“Tokenized” Stocks Are Breaking Down Barriers. Here’s What Investors Need to Know.

Today’s stock trading platforms were originally developed for phones with cords, but Robinhood‘s (HOOD) recently launched tokenized stock program is an effort to transition to high-speed trade processing networks based on public blockchains. This new service allows users to purchase crypto tokens that represent shares in companies like Apple, Tesla, and even private ones, with plans to bring this feature to the U.S. market soon.

The guarantee offers continuous trading around-the-clock, swift transaction confirmations, and a direct purchasing option for stocks using cryptocurrencies. This aspect is crucial because the forthcoming investment in crypto might primarily come through recognizable stock symbols. Here’s what you should understand about this pattern, as well as strategies to capitalize on it while investing.

Tokenized assets are going mainstream

Consider a tokenized stock as a digital counterpart to traditional shares, which may grant ownership of the underlying stock (though this isn’t guaranteed at all times).

In an ideal scenario, a company releases a digital token when they own shares of the stock being converted. An investor purchases this token from them, and theoretically, the token owner has the option to trade the token for actual shares of the stock if desired. The value of the token is closely linked to the worth of the underlying stock because it can be exchanged for it.

An alternative, less favorable method for implementing tokenization is creating a token that imitates the price fluctuations of an underlying asset, but without the token creator holding any shares themselves. Often, these tokens mimic the performance of shares from private companies, which aren’t publicly traded in highly active markets like those for public companies. Some of these private companies aren’t even legally allowed to be traded without explicit permission from the share issuer.

In this kind of scenario, issuers of these tokens offer a financial product that has no connection whatsoever to the real worth of the asset. Consequently, there’s no guarantee against suffering losses. While it might be feasible to sell these tokens to someone more gullible, they are not investment-quality and it is strongly advised against purchasing them.

Robinhood admits that when it comes to tokens for public companies they manage, these tokens are secured with actual company shares. However, the OpenAI and SpaceX tokens are solely supported by Robinhood’s risk management desk, implying that token holders have no right to the underlying businesses if things take a turn for the worse. Essentially, Robinhood is issuing types of tokenized stocks that may not be as valuable or investable, along with tokenized shares based on their own assets.

But why bother with tokenization of stocks in general? In short, convenience.

In traditional U.S. stock trades, settlement occurs the following day, they come with fees, and they’re unavailable during nights and weekends. On the other hand, a blockchain can expedite a tokenized trade in mere seconds for just pennies, without ever needing to rest. Robinhood anticipates that this efficiency and extended trading hours could attract more users.

Investors stand to gain significantly if they strategically invest ahead of this growing trend. According to Boston Consulting Group (BCG), the market for tokenized real-world assets, such as stocks, could reach approximately $16.1 trillion by 2030. Currently, only a small fraction, around $22 billion, is tokenized on the blockchain. However, this is rapidly changing, with stock trading volume accounting for $528 million, but expect that to increase quickly.

One chain could be the biggest beneficiary here

Step into the realm of Solana (SOL), a network boasting the capability to process thousands of transactions every second, typically charging just pennies. These characteristics make it an appealing option for the future of tokenized stock trading.

The worth of assets on the Solana platform that are divided into digital units (tokenized assets) has increased by a staggering 140% as of mid-July, surpassing $101.6 million. This growth outpaces the entire tokenization market and accounts for nearly all the expansion seen in the tokenized stocks sector this year. The xStocks project, which was launched on Solana at the end of June, has attracted over 40,000 cryptocurrency wallets within its first week, providing more than 50 digital representations (tokenized versions) of U.S. stock exchange tickers.

Currently, Solana’s blend of high transaction speed and affordable costs places it ahead in the market for tokenized stocks. If this sector adheres to the broader tokenization plan, liquidity will attract investment, strengthening its lead. However, regulation might impede the sector, or a swift competitor could arise, so manage your investments prudently to account for these possibilities.

Investors interested in the tokenization wave thus have two main options.

1 Option: It’s wise to purchase Robinhood stock, hoping it can expand its platform without upsetting regulatory bodies, and ensuring its experiment with tokenized shares of private companies doesn’t lead to significant consequences.

It would be wiser to invest in a small portion of the tokenization infrastructure, such as Solana or another platform expected to become a central hub for trading tokenized stocks. If tokenized stock trading becomes more common and widespread, an early investment in Solana might prove to be a smart move.

From my perspective, unlike a traditional company like Robinhood, Solana’s blockchain network accommodates numerous tokenized stock issuers. This setup significantly reduces the overall regulatory risk compared to investing in Robinhood. However, while Robinhood’s ventures into tokenization might potentially generate substantial wealth for investors, it appears that its approach to issuing tokens may be falling short in terms of investor protection and education.

2025-07-23 20:35

Tokenized assets are going mainstream

One chain could be the biggest beneficiary here

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