In less than two years, the tokenized securities market has experienced nearly "explosive" growth. According to RWA.xyz data, the total market capitalization of Real World Asset (RWA) tokenization has surpassed $2.8 billion, with on-chain stocks reaching $420 million—compared to less than $5 million in early 2024, representing an over 80-fold increase in just two years.

Driving this wave is the collective entry and accelerated deployment of businesses: Robinhood has launched tokenized private equity products covering popular targets such as SpaceX and OpenAI; Kraken's XStocks has listed over 50 tokenized versions of U.S. stocks and ETFs; Ondo's Wall Street 2.0 has brought over 100 U.S. stocks and ETFs to Ethereum; Galaxy Digital was the first to move its Nasdaq-listed stock to a public chain; SBI Holdings partnered with Startale to establish an on-chain trading platform in Japan. Whether crypto-native companies or traditional financial giants, everyone is vying for the first-mover advantage in tokenized stocks on this emerging track.

This is not just a race between crypto and traditional finance but is also seen as a potential "revolution" against the traditional exchange model. On September 8, the world's second-largest exchange, Nasdaq, chose to actively engage by submitting an application to the U.S. Securities and Exchange Commission (SEC) to officially embrace tokenized stocks, attempting to move this transformation from a "peripheral experiment" to the core stage of Wall Street.

New Packaging in the Old System: The Operational Logic of Tokenized Stocks

Tokenized stocks are not a new asset out of thin air but a new "packaging form" of traditional equity. The key lies in how to integrate blockchain's ledger and settlement capabilities on top of the existing financial infrastructure. In the rule proposal submitted by Nasdaq to the SEC, this logic is articulated very clearly: in the future, when placing an order, investors can choose the "tokenized settlement" option in the system, and trade matching will still be completed in the same order book without receiving additional priority due to tokenization. The real change occurs after the trade—Nasdaq will transmit the settlement instructions to the Depository Trust Company (DTC), which will transfer the traditional stocks to a special account, mint equivalent tokens on-chain, and then distribute them to the broker's wallet. This way, tokenized stocks and traditional stocks remain completely identical in the trading process, with on-chain mapping introduced only at the settlement layer.

This design means that tokenized stocks are not separate from the National Market System (NMS) but are instead incorporated into the existing regulatory and transparency framework: trades are still recorded in the National Best Bid and Offer (NBBO), ownership and voting rights are fully aligned with traditional stocks, and trade surveillance is jointly conducted by Nasdaq and FINRA. In other words, tokenization here is not "starting from scratch" but rather an upgrade to the underlying infrastructure. "We are not looking to replace the existing system but to provide the market with another, more efficient, and more transparent technological option," said Chuck Mack, Senior Vice President of Nasdaq's North American Market, in an interview. "Tokenized securities are simply the same asset expressed in a new form on the blockchain." This approach can leverage both the existing market structure and clearing system, while allowing the blockchain to become a new generation of custody and settlement tool.

From a more macro perspective, the appeal of tokenization lies in addressing several core pain points of the capital market. First is settlement efficiency— in the current system, stock trades usually take T+1 or even longer to settle, while on-chain settlement can almost achieve real-time clearing, reducing counterparty risk. Second is trading hours and accessibility— traditional exchanges follow a market open and close system, and cross-border investments require layers of intermediaries, while tokenized stocks can theoretically trade 24/7 and are more easily accessible to foreign investors through blockchain wallets. Lastly, asset programmability, which means that proxy voting, dividend distribution, and even corporate governance can all be automated and made transparent with smart contract support.

In the long term, Nasdaq has positioned tokenization as the next iteration of capital market infrastructure. According to the plan, with the completion of the DTC upgrade, on-chain settlement functionality will earliest go live in the third quarter of 2026, at which point tokenized stocks will run parallel to traditional stocks in the regulated U.S. market. Nasdaq has explicitly refused to advance through exemptions or workarounds, not only upholding investor protection principles but also avoiding the risk of liquidity fragmentation.

Different Paths for Various Players

xStocks: Compliance Custody + DeFi Composability

xStocks, driven by Backed Finance, is built on the DLT regulations of Switzerland and Liechtenstein, establishing an SPV holding real stocks and minting tokens on-chain at a 1:1 ratio. The tokens are legally asset-backed priority debt certificates, backed by trustees and real-time proof of reserves. The issuance and trading sides are separate, and the tokens can circulate on centralized exchanges like Kraken, Bybit, as well as access DeFi protocols on Solana like Jupiter and Kamino. The highlight of this model is its openness and transparency, truly possessing cross-market, cross-protocol composability, but the downside is that liquidity remains limited, and the market size is not yet comparable to on-chain solutions.

Robinhood: A Licensed Broker's Closed-Loop On-Chain Experiment

Robinhood, on the other hand, has taken a completely different approach. Leveraging its MiFID II license through a Lithuanian subsidiary, it purchases and custodies US stocks, ETFs, and private equity within a compliant framework, then mints corresponding tokens on the Arbitrum chain. All token transactions are completed within Robinhood's proprietary app in a closed loop, with tokens being real-time mapped to actual stocks, ensuring "on-chain quantity = custodied position." The advantage of this model is regulatory control, consistent user experience, and the ability to achieve fractional share dividends and on-chain settlement. However, the tokens are almost unable to freely transfer, lacking open liquidity. Robinhood sees tokenization as a tool to expand its financial landscape, rather than just a market innovation.

Galaxy: A Publicly Listed Company's Self-Onboarding "Native Token"

In contrast to the previous examples, Galaxy Digital has chosen to directly move its stock listed on Nasdaq to the blockchain. It has partnered with SEC-registered transfer agent Superstate to allow shareholders to convert GLXY common stock 1:1 into tokenized shares on Solana through a compliant process. Unlike "mirror tokens" or "synthetic contracts," these tokens represent legally recognized ownership rights, including full voting and dividend rights. Galaxy's initiative has achieved for the first time "token rights equal to stock rights," laying the foundation for a true on-chain equity market. However, its liquidity is still in its early stages, supporting only peer-to-peer trading among registered users for now. Further deregulation is needed to move towards a fully-fledged secondary market.

Ondo: Building Wall Street 2.0

Ondo Finance, founded by a former Goldman Sachs executive, is following the path of "institutional-grade packaging + open distribution." The newly launched Ondo Global Markets platform tokenizes over 100 US stocks and ETFs on Ethereum, providing a legal on-chain investment gateway for non-US investors. Its model involves Ondo purchasing and custoding real stocks through a licensed broker, then minting tokens on-chain at a 1:1 ratio, ensuring each token possesses full economic rights, including dividends and corporate actions. Ondo's highlights are scalability and openness—it not only features daily reserve proof, bankruptcy isolation, and third-party custody but also supports cross-chain interoperability and DeFi integration. Users can invest in star stocks like Apple and Tesla and use tokens as collateral for lending and automated strategies. Ondo has turned tokenization into a "global financial supermarket," aiming to merge Wall Street's liquidity with blockchain's transparency, creating a truly Wall Street 2.0.

Related Reading: "From Robinhood to xStocks, How is US Stock Tokenization Achieved?"

Embrace or Venture? Wall Street's On-Chain Test

The Nasdaq has officially submitted a tokenized stock trading application to the SEC, seen as a "core attempt" by Wall Street in its digitization process. The core of this proposal is that tokenized stocks should have the same rights and protections as their underlying securities, with trading matching still taking place in the existing order book and settlement being handled by the DTC to mint equivalent tokens on-chain. This means that tokenization is no longer a marginal experiment but may become part of the US capital market's institutional infrastructure. Compared to Robinhood or xStocks, which are still based on price mapping and contract notes, Nasdaq's approach is more thorough—it becomes the first to fully migrate all shareholder rights (voting rights, dividend rights, governance rights) to the blockchain in a tokenized scheme. This means that investors no longer receive a "shadow" of the stock but a digital stock entity with complete rights.

Nasdaq CEO Tal Cohen stated, "Blockchain technology has provided unprecedented possibilities to shorten the settlement cycle, modernize proxy voting, and automate corporate actions." In other words, Nasdaq is not aiming to overthrow the old order but hopes to upgrade the market's underlying architecture with minimal institutional friction, ensuring that core principles of investor protection and market transparency are not compromised. For regulators, this posture sends a positive signal—rather than allowing tokenization to grow wildly overseas or in a gray area, it is better to directly incorporate it into a regulated framework.

However, negative voices also exist. JPMorgan Chase bluntly stated in a research report that tokenization of bonds and stocks "has not yet seen significant adoption outside of crypto-native companies," cautioning the market not to overstate short-term prospects. Citadel Securities warned that if regulators rush ahead without establishing clear rules, it may actually pose market risks. Globally, the World Federation of Exchanges (WFE) also wrote to regulatory agencies, expressing concerns that tokenized stocks may "mimic" real equities but lack shareholder rights and protection measures, calling for strengthened legal applicability and custody frameworks. These doubts indicate that although the potential of tokenization is enormous, institutional implementation still requires a lengthy period of adjustment.

Conclusion

The Nasdaq proposal is not just a technical adjustment, but an institutional "experiment." If the SEC ultimately approves it, this will mark the first time blockchain technology has taken center stage in a major U.S. stock market, potentially laying the groundwork for future 24/7 trading, instant settlement, and smart contract governance. However, before all this truly unfolds, the market still needs to observe: whether regulators can provide a clear framework, whether investors can trust this new model, and whether tokenization can really bring value beyond the traditional market.

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