The U.S. Securities and Exchange Commission issued an order on September 17 permitting blockchain-based venues to trade tokenized versions of listed U.S. stocks without registering as exchanges. Each token must carry the same rights as the traditional share it represents.
The exemption limits trading to approved participants and caps the number of symbols and trading volume. The relief expires after five years.
Potential Simplification of Trading Infrastructure
According to industry executives, tokenization could streamline Wall Street's settlement process. Gabor Gurbacs, founder and CEO of tokenization platform Openassets, said that buying a stock today passes through approximately nine intermediaries. He expects tokenization could remove six or seven of them, with changes to transfer agent rules making that shift possible.
For investors, the experience of buying stocks should remain largely similar, though settlement and costs would change at the backend. Nick Cherney, who leads innovation at asset manager Janus Henderson, agreed the existing brokerage model could move to blockchain with little visible difference to users.
Early Stage of Market Development
The scale of tokenized assets remains small relative to traditional markets. Janus Henderson's most successful tokenized fund has ranged between $500 million and $1 billion, while the firm's flagship ETF manages about $30 billion. Global ETFs total approximately $24 trillion, compared to tokenized assets below $500 billion.
Cherney described blockchain adoption as an inevitability, though he noted that cost savings alone may not drive rapid adoption in already-efficient U.S. markets. The five-year exemption period may provide data on whether broader adoption follows, as approximately 200 institutions currently use Janus Henderson's tokenized funds.
