Tokenized stocks explode! 1.2 billion market cap replicates the 300 billion stablecoin myth?

Tokenized stock market cap has soared to $1.2 billion, with Token Terminal comparing it to “the stablecoin moment of 2020.” This comparison is highly impactful: in 2020, stablecoin market cap was only a few hundred billion dollars, and now it has developed into a $300 billion industry. If tokenized stocks replicate this growth trajectory, the future market potential will be beyond imagination. Nasdaq has submitted an application to the U.S. Securities and Exchange Commission (SEC) to offer tokenized stocks on its platform.

Nasdaq’s Entry Changes the Game

Nasdaq’s application to provide tokenized stocks on its platform is the most explicit recognition from traditional financial giants of the tokenization field. Matt Savarese, Head of Digital Asset Strategy at Nasdaq, stated that tokenization is a top strategic priority. This is not just lip service but a strategic commitment. When the world’s second-largest stock exchange makes tokenization a top priority, it signifies that this technology has moved from fringe experimentation into mainstream agenda.

Nasdaq’s involvement carries multiple implications. First, regulatory endorsement. Nasdaq has operated under the strict regulation of the SEC for over 50 years. Its application for tokenized stock services indicates that regulatory pathways are becoming clearer. This will dispel the biggest concerns of institutional investors regarding compliance risks. Second, liquidity infusion. Nasdaq’s average daily trading volume exceeds hundreds of billions of dollars. If its platform officially launches tokenized stocks, it will inject unprecedented liquidity into the on-chain market.

Third, setting technical standards. As a technology-driven exchange, Nasdaq has the capability to establish technical standards and best practices for tokenized stocks, promoting industry unification. Currently, different platforms adopt various technical architectures and compliance frameworks for tokenized stocks, lacking interoperability. Nasdaq’s participation could accelerate standardization and reduce market friction.

Looking at the timeline, Nasdaq’s application coincides with the market cap of tokenized stocks surpassing $1.2 billion, which is no coincidence. Traditional financial giants usually enter emerging markets after reaching a certain scale and manageable risk; $1.2 billion clearly meets this threshold. Although this “waiting for the right moment” strategy is conservative, once they decide to enter, they often reshape the market with overwhelming resource advantages.

The Four Fronts of the Tokenization Race

Institutional Players Are Going All-In

Crypto Exchanges: In September, CEX partnered with Backed Finance to launch about 60 tokenized stocks on Ethereum. These exchanges have a large native crypto user base, familiar with on-chain operations but lacking traditional stock investment channels. Tokenized stocks fill this gap perfectly.

Tokenization Infrastructure Providers: Backed Finance’s xStocks product suite and Securitize’s plans to launch compliant on-chain stock trading represent specialized tokenization solutions. These companies do not directly serve end-users but provide technology and compliance frameworks for exchanges and financial institutions, similar to a SaaS business model.

DeFi Native Protocols: Ondo Finance plans to launch tokenized US stocks and ETFs on Solana in early 2026. Choosing Solana over Ethereum hints at targeting high-frequency trading and low-cost advantages. The participation of DeFi protocols will deeply integrate tokenized stocks with lending, derivatives, and other on-chain financial products, creating a synergistic effect.

Integrated Trading Platforms: The largest compliant crypto exchange in the US announced plans this month to offer stock trading services, aiming to become a “universal exchange.” This strategy integrates cryptocurrencies, tokenized stocks, and traditional financial products on a single platform, reducing user friction when switching between systems.

Each of these four camps has its advantages: crypto exchanges have users, infrastructure providers control technology, DeFi protocols offer innovation, and integrated platforms provide seamless experience. This diverse competition will accelerate the maturity of tokenized stocks but may also lead to fragmentation of standards and dispersed liquidity. Ultimately, the market may resemble the dual oligopoly of stablecoins USDT and USDC, or be unified under giants like Nasdaq.

Why Compare to the 2020 Stablecoin Moment?

(Source: Token Terminal)

Token Terminal points out that “today’s tokenized stocks are like the stablecoins of 2020,” revealing profound market logic. In 2020, stablecoins had a market cap of about $20-30 billion and were seen as foundational infrastructure for DeFi, but mainstream financial institutions remained cautious. Five years later, stablecoins’ market cap has reached $300 billion, increasing over tenfold, becoming the second-largest pillar in the crypto ecosystem after Bitcoin and Ethereum.

The similarity between tokenized stocks and stablecoins lies in both mapping traditional financial assets onto the blockchain, lowering barriers between traditional finance and the crypto world. Stablecoins solve the problem of value stability, allowing crypto users to hold assets pegged to USD without exposure to volatility. Tokenized stocks address the issue of limited asset variety, enabling on-chain users to invest in traditional stocks like Apple and Tesla without leaving the crypto ecosystem.

From a time cycle perspective, tokenized stocks are currently in the “early mainstream adoption” stage similar to stablecoins in 2020. A market cap of $1.2 billion, though tiny compared to the global stock market of over $100 trillion, is growing rapidly. According to data from Token Terminal, strong growth in September and December pushed the market cap to new highs, indicating demand is accelerating rather than growing linearly. This exponential growth curve is typical of early-stage markets.

Some industry insiders compare tokenized stocks to the early DeFi boom of 2020. DeFi exploded in summer 2020, with total value locked (TVL) soaring from less than $1 billion to hundreds of billions. Tokenized stocks may replicate this explosive growth because of their broad potential applications: 24/7 trading surpassing traditional stock market hours, fractional ownership lowering investment barriers, faster settlement improving capital efficiency, and on-chain transparency building trust.

However, challenges also loom. Regulatory uncertainty is the biggest obstacle, as different jurisdictions have vastly different classifications and regulatory requirements for tokenized securities. Liquidity fragmentation is another serious issue; currently, tokenized stocks are spread across multiple chains like Ethereum and Solana, lacking unified liquidity pools. Additionally, traditional brokerages and exchanges may lobby and upgrade their technology to resist on-chain competition.

Is $1.2 Billion Just the Beginning or a Bubble Warning?

From an optimistic perspective, the $1.2 billion market cap is just the starting point for the trillions of dollars potential in tokenized stocks. The global stock market exceeds $100 trillion; even a 1% transfer to the blockchain would be $1 trillion. Considering the efficiency gains and new user groups (such as those unable to open traditional brokerage accounts), actual penetration could be even higher. If tokenized stocks reach $300 billion in 5 years, comparable to stablecoins, they will become the fourth-largest on-chain asset class after Bitcoin, Ethereum, and stablecoins.

From a cautious view, the $1.2 billion market cap may contain speculative bubbles. How much of the demand for tokenized stocks comes from long-term investors versus arbitrageurs and speculators? There is no clear data yet. If most demand is from short-term speculation, the market could quickly retreat once novelty wears off or regulation tightens. Although giants like Nasdaq bring compliance and liquidity, they may also squeeze out native crypto platforms, leading to market consolidation and exits.