Tokenized stocks are, in essence, digital representations of traditional equities, available for trading at any time. - MarketWatch photo illustration/iStockphoto In the world of traditional brokerages, buying or selling equities has meant interacting with layers of intermediaries: brokers; custodians, clearinghouses. The system used to underpin massive revenue streams from margin loans and securities-based lending to settlement and custody fees.
But a new frontier is emerging at the edges of that system. Tokenized equities — real shares wrapped or reissued as blockchain tokens — threaten traditional brokerages. What if investors could hold actual stock exposure and unlock liquidity without selling the shares? That future might come sooner than expected — perhaps even this year.
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Tokenized stocks are, in essence, digital representations of traditional equities. The idea is straightforward: A firm holds real shares in regulated custody and issues a blockchain token that represents each share (or a fraction of one). That token can then trade on blockchain-enabled platforms, carry economic exposure to the underlying company, and — depending on the structure — might even carry certain shareholder rights.
Proponents say tokenization offers a number of compelling advantages:
Importantly, and often understated, tokenized equities remain tied to the traditional financial-asset universe; they are not “crypto-only” fictions but rather a bridge between legacy asset classes and blockchain infrastructure.
But tokenization doesn’t magically erase regulation or risk — therein lies the tension. While tokenized equities promise a “digital upgrade,” realizing their benefits at scale requires navigating legal, structural and market-microstructure challenges.
The buildup starts nowTokenization of real-world assets — including equities — is no longer niche. Mainstream financial institutions are exploring token-friendly custody and settlement, global exchanges are piloting digital-asset divisions, and asset managers are assessing tokenized share classes
On the retail side, leading platforms are already live. Kraken has built a product called “xStocks,” where tokenized representations of real stocks and ETFs (backed 1:1 by underlying equities) are issued on-chain, and can be traded — in principle — outside of traditional market hours. Kraken’s xStocks product lets traders access tokenized shares of major U.S. stocks and ETFs and trade them 24 hours a day during weekdays on its platform
Story ContinuesThe platform’s traction is growing: In late 2025, Kraken reported its tokenized equities business surpassed $10 billion in total transaction volume.
Meanwhile, Galaxy Digital and Superstate launched an onchain version of GLXY Class A common stock on Solana via Superstate’s “Opening Bell,” positioning it as the first tokenization of SEC-registered public equity on a major public blockchain.
In this structure, existing shareholders can move shares into tokenized form, and ownership updates are handled through the regulated transfer-agent workflow rather than a purely synthetic “price-tracking” token model — an important proof point for full-fidelity tokenized equities.
Industry analysts argue that tokenization could reshape aspects of capital markets: instant settlement, fractionalization, global access and on-chain ownership records — all attributes that may appeal to both retail and institutional investors.
Taken together, these developments suggest that 2026 could be the inflection point when tokenized equities shift from experimentation to infrastructure.
What’s at stake: Winners, losers and the coming shiftThe rise of tokenized stocks doesn’t just create new opportunities — it threatens cornerstone revenue models of traditional brokerages and their associated infrastructure.
Potential WinnersThe strategy is already visible in the market. Kraken has moved to consolidate its tokenized equities stack by acquiring Backed, the issuer behind its xStocks products. The deal folds issuance, custody coordination and distribution into a single platform — mirroring how traditional brokerages vertically integrated clearing and custody over decades. If tokenized equities scale, this kind of control over both the rails and the asset layer may prove decisive.
For shareholders, the key question isn’t whether tokenization works, it’s how much of your broker’s earnings depend on activities tokenized stocks could displace.
At brokerage giant Charles Schwab SCHW, for example, net interest income from cash sweeps and securities lending made up nearly half of total revenue in the second-quarter of 2025 ($2.82 billion of $5.85 billion). At Interactive Brokers Group IBKR, fourth-quarter 2024 net interest income hit $807 million — driven by margin loans and credit balances — versus just $477 million in commissions. Robinhood Markets HOOD, meanwhile, derived 42% of its second-quarter 2024 revenue from net interest ($285 million of $682 million total), with net-interest revenue growing 25% year over year by the fourth quarter of 2024. Even Morgan Stanley’s MS Wealth Management division, with $6.2 trillion in client assets, depends on sticky balances and net interest spreads from E*Trade and workplace channels.
Each of these firms are telling shareholders that net-interest income on client cash and margin is durable and scalable. But if tokenized equities indeed become a mainstream way to unlock liquidity in 2026, that assumption faces a real test.
Beyond brokerages, clearinghouses and legacy settlement infrastructure also face pressure. If settlement moves on-chain and peer-to-peer, centralized clearing and post-trade processes become less central — threatening a whole layer of traditional capital-markets infrastructure.
Regulatory reality and practical hurdlesTokenization doesn’t bypass existing securities regulations. While the SEC has been developing an “innovation exemption” concept to ease certain compliance pathways, major exchange and industry groups — including the World Federation of Exchanges and Securities Industry and Financial Markets Association — warn that broad exemptive relief could let tokenized venues sidestep core securities rules around best execution, market surveillance and investor protection.
This push-pull matters for tokenized equities specifically, because the eventual rule shape will influence whether tokenized stock venues look more like regulated exchanges (with familiar protections) or more like lightly-gated on-chain markets (with novel risks).
They remain legally regulated securities (or at least must navigate securities-law frameworks), and many structural, legal and practical challenges remain.
Tokenized stocks can lack certain traditional investor rights and protections. Regulators and critics warn that for many tokenized offerings, buyers do not gain real shareholder rights (voting, governance, dividend-distribution mechanisms). Liquidity remains a persistent issue. While many real-world assets have been tokenized, trading volume remains low and secondary markets are thin, even when tokens promise 24/7 tradability.
Why 2026 is pivotalThe case for 2026 as a turning point is anchored in specific regulatory and infrastructure milestones converging that year:
Nasdaq’s tokenization push: The most tangible catalyst is Nasdaq’s rule filing to let investors trade tokenized U.S. stocks and exchange-traded funds alongside traditional shares on the same order book.
Under the proposal, these tokenized securities would carry full shareholder rights and share the same CUSIP as the underlying stock. If the SEC approves and the Depository Trust Co., the central securities depository subsidiary of the Depository Trust & Clearing Corp., completes its blockchain-based settlement system, the first token-settled trades could go live as early as the end of this September — the first time tokenized securities trade on a major U.S. exchange.
That conditionality is not theoretical. In late 2025, SEC staff granted no-action relief to the Depository Trust Co. for a pilot version of tokenization services. The relief allows DTC to explore tokenized representations of securities held in its custody, with positions mapped to approved blockchains and transferred only between whitelisted, regulated wallets.
The Depository Trust & Clearing Corp. has framed the initiative as an incremental modernization of post-trade plumbing rather than a wholesale rewrite of market structure, with an initial rollout targeted for the second half of 2026. That timeline broadly aligns with Nasdaq’s ambitions, but it also underscores the reality: Tokenized settlement in U.S. equities will arrive first as a tightly permissioned pilot, not an open on-chain free-for-all. Whether that model proves sufficient — or constraining — will shape how fast tokenized equities can scale beyond early adopters.
What this means for investors — and what to watchFor investors holding traditional brokerage stocks or weighing exposure to this shift, the implications are immediate.
For investors (especially those holding shares in large brokerages) and market watchers, the rise of tokenized stocks demands attention.
Traditional brokerages do have one advantage: They still hold the customer relationships. But if they wait for perfect regulatory clarity before building, they’ll find the rails already laid by others. The window between “framework announced” and “market structure ossified” will be measured in quarters, not years.
By the looks of it, 2026 is when tokenization stops being theoretical. It’s also when the power map of equity markets gets redrawn and those caught watching from the sidelines may find there’s no easy way back in.
More: After bitcoin’s fall, pity those wildly enthusiastic investors who borrowed billions against crypto
Also read: Trump’s misguided crypto policies threaten America’s banks
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