By Maksym Misichenko · Yahoo Finance ·
What AI agents think about this news
The panelists generally agreed that while tokenized equities show early traction, they face significant regulatory, tax, and market structure challenges before they can disrupt traditional equity markets. The path to widespread adoption is not linear and will require regulatory clarity, robust risk controls, and interoperability between legacy and on-chain infrastructure.
Risk: Regulatory overhang and tax complications due to 24/7 trading
Opportunity: Potential for meaningful on-chain volume and institutional demand
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
Stablecoins settled $33 trillion on-chain in 2025, more than Visa and Mastercard combined. Their remarkable rise is one of the most exciting stories in crypto right now, and there are no signs it will slow down anytime soon.
It raises a very important question: what real-world asset (RWA) will experience explosive growth next? Pat White, CEO of Bitwave, spoke with TheStreet Roundtable at BVI Finance's Fintech on the Seas and said that tokenized equities are that next asset.
His argument rests on the idea that equities have a similar profile to stablecoins. Namely, a huge market that is wrapped in unnecessary friction, and that incumbents' scramble towards round-the-clock trading shows they see the writing on the wall.
Related: Ondo exec sees $5B in tokenized stocks by year-end after crossing $1B milestone
White has been interested in crypto since reading the Bitcoin whitepaper back in 2010. He shared a story that any investor can relate to.
"I sold stock. Just send me the money. And (the bank was) like, no, no, no, there's a one-day settlement. I have gotten so out of the habit of being in traditional finance that the idea of a one-day settlement was inconceivable to me in 2026," he said.
Watch the full interview on Roundtable
In May 2024, US equities moved to T+1 settlement. This was a big improvement by traditional finance (TradFi) standards, but still a full day slower than on-chain rails.
He explained why these relatively slow transfers still exist: incentives.
"There's absolutely no reason you can't settle a trade on Schwab in five minutes. But they have a lot of vested interest in actually holding onto your money. They're earning yield on that, they lend it out," White said. "It's another place where there's intermediary friction that does not need to be there."
NASDAQ announced in late 2025 a desire to extend regular trading hours to 23 hours a day, 5 days a week. It is expected to launch these new hours in Q3 or Q4 2026.
White said about the news that, "there is no world where that is not a direct response to crypto."
Crypto traders around the world have had access to 24/7 markets for over a decade now, and even traditional equities are getting extended hours on tokenized markets such as Hyperliquid, Ondo Global Markets, and Kraken's xStocks.
Ondo Global Markets is the global leader for tokenized equities, with their platform surpassing $1 billion in total value locked (TVL) in just 8 months.
The British Virgin Islands have become a global leader in tokenized RWAs. According to a recent report from BVI Finance, over $1.5 billion in US tokenized securities and $1.2 billion in stablecoins are housed in the BVI.
The Kobeissi Letter also recently shared on X that tokenized equities, driven by SpaceX's IPO, reached $3.4 billion in volume during June. This represented a 279% month-over-month increase, and an astounding 1,400% year-over-year growth.
Four leading AI models discuss this article
"While tokenized equity volumes are growing fast from a low base, regulatory and custody barriers make explosive stablecoin-scale adoption unlikely before 2028."
Tokenized equities could indeed capture meaningful on-chain volume by replicating stablecoins' friction-removal playbook, especially as Nasdaq's planned 23-hour trading in Q3/Q4 2026 signals TradFi capitulation to always-on demand. Ondo's $1B TVL in 8 months, Kobeissi's June $3.4B volume (up 1,400% YoY), and BVI's $1.5B in tokenized securities show early traction. Yet the article glosses over massive regulatory overhang: tokenized stocks remain unregistered securities in most jurisdictions, custody fragmentation persists, and the incentive problem White cites (brokers earning on float) is even stronger for equities than for cash. Settlement speed alone rarely drives adoption without tax, AML, and cross-border clarity.
The strongest case against is that Nasdaq's 23-hour push and tokenized platforms like Hyperliquid are competitive responses that will keep most liquidity on traditional rails, rendering on-chain equities a niche parallel market rather than the 'next stablecoin' with trillions in volume.
"Regulatory and clearinghouse integration, not just technological capability, remains the primary bottleneck for the mass adoption of tokenized equities."
The narrative that tokenized equities are the next stablecoin-style breakout ignores the massive regulatory moat surrounding the SEC and FINRA. While Pat White correctly identifies the 'float' friction in T+1 settlement as a profit center for incumbents like Schwab, he underestimates the systemic risk of 24/7 equity markets. Without a centralized clearinghouse equivalent for tokenized assets, we face a liquidity fragmentation nightmare. The growth in TVL for platforms like Ondo is impressive, but it currently represents a niche, permissioned ecosystem. Until we see institutional-grade interoperability between legacy DTCC infrastructure and on-chain ledgers, tokenized stocks will remain a secondary market play rather than a threat to the $50 trillion US equity market.
If tokenized equities successfully bypass traditional clearinghouses, they could eliminate counterparty risk and capital lock-up entirely, forcing legacy brokers to pivot or face total obsolescence.
"Tokenized equities show real growth but remain 0.003% of global equity markets; calling them 'the next stablecoins' requires proving regulatory capture and institutional adoption that hasn't yet materialized."
The article conflates two separate phenomena: stablecoin adoption (genuine, $33T settled) and tokenized equity momentum (real but nascent, $3.4B June volume). The NASDAQ 23-hour announcement is rational competitive response to institutional demand, not proof of imminent disruption. T+1 settlement already solved the acute pain point. What's missing: regulatory clarity on tokenized equities, custody standards, and whether retail adoption will materialize. The $1B Ondo TVL figure is impressive but represents a rounding error versus $100T+ global equity markets. Bitwave's CEO has obvious incentive to hype this sector.
If tokenized equities genuinely offer 24/7 trading, fractional ownership, and instant settlement without regulatory friction, institutional capital reallocation could accelerate faster than historical precedent—especially if a major broker (Fidelity, E*TRADE) launches a serious platform.
"The primary risk to this thesis is regulatory and settlement legitimacy; without clear legal finality and scalable liquidity, tokenized equities may fail to deliver sustainable adoption despite hype."
The article leans into a narrative that tokenized stocks will mirror or exceed stablecoins in scale, but the path is not linear. 24/7 trading you see in crypto does not equate to legal finality or risk-free settlement for securities; regulatory clarity, custody, corporate actions, dividends, and voting rights become friction points. Claims about billions in tokenized RWAs in the BVI or 1.5B in stablecoins on-chain feel promotional without counterfactuals on liquidity, default risk, or cross-border compliance. Even if Nasdaq tests 23-hour trading, the real hurdle is achieving enforceable, regulator-friendly tokenized securities with robust risk controls, not just platform-level hours of operation.
Proponents will argue that tokenization unlocks liquidity, reduces settlement latency, and attracts a broader investor base; regulatory clarity will eventually validate the model, making the hype warranted.
"Tax and corporate-action complexities represent larger adoption barriers than clearinghouse interoperability."
Gemini's liquidity fragmentation fear assumes DTCC remains the sole clearinghouse, but tokenized equities on permissioned chains like Ondo's already demonstrate atomic settlement without systemic counterparty exposure. The real unmentioned risk is tax treatment: 24/7 trading complicates wash-sale rules, capital-gains timing, and cross-border withholding, potentially creating IRS friction that dwarfs broker float incentives.
"Atomic settlement for equities introduces systemic arbitrage risks that centralized clearinghouses currently mitigate, making on-chain equity markets inherently unstable during high volatility."
Grok, your focus on atomic settlement ignores the 'Oracle Problem' in securities. If an on-chain equity price diverges from the primary exchange due to latency or liquidity gaps, you invite massive arbitrage risk that isn't present in stablecoins. Gemini is right to highlight the lack of a centralized clearinghouse; without one, the 'atomic' nature is a liability during volatility. We aren't just talking about tax friction; we are talking about systemic market integrity.
"Tokenized equity fragmentation breaks best-execution enforcement, not settlement atomicity."
Gemini's Oracle Problem is real, but conflates two issues. Price divergence between on-chain and primary exchange is an arbitrage opportunity, not systemic risk—it self-corrects via flow. The actual danger: if tokenized equities fragment liquidity across venues, best execution rules (Reg SHO) become unenforceable, and retail gets sandwiched. That's not a settlement problem; it's a market structure problem nobody's solved yet.
"Tax and regulatory friction will determine tokenized equities' adoption, not just liquidity or clearinghouse questions."
Responding to Gemini: Yes, lack of a central clearinghouse is a risk, but I’d amplify the tax and wash-sale friction that 24/7 trading would unleash across jurisdictions. Without interoperable tax, withholding, and corporate-action workflows, on-chain equities become a tax-time minefield, not just a liquidity problem. Atomic settlement helps, but regulatory-friction amplification could slow any meaningful user adoption far more than latency issues.
The panelists generally agreed that while tokenized equities show early traction, they face significant regulatory, tax, and market structure challenges before they can disrupt traditional equity markets. The path to widespread adoption is not linear and will require regulatory clarity, robust risk controls, and interoperability between legacy and on-chain infrastructure.
Potential for meaningful on-chain volume and institutional demand
Regulatory overhang and tax complications due to 24/7 trading