Tokenized stocks represent new opportunities in financial markets, merging traditional assets with blockchain technologies. The potential of this market has proven significant.
Convergence of Traditional Finance and Crypto Industry
The traditional finance sector is actively integrating into the crypto industry, as evidenced by major banks like Citigroup and Bank of America preparing to issue stablecoins. Concurrently, projects such as Injective and Backed Finance are tokenizing stocks of well-known companies on the blockchain. This convergence is underscored by recent regulatory developments in the U.S., where laws have been enacted to facilitate the integration of stable currencies into the financial system. Instead of competition, Wall Street and DeFi are starting to collaborate.
What is the Tokenized Stock Market?
The tokenized stock market involves converting traditional stocks into digital tokens on a blockchain, reflecting the value of the underlying assets but typically lacking shareholder rights. This market started developing in 2021 but faced various challenges with early models. Modern approaches, exemplified by Injective and xStocks, demonstrate more effective mechanisms and compliance frameworks. Tokenized stocks open up new opportunities for investors, such as 24/7 trading and the ability to use tokens in DeFi protocols.
Key Players in the Tokenized Stock Market
The tokenized stock market is shaped by several key players, each contributing to the ecosystem's development. Noteworthy firms include:
- Injective, a leader in derivatives for tokenized stocks with a trading volume exceeding $1 billion. - Backed Finance, responsible for 80% of the tokenized stock market, supporting a 1:1 backing with traditional assets. - Robinhood, which introduced tokenized stocks in Europe with zero commissions. - Gemini and Securitize, actively working on tokenizing various assets and providing services to support this segment.
Tokenized stocks possess significant growth potential by 2030. Given current trends in regulation and consumer demand, the market could reach $1.34 trillion, creating intriguing opportunities for investors and participants in financial markets.
