Tokenization could take over Wall Street. What is it?

The tokenization of real-world assets, including equities, bonds, gold, and real estate, is rapidly expanding. This process involves issuing assets on blockchain technology, promising faster settlement, easier trading, and fractional ownership, thereby increasing accessibility for more investors globally. Some industry insiders predict the entire financial market will eventually operate on blockchain, enabling seamless asset swaps.

• The tokenization of real-world assets is accelerating, with expectations of significant growth.
• Tokenized stocks are issued on blockchain technology, the same as crypto.
• Industry insiders anticipate the entire financial market will eventually run on blockchain.
• The market cap for real-world assets is projected to grow from $600 billion to $19 trillion by 2033.
• Benefits of tokenized equities include easier trading, faster settlement, fractional ownership, global accessibility, and use as collateral.

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What is Tokenization? [00:11]

• Tokenization of a stock means it's issued on blockchain technology.
• Blockchain is the same technology that crypto is based on.

The speaker explains that tokenization essentially means issuing a stock on blockchain technology, the same underlying technology used for cryptocurrencies.

The tokenization of a stock for example that is basically a stock which is issued on blockchain. That's the same technology on which crypto is based.

The Future of Financial Markets [00:24]

• Industry insiders predict the entire financial market will eventually run on blockchain.
• This trend began with stablecoins and is now expanding to equities.
• Companies like Robin Hood and Gemini are offering tokenized stocks in the EU.
• The NASDAQ has requested permission from the SEC to offer tokenized shares and securities.
• This move is driven by the expected upgrade of financial infrastructure to blockchain, and a desire not to fall behind platforms like Coinbase, Kraken, and Gemini.

The speaker highlights the growing trend of financial markets migrating to blockchain, with major exchanges seeking regulatory approval to participate and avoid being outpaced by crypto-native platforms.

You started to see this with stable coins and then now we're starting to see it with equities.

Market Size and Scope [01:21]

• One study indicates the market cap for real-world assets is expected to surge from $600 billion this year to approximately $19 trillion by 2033.
• This expansion includes not only equities but also bonds, gold, and real estate – virtually any tangible asset.

The rapid growth projected for the tokenization of real-world assets underscores the significant financial opportunity and the broad application beyond just stocks.

Just to show you what one study shows is that real world assets, the market cap for real world assets is expected to go from 600 uh billion this year to about 19 trillion uh in 2033.

Benefits of Tokenized Equities [01:47]

• Tokenized equities can be traded more easily and offer faster settlement times.
• They can be divided into smaller portions, making them accessible to a wider range of investors.
• These assets can be accessed from anywhere in the world.
• Tokenized equities can also be used as collateral.
• An industry insider suggests the ability to directly swap one tokenized stock for another in a single transaction, eliminating the need for traditional multi-step settlement processes.

The advantages of tokenizing equities are numerous, focusing on enhanced liquidity, accessibility, and operational efficiency, potentially transforming how assets are managed and traded.

Well, they can be more easily uh traded. There's faster settlement times. Uh they can be split into smaller pieces.

Challenges and Migration [02:34]

• Current challenges include the need to update and change existing settlement and clearing processes, which can currently take several days.
• This shift to blockchain-based processes will require time.
• The overarching goal is for companies to issue their shares directly on the blockchain.
• Wall Street is investing in the belief that this migration will eventually occur for all assets.

Despite the hurdles in adapting legacy financial systems, the speaker emphasizes that the transition to blockchain for financial markets is seen as inevitable and is a key focus for industry investment.

The challenges of course are that you have uh settlement processes that have to be changed, clearing processes that have to be changed. Um the goal is to eventually have stocks like Tesla, like Amazon, like the Mag 7, all issuing th those companies issuing their shares on blockchain.