Ever since Robinhood co-founder Vlad Tenev bounded onto the stage in Cannes two weeks ago, channeling old-time movie star David Niven in his white suit and cravat, everybody’s been talking about tokenized stocks.
It certainly seems like a big deal for mainstream adoption of crypto. Robinhood is a TradFi equities platform with 26 million retail customers tokenizing stocks on Arbitrum and offering them to EU users through its user-friendly app interface.
There are no crypto wallets or seed phrases required — and Tenev suggests it’s a test run for a wider integration of crypto, a demonstration of “what Robinhood itself could look like, built entirely on blockchain technology.”
That same week, Gemini launched its own tokenized stocks on Arbitrum in the EU, and 60 of Backed’s xStocks went live on Solana, supported by Kraken, Bybit, Bitrue and Gate.io.
Tokenized stocks may be just months away from launching in the US too, after dShares issuer Dinari was awarded a broker-dealer license and Ondo Finance acquired Oasis Pro to make use of its licenses.
Coinbase has wanted to launch tokenized equities in the US since 2018 and is reportedly seeking the Securities and Exchange Commission’s permission to finally do so. Chief law officer Paul Grewal called tokenized equities “the future of finance, and a huge priority” for the company.
But this isn’t the first time tokenized equities have been attempted, and the playing field is littered with the bodies of issuers from the last cycle.
And while tokenization brings many advantages, there are considerable downsides to the models Robinhood and Kraken use to tokenize stocks. Here are the pros and cons of tokenized equities in 2025.
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— BREAD | ∑: (@0xBreadguy) July 2, 2025
Con: Tokenized stocks are not really stocks at all
Critics argue that the tokenized equity offered by xStocks and Robinhood is just a synthetic representation of a share held in a vault somewhere and does not confer any shareholder rights and protections that come with real ownership.
In Robinhood’s case, the tokenized stocks are considered derivatives under EU regulations, even if the model uses licensed US broker-dealers who issue tokenized stocks and custody the underlying assets. Tenev calls it “a derivative that’s backed by the real share.”
Backed’s xStocks tokens are also backed 1:1 by a Special Purpose Vehicle in Liechtenstein. Even if Kraken or Bybit collapses, the underlying assets theoretically remain safe. The token can be redeemed for the offchain price when the market opens.
Alan Keegan, the DeFi portfolio manager at M31 Capital, says this is halfway to the goal. “We’ve solved the issue of issuing a claim for an offchain asset onchain, via tokenizations,” but adds that there’s still a long way to go.
“There are regulatory questions and legal infrastructure to be built to get to a place where an onchain transaction of a security actually represents a transfer of that security,” he says.
“Building the infrastructure to solve that problem requires a great degree of legal know-how, traditional finance know-how, blockchain sophistication, and (speaking frankly) money to spend.”
The closest example to date is Securitize’s Exodus token on Algorand, which represents direct legal ownership of the security on Securitize’s shareholder registry
“It’s going to take time, but native tokenization is the necessary first step,” Securitize CEO Carlos Domingo tells Magazine.
“You can’t decentralize stock ownership unless the stock is represented onchain in a compliant, legally valid way. Securitize is one of the only platforms in the US that can do this today.”
Neutral: Tokenized stocks are in a legal gray area
Tokenized stocks operate in a legal gray area, with Robinhood and xStocks pushing the envelope in a similar way to how Uber did with its ridesharing app a few years ago.
Robinhood’s tokenized stocks are only available in the EU for now, but as it’s a listed company working with a US-listed broker-dealer to offer US securities, US regulators could decide to shut it down.
The Securities Industry and Financial Markets Association (SIFMA) has already urged the SEC to reject trading models that fall outside the Regulation National Market System for equities.
However, new SEC chair Paul Atkins has expressed in-principle support. “Tokenization is an innovation. And we at the SEC should be focused on how we advance innovation in the marketplace,” Atkins told CNBC.
JUST IN: 🇺🇸 SEC Chair Paul Atkins says…
cointelegraph.com