenized shares cautiously for that reason. “If those shares are not something a large asset manager can custody today, then they would not want us to consider them in the calculations,” she said.
That stance may not last long. Major custodians and banks have accelerated blockchain projects over the past two years as tokenization shifted from crypto experimentation into a broader infrastructure race.
“I think we’re going to move to a point where every custodian is going to be custodying tokens,” Mierzwa said.
The conversation has intensified after a series of recent tokenization announcements from both crypto firms and traditional financial companies.
BlackRock, Franklin Templeton and Apollo have all expanded tokenized fund products. Robinhood (HOOD) and Kraken have explored tokenized equities. Coinbase-backed projects continue pushing stablecoins and blockchain settlement deeper into capital markets.
Mark Wendland, CEO of Canton Network parent Digital Asset Holdings, described the divide as the difference between “true native issuance” and tokenized lookalikes.
“A security is a security,” Wendland said in an interview with CoinDesk, referencing recent statements from U.S. securities regulators that tokenized securities should be treated similarly to traditional securities under capital rules.
The distinction matters because blockchain settlement changes how ownership moves through markets.
Today, most stock trades still rely on layers of intermediaries and delayed settlement systems. Even after a trade is completed, moving securities and collateral between parties can take one or two days. Tokenized securities could compress much of that process into near real-time.
‘Much faster’
Wendland said the biggest opportunity may not even be 24/7 trading. Instead, he pointed to collateral mobility and capital efficiency.
In traditional finance, large trading firms constantly move collateral between brokers, clearinghouses and counterparties. Delays in settlement tie up capital that cannot be reused elsewhere.
“If collateral normally moves on a T+1 or T+2 basis and now it’s moving more real-time, the throughput of that collateral mobility is much faster,” Wendland said.
That means firms could potentially deploy the same capital more efficiently across markets.
Imagine a trading firm posting Treasury securities as collateral in the morning. Under current systems, retrieving excess collateral can take days. On blockchain rails, those assets could theoretically move back within hours or minutes.
Supporters believe those efficiency gains could eventually save firms billions of dollars across equity, repo and derivatives markets.
Price discovery
Still, tokenization creates entirely new market structure problems. One issue involves pricing.
Traditional stock markets close overnight and on weekends. Tokenized assets do not necessarily stop trading. Mierzwa raised a hypothetical example involving Apple shares trading on blockchain markets during the weekend. If tokenized Apple shares trade at one price on Saturday but Nasdaq opens sharply lower Monday morning, firms must decide where true price discovery occurred.
“You really shouldn’t see that much of a discount,” she said. “But it will be interesting to see where the price discovery is coming from.”
The problem becomes even more complicated if multiple tokenized versions of the same stock exist simultaneously.
Some tokens may include dividend rights. Others may not. One version may settle through a regulated custodian while another trades freely on a decentralized infrastructure. That could effectively create multiple blockchain-based share classes tied to the same company. “The pricing and the liquidity could be different,” Mierzwa said.
Index providers may eventually need methodologies similar to traditional class A or class B shares, combining liquidity across different tokenized versions of the same security.
Timing also creates operational headaches.
Many financial benchmarks rely on synchronized market data across currencies, equities and derivatives. But tokenized markets operating continuously may not align neatly with traditional market hours.
For example, foreign exchange hedging markets still largely close on weekends. If tokenized equities trade nonstop while currency hedges pause, index providers may need interpolation models to calculate benchmark values during those gaps.
Even stablecoins introduce related challenges.
Many stablecoin issuers back their reserves with U.S. Treasuries. Yet Treasury markets do not operate continuously. If stablecoin holders demand large redemptions during weekends, issuers could face liquidity mismatches between always-on crypto markets and traditional financial rails.
Those concerns are part of why banks are increasingly building private blockchain systems rather than connecting directly into open decentralized finance networks.
Mierzwa said many large financial institutions are effectively creating “walled gardens” where tokenized assets can move within tightly controlled environments that preserve compliance, identity verification and security standards.
That approach may frustrate parts of crypto’s anti-establishment culture, but it reflects how traditional finance adopts new infrastructure. Banks see efficiency gains from blockchain settlement while still wanting oversight, insurance protections and regulated counterparties. At the same time, crypto-native firms continue pushing innovation faster than many traditional institutions expected.
“I don’t think it’s going to take 10 years,” Mierzwa said. “We’ll start seeing more interoperability in the next two to three years.”
