Wall Street’s Tokenized Stock Rush Is Getting Messy

At the Onchain Leaders Gathering in Geneva, industry experts gathered to discuss the challenges of bringing capital markets onto blockchain. Nasdaq and LSEG are pushing for stocks to be tokenized, with Nasdaq investing $100 million in Payward to develop the necessary infrastructure. However, the true test lies in creating a liquid, private, compliant, and useful system for institutions.

During a panel titled "The New Financial Stack," experts from Zama, G-20 Group, Blobb.io, and Rex Change debated the barriers institutions face, including infrastructure, liquidity, confidentiality, and market access. Antoine Hello, Director of Financial Institutions at Zama, stressed the need for public blockchain infrastructure to handle real volume while protecting sensitive financial information.

François Meurier, Founder and Managing Director of Rex Change, emphasized the importance of practical implementation rather than just theory. Despite growing interest, tokenized stocks show uneven growth, with holder numbers increasing by 174% but monthly transfer volume dropping nearly 53%. The issue of ownership also arose, as seen in the case of AMC tokens, where holders do not enjoy normal shareholder rights.

The World Federation of Exchanges warned that some tokenized equities could weaken investor protections and market integrity. UBS Asset Management's Head of Digital Assets, Diana-Cezara Toader, highlighted liquidity, common infrastructure, and regulation as ongoing challenges for wider adoption. Tether's Head of Tokenization Expansion, Francesco Ranieri Fabracci, stressed the need for tokenized assets to be useful, with Nasdaq and LSEG suggesting Wall Street is ready to test this idea at scale.