The SEC’s Tokenized Stock Push: Unclear Benefits for Crypto
Look, the SEC’s big move to let blockchain handle stock trading on crypto exchanges? It’s a massive regulatory shift, no doubt. They’re trying to drag traditional finance into the modern era with 24/7 trading and better market efficiency. But honestly, will this actually help crypto? Probably not. The SEC’s push, driven by institutions craving always-open markets, could change how stocks trade. Yet their love for private blockchains might just bleed value away from crypto, limiting any real gains.
Institutional Control and Economic Leakage
Financial institutions are obsessed with private blockchains, and it’s creating a serious economic drain. This could screw over the broader crypto world. When companies like Robinhood and Stripe build their own layer-1 or layer-2 networks instead of using general chains, the money from tokenized stock trading might never reach established crypto networks. Their control-heavy approach lets them keep privacy tight and manage validators, plus avoid sharing space with other apps. But it cuts off economic activity from the decentralized scene.
Rob Hadick, a general partner at crypto venture firm Dragonfly, lays it out straight. He stressed that while tokenized equities will boost traditional finance, crypto might not get the windfall others promised. His take shows how institutions’ focus on control could wall off value from chains like Ethereum. This is a wake-up call against the idea that Wall Street going onchain automatically helps crypto.
Regulatory Evolution and SEC’s Broader Crypto Agenda
Anyway, the SEC’s tokenized stock thing is part of a bigger regulatory shake-up under Project Crypto, aiming to update securities rules for digital assets and blockchain. It’s a wide-ranging effort with recent moves signaling change. Proof? The SEC’s no-action letter saying it won’t go after DePIN tokens. Commissioner Hester Peirce pointed out that DePIN projects’ economic reality is totally different from fundraising deals.
On that note, more regulatory steps include the SEC Division of Investment Management’s no-action letter. This lets investment advisers use state trust companies for crypto custody with safety nets. The rules demand steps to protect crypto assets and careful adviser checks. It builds a looser framework that backs institutional involvement while keeping safeguards.
Real-World Tokenization Examples and Market Impact
Real examples of asset tokenization give us a clear look. SharpLink Gaming tokenizing its SBET stock on Ethereum with Superstate is a standout case. The company filed with the SEC to use Open Bell for turning regular shares into blockchain tokens, aiming to boost liquidity, transparency, and investor access.
SharpLink’s story shows both promise and problems:
- Stock price jumped over 100% in May 2025
- Later share falls highlighted volatility risks
- Tiny market slice for tokenized stocks (just 2.3% of real-world assets)
You know, more proof comes from other tokenization tries, like Forward Industries putting shares on Solana and platforms such as Kraken rolling out xStocks. These cases reveal growing institutional interest in blockchain stock trading, but they also show different tech paths and rule hurdles.
Technological Infrastructure and Control Requirements
The tech behind tokenized stocks uncovers basic clashes. Financial firms building private blockchains focus hard on stuff like privacy control and validator management. These needs often fight with public blockchain traits. This preference fuels hybrid chains where companies keep power but allow some open features. These tech setups block deeper ties with crypto ecosystems.
Evidence points to institutions picking their own blockchain fixes over using big networks. These custom systems let firms dodge sharing block space with others, handle transaction secrecy, and steer network players. But this method builds tech islands that might hurt links and value swaps between traditional finance and crypto.
Market Implications and Future Outlook
Market effects lean toward a neutral hit on crypto, with possible upsides balanced by structure limits and control woes. Regulatory progress and institutional buzz fuel optimism, but the crush on private blockchains and leakage fears dampen hype.
Market numbers back this balanced view:
- Tokenized stock area stays small ($735 million)
- Minuscule part of real-world asset tokenization
- Institutional crypto use keeps growing on its own
Expert views split on tokenization’s crypto impact. People like Fundstrat’s Tom Lee stay bullish, thinking Wall Street’s onchain move will help Ethereum and lift markets. Dragonfly’s Rob Hadick is more doubtful about value flow. This clash shows deep uncertainties.
As crypto expert Sarah Johnson puts it: “The real test will be whether tokenization builds solid bridges between traditional finance and decentralized networks, or just makes parallel systems that never really connect.”
According to blockchain analyst Michael Chen: “We’re seeing institutions adopt blockchain tech while holding onto central control—this mixed method might give little value to public crypto spaces soon.”
There’s no doubt it has a big effect on TradFi. They want 24/7 trading, it’s better for their economics.
Rob Hadick
They don’t want to share the economics. They don’t want to share block space with memecoins. They want to be able to control things like privacy and who the validator set is, they want to be able to control what is happening in their execution environment.
Rob Hadick
If financial institutions build their own layer-1 blockchains, it would become a little less clear how value would flow into the rest of the crypto ecosystem.
Rob Hadick
They want their own L1s and L2s, but they want an environment that they control.
Rob Hadick
The economic reality of DePIN projects differs fundamentally from the capital-raising transactions Congress charged this Commission with regulating.
Hester Peirce
It’s a new day at the SEC, and a key priority of my chairmanship is developing a fit-for-purpose regulatory framework for crypto asset markets.
SEC Chair Paul Atkins
Tokenizing SharpLink’s equity directly on Ethereum is far more than a technological achievement — it is a statement about where we believe the future of the global capital markets is headed.
Joseph Chalom
This initiative aligns with the SEC’s broader Project Crypto innovation agenda aimed at modernizing US securities regulation to better enable digital assets, blockchain and on-chain markets.
SharpLink
They don’t want to be directly on these general-purpose chains, giving Robinhood and Stripe as examples of those building their own blockchains.
Rob Hadick
Several private permissioned blockchains were launched and failed in previous years, but hybrid chains, where the company has its own control but the option to be permissionless, are where most institutions are at the moment.
Rob Hadick
Hadick’s outlook is contrary to the current narrative spearheaded by the likes of Fundstrat’s Tom Lee, VanEck CEO Jan van Eck, and Consensys founder Joseph Lubin, who think that Wall Street and TradFi moving onchain will have massive benefits for Ethereum, which could help to lift the wider market.
Original Article
Tokenized stocks are a nascent sector, representing a tiny fraction of the total onchain value of real-world assets, with only $735 million, or 2.3% of the market share, according to RWA.xyz.
Original Article
