A massive tech update will bring faster, cheaper trading to Wall Street. Get ready for stocks on a blockchain

A call for reform from Robinhood CEO Vlad Tenev and others has led to advancements, with stock trades now settling one day faster than in 2021. Furthermore, the financial sector is pursuing a more transformative approach: converting stocks into digital assets for immediate trading and settlement on a blockchain.

It is not just crypto firms and fintech players leading this charge for “tokenization.” Big banks like J.P. Morgan are also using blockchains to facilitate trades in certain assets and, in doing so, transforming the financial ecosystem more broadly. Already, tokenization—which Tenev has described as a “freight train” poised to eat Wall Street—has brought fundamental changes to how stocks and other assets are traded.

The potential upsides to tokenization are huge, but significant questions remain over how to implement it. Meanwhile, some fear the coming train could undermine some protections for individual “retail” investors and destabilize a U.S. Equities market whose reliability has for decades been the envy of the world.

The current tokenization trend isn't the initial effort to modernize Wall Street's internal processes. Back in the 1970s, traders faced an issue dubbed the “paperwork crisis,”, where stock markets, overwhelmed by transactions, closed temporarily during the week just to manage the sheer volume of recordkeeping. These recurring operational halts ultimately prompted the adoption of a computer-driven resolution.

“Once upon a time there were leather-bound journals that said who owns all the stock,” explains Robert Leshner, a former economist who now runs the tokenization firm Superstate. “Then, people said, ‘This is too hard, let’s not update anymore,’ so they decided to create a legal fiction that assigned ownership of all the stock to the Depository Trust & Clearing Corporation,” or DTCC.

Under the long-standing DTCC system, there's no longer a need to log each individual share transfer. The clearinghouse now monitors the stock held by various brokerages for their clients and reconciles transactions among them on the subsequent business day.

Within this framework, brokerages hold nominal ownership of stock, yet all associated rights, including dividends and voting powers, are retained by the clients. This arrangement has proven effective for many years, and for individuals preferring traditional methods, DTCC allows for the continued request of physical share certificates. (This choice appeals to “GameStop truthers,” individuals who suspect a Wall Street plot against individual investors and believe a return to paper will prevent it.)

Now, though, the current DTCC system of “T+1”—in which the clearinghouse closes out trades the next business day by reconciling accounts among brokerages—has come to feel outdated in an age when so much business is conducted instantly and around the clock. This has prompted companies like Leshner’s Superstate to offer a faster alternative. The startup is working with companies to issue versions of their shares that trade on a blockchain, an arrangement under which the firms don’t have to rely on intermediaries to hold or track their stock. It also means stock trades can be settled instantly, while allowing firms to interact with their shareholders more directly.

Different companies are tackling tokenization from another angle. Robinhood, for instance, doesn't facilitate companies in tokenizing their shares. Instead, it takes existing stocks from the public market and presents them on a blockchain “wrapper” as a type of derivative. These options are presently limited to Europe, allowing shareholders to trade the “Stock Tokens” along with cryptocurrencies such as Bitcoin.

For individual investors not acquainted with tokenization, it might be startling, and perhaps concerning, to learn that a firm they hold shares in is being traded within the crypto ecosystem. Currently, this isn't a cause for concern.
Presently, even proponents of tokenization suggest the new blockchain system will coexist with the existing one, not supersede it. Therefore, what's the rationale behind undertaking this endeavor?

Tokenized assets won't significantly impact the typical investor who trades infrequently. However, frequent traders will find the shift to blockchain beneficial, as it allows for increased trading activity outside of regular market hours, including evenings and weekends. This new system will also appeal to institutional investors by releasing collateral that would otherwise be immobilized during settlement periods.

“Imagine you’re a hedge fund and want to buy $1 million of Tesla stock,” says Johann Kerbrat, SVP of Robinhood Crypto. “You buy it on Friday, so you don’t have the money anymore, but you don’t get the shares in your account until Monday. So for three days, you can’t do anything.” It’s not just stocks being tokenized. BlackRock’s BUIDL fund, working with Superstate’s tokenization rival Securitize, offers access to money-market funds and U.S. Treasuries via blockchain, and has already grown to $2 billion in assets under management. Meanwhile,J.P. Morgan is offering tokenized versions of private equity assets on its in-house Kinexys blockchain, in part because the process makes capital calls easier to track and manage.

This development may just be the start. Rob Hadick, a partner at venture capital firm Dragonfly Capital, points out that other financial sectors, such as credit and fixed income, largely remain pre-digital, with some deals still finalized via fax. Adopting tokenization could lead to quicker and more dependable settlement of these transactions. Hadick suggests this will also benefit banks and brokerages financially by decreasing the need for back-office personnel and displacing specialized intermediaries involved in processes like loan origination and servicing fees. Furthermore, tokenized assets will offer traders greater ease in transferring them between brokerages or using them as collateral.

Things are still in their nascent stages, particularly in the United States, where the Securities and Exchange Commission hasn't yet approved tokenized equities. By mid-November, the global worth of these assets reached approximately $660 million, as reported by RWA.xyz; prominent examples include tokenized representations of index-following ETFs and major technology companies' shares like Tesla, Nvidia, and Alphabet.

Despite its early stage, brokerages are continuing their efforts, with crypto firm Kraken notably seeing strong activity in Brazil and South Africa for its tokenized U.S. Stocks. In these regions, traders still face substantial commissions, sometimes exceeding 10%, a stark contrast to the U.S. Where such fees are mostly gone. Separately, Robinhood has acquired shares in the private company OpenAI and SpaceX, offering tokenized versions to its European clientele.

Regarding the DTCC, one might readily believe the clearinghouse is against the trend of tokenization. However, the reality is quite different: Two individuals with knowledge of the company indicate that it's keen on adopting blockchain, partly due to its potential for growth in private markets. When approached for a statement, the DTCC withheld specifics but did imply its acceptance of the technology.

“DTCC believes in the power and potential of tokenization to evolve and modernize market infrastructure. We are actively working to enable capabilities that further our products and services,” said Brian Steele, DTCC’s president of clearing and securities services.

Not all parties are persuaded that a swift move toward tokenization is beneficial. Among those advocating for a more measured pace is Citadel Securities, which has requested that the SEC implement a gradual strategy. A source familiar with the company indicated that the prominent trading firm is concerned that certain crypto-related businesses aim to leverage the regulatory process for tokenization to secure waivers from established consumer protection duties. This individual also voiced apprehension that an accelerated transition might erode confidence in the U.S. Stock market, recognized as the world's largest and meticulously developed over many years.

This apprehension might have merit. Significant price differences have already surfaced between conventional company stock shares and their tokenized counterparts, such as those provided by Kraken. Furthermore, it remains uncertain whether all companies issuing tokenized equities have implemented sufficient safeguards concerning custody and their fiduciary duties to clients. For example, what would occur if a cryptocurrency firm faced bankruptcy while in possession of a customer's tokenized stock shares?

While all financial institutions seem to see blockchain as the future technology, they might not agree on which specific blockchain. For instance, Robinhood, along with other companies, is utilizing the open-source Ethereum chain for its tokenization ventures, whereas J.P. Morgan seems committed to its own private chain. Venture capitalist Hadick suggests this divergence could impede widespread adoption, as he notes that other major corporations such as Goldman Sachs might hesitate to depend on a blockchain managed by a competitor.

Hadick adds, though, that any impasse is unlikely to last long, since “one thing blockchains do well is coordinate trust.”

This article appears in the December 2025/January 2026 issue of Coins2Day with the headline: “Get ready to own a tokenized portfolio.”