Share Dialog
October 7, 2025
Public equities, representing ownership in companies listed on stock exchanges like the NYSE, have evolved dramatically over centuries. The history of equities traces back to the Dutch East India Company in 1602, which issued the world's first publicly traded shares, allowing investors to own fractions of a company and trade them on exchanges. In the late 20th century, the limited liability company (LLC) emerged, originating in Wyoming in 1977 and spreading globally, offering business owners liability protection, tax flexibility, and simplified operations. More recently, the 2012 JOBS Act revolutionized access to capital by expanding accredited investor rules, easing restrictions on crowdfunding, and allowing non-accredited investors to participate in private offerings through platforms like Kickstarter and equity crowdfunding sites.
Building on our “Tokenization Across Asset Classes: The Future of Finance” primer, this deep dive explores how tokenization democratizes public equities, reducing barriers for retail investors and boosting efficiency for institutions. Currently, tokenized assets have an estimated value of approximately $25 billion while the global equities market is estimated at $127 trillion, analysts project tokenized assets will reach $18.9 trillion by 2033, with equities driving 10%-20% (~$1.9-$3.8 trillion), setting the stage for a new era of open, programmable markets.
Exhibit A: Evolution of Tokenized Financial Services
Source: BCG and Ripple. For illustrative purposes only.
Public equities are shares in publicly traded companies, listed on centralized exchanges like the NYSE or Nasdaq, where they are traded during set hours with T+1 settlement cycles and geographic restrictions. These markets, while liquid, involve intermediaries like brokers and clearinghouses, adding costs and inefficiencies. Tokenization, on the other hand, redefines this landscape by representing shares as blockchain-based tokens (e.g., ERC-20* or ERC-1400* standards), backed 1:1 by custodial assets. The process begins with a public share on the NYSE, which is custodied off-chain while a corresponding token is minted on a blockchain like Solana* or Ethereum, enabling seamless onchain trading, settlement, and DeFi integration. This shift unlocks transformative benefits, including:
24/7 trading, breaking free from exchange hours.
Expanded fractional ownership, enabling smaller investors to participate.
Automated compliance through smart contracts, reducing manual oversight.
DeFi integration, opening new financial use cases.
Increased liquidity, attracting more participants to deepen markets.
These advantages come with challenges, such as regulatory hurdles (e.g., SEC oversight), interoperability with legacy systems, and liquidity fragmentation across blockchains.
Tokenization reimagines how public equities are traded, settled, and utilized. These are some of the key applications:
Global, Fractional Access to Stocks: Tokenization allows retail investors across the world to own fractions of high-value stocks like Apple or Tesla, lowering entry barriers. Platforms like Backed Finance* enable trading on Solana, accessible via mobile wallets.
Enables small-scale investors to build diversified portfolios with minimal capital.
Democratizes access for underserved regions, bypassing wealth or geographic restrictions.
Real-Time Settlement of Trades: Tokenized equities settle instantly onchain, minimizing counterparty risk and enabling high-frequency traders to exploit arbitrage opportunities without T+1 delays. This reduces capital lockup and enhances market efficiency.
Reduces collateral needs, freeing capital for broader opportunities.
Allows 24/7 trading strategies, improving price discovery and market responsiveness.
Programmable Dividends and Voting Rights: Smart contracts embed dividend payments and shareholder voting into tokens, automating payouts and governance. For example, tokenized shares could auto-distribute quarterly dividends or enable onchain proxy voting, streamlining corporate actions.
Eliminates intermediary costs and errors in dividend distribution.
Enhances shareholder engagement with transparent, seamless voting.
Synthetic Equity Derivatives: Tokenized options or futures provide exposure to stock price movements without owning shares, ideal for hedging or speculation. Injective Protocol*’s decentralized derivatives platform supports synthetic equities, integrating with DeFi for yield opportunities.
Offers cost-effective hedging without physical custody.
Enables leveraged positions or yield farming in DeFi ecosystems.
Collateralization in DeFi: Tokenized equities can serve as collateral for instant loans in DeFi protocols like Aave*, unlocking liquidity. A tokenized Tesla share, for instance, could secure a stablecoin loan, blending traditional and decentralized finance.
Allows holders to borrow without selling, preserving upside potential.
Integrates equities into DeFi for additional yield through lending or staking.
Public equities are expected to form a meaningful share of the future tokenized economy. Already, Injective’s TradFi Stocks Index is tracking hundreds of publicly listed equities, and Galaxy has tokenized an SEC-registered Nasdaq equity. As volume and infrastructure mature, equities are likely to outpace many asset classes in adoption. This shift promises transformative improvements in global capital markets, unlocking efficiency and accessibility at an unprecedented scale while fostering innovation in programmable finance.
Pros:
Settlement and Related Costs: Instant onchain settlement eliminates T+1 delays, potentially cutting costs by up to 50% and reducing intermediary fees.
Accessibility: Fractional ownership opens high-value stocks to global retail investors, fostering inclusion in emerging markets.
Expanded Investor Access: Tokenization lowers barriers, enabling non-accredited investors worldwide to participate in blue-chip equities previously limited to institutions.
Liquidity: 24/7 trading enables continuous markets, enhancing price discovery and reducing capital lockup.
Programmability: Smart contracts automate dividends, voting, and compliance, streamlining operations and boosting transparency.
Potential Risks:
Market Volatility: 24/7 trading could amplify price swings, necessitating robust risk management strategies.
Regulatory Shifts: Evolving regulations, like the SEC’s Howey Test, may impose new compliance burdens.
Liquidity Fragmentation: Multiple blockchains could split trading pools, reducing market efficiency.
Cybersecurity: Onchain assets face hacking risks, requiring advanced security protocols.
Transparency Risks: While onchain visibility enhances trust, some high-frequency traders or hedge funds may prefer privacy to avoid competitive disadvantages.
The path to tokenized public equities is fraught with challenges, but each hurdle presents an opportunity to refine the ecosystem. Integrating AML/KYC requirements into onchain workflows is critical to meet regulatory standards, yet it demands seamless technology to avoid user friction. Achieving cross-chain interoperability is essential to prevent liquidity fragmentation across blockchains, ensuring markets remain robust and unified. The shift to 24/7 trading introduces risks of market manipulation, requiring vigilant monitoring to maintain trust.
Regulatory landscapes shape adoption and vary widely. In the U.S., the SEC’s evolving Howey Test interpretations create uncertainty for tokenized securities, demanding rigorous compliance frameworks. By contrast, Europe’s MiCA framework, effective since late 2024, offers a clearer path, fostering innovation through structured guidelines. Asian jurisdictions like Hong Kong and Singapore provide regulatory sandboxes, balancing innovation with strict KYC mandates.
Market readiness hinges on harmonizing these regulations and maturing infrastructure. The lack of blockchain standardization remains a significant bottleneck, as fragmented protocols hinder seamless integration and liquidity. This fragmentation not only complicates cross-chain transfers but also raises concerns about data consistency and security, slowing the path to widespread adoption. Collaborative efforts among regulators, technologists, and market participants are vital to build a secure, scalable ecosystem.
The tokenization of public equities has progressed through key milestones, evolving from early experiments in synthetic assets to the early beginning of mainstream institutional adoption. This timeline highlights select pivotal developments that have shaped the landscape, beginning with foundational synthetics in 2019.
2019-2021: Early Synthetics on Mirror Protocol: Mirror Protocol (Terra-based) pioneered synthetic “mirrored” stocks (e.g., mAAPL, mTSLA), enabling DeFi access to equity exposure without direct ownership. The platform reached $1.5 billion TVL at its peak but was deprecated in 2023 due to Terra’s collapse.
2022-2023: Backed Finance’s Tokenized Stocks: Backed Finance launched 1:1 tokenized U.S. stocks (e.g., TSLA, NVDA, AAPL) on Solana, backed by custodial assets. By 2023, it achieved a TVL of approximately $50 million, offering retail investors global access with regulatory compliance.
2023–2024: J.P. Morgan’s Kinexys (Onyx) Platform: Acts as a foundation for tokenizing public markets through collateral-use of shares in money market funds and institutional funds on its TCN network, paving the way for public equity settlement use cases.
2024: Robinhood’s European Expansion: Robinhood expanded tokenized U.S. equities to Europe, complying with EU’s MiCA regulations. Volumes reached $300 million in Q2 2025 across 10+ tokenized stocks, enabling 24/7 trading for EU retail investors.
2025: Hamilton Lane’s Tokenized Equity Fund Expansion: In Q1 2025, Hamilton Lane expanded its tokenized feeder funds, including equity-focused strategies, on Securitize’s platform, showcasing scalability for public market exposure.
2025: Galaxy Digital tokenizes GLXY: Galaxy’s Class A common stock becomes the first Nasdaq-listed U.S. equity to be tokenized on Solana. Issued through Superstate, these are actual SEC-registered shares with full voting and economic rights, not synthetic representations. Early uptake saw ~32,000 shares converted by more than 20 investors, marking a pivotal moment in issuer-led tokenization.
2025: Injective’s TradFi Stocks Index & Onchain Equity Flow: Injective launched its TradFi index to bring publicly listed U.S. equities (e.g., Apple, Microsoft, Amazon) on-chain as perpetual exposure, combining high notional volume with real public stock tracking via oracles. In year-to-date 2025 activity, its RWA/perpetual markets exceeded US$1.6 billion in cumulative trading volume, with equities representing over 70% of that activity.
2025: Avalanche's Tokenized Stocks Initiative with Dinari: Dinari, a project focused on tokenized public securities, launched its own blockchain using Avalanche's technology, aiming to unify clearing and settlement for tokenized equities across various chains, similar to the DTCC's role in the U.S. stock market.
Below we are including a select number of important players currently working on tokenization of public equities:
Avalanche / Dinari: Dinari, leveraging Avalanche's infrastructure, is actively tokenizing public equities, aiming to create a unified settlement layer across multiple blockchains, enhancing global accessibility and efficiency.
Backed Finance: A leader in tokenized U.S. equities on Solana, offering 1:1 backed stocks like TSLA and NVDA, integrated with DeFi for collateral use in 2025.
Coinbase: Seeking SEC approval to launch tokenized stocks and derivatives for U.S. users, aiming to create an "everything exchange" integrating blockchain-based equities with crypto rails.
Galaxy Digital / Superstate: Issuing tokenized shares of its own stock (GLXY), with full equity rights, on Solana.
Injective Protocol: A decentralized platform offering synthetic equity derivatives, integrated with Cosmos, with 2025 upgrades boosting notional trading volume.
Kraken and Bybit: Provide custody-backed tokenized equities via xStocks, expanding to Asian markets in 2025 with Hong Kong and Singapore regulatory approvals.
Robinhood: Expanded tokenized U.S. stocks to Europe in 2024, hitting $300 million in Q2 2025 trading volumes with MiCA-compliant infrastructure for retail access.
Securitize: Specializes in institutional-grade tokenization, including equity-focused funds with Hamilton Lane (Q1 2025), managing over $3.94 billion in tokenized assets as of July 2025.
Swarm Markets: An EU-based fintech launched in 2025, offering MiCA-compliant tokenized equity trading for retail and institutional investors.
AI is revolutionizing tokenized equities, serving as the logic layer for blockchain’s trust ledger, as outlined in the primer. AI-driven trading bots optimize strategies on 24/7 platforms, executing trades based on real-time signals. Traditional algorithmic trading, which accounts for ~70% of U.S. stock market volume, relies on rules-based systems, but AI introduces adaptive machine learning to predict patterns and respond dynamically, enhancing efficiency. This shift could amplify volatility risks, such as flash crashes from coordinated AI actions, requiring safeguards. Predictive analytics, leveraging sentiment from platforms like X, improve price discovery for tokenized stocks. Automated portfolio rebalancing, powered by AI copilots, adjusts holdings based on macro triggers, boosting returns. Decentralized AI agents, like those on Gaia, could automate compliance checks or onchain audits, cutting costs. For instance, platforms like Injective use machine learning to refine synthetic equity pricing by integrating real-time data from oracles and predictive models, adjusting for market volatility and sentiment to minimize slippage and ensure accurate valuations, driving market efficiency.
By 2030, tokenized equities could capture a significant portion of global trading volume, driven by institutional adoption and retail demand in emerging markets. Trends include AI agents enabling autonomous trading, cross-chain bridges unifying liquidity, and expansion into markets like Africa and Southeast Asia. Regulatory clarity and infrastructure scalability will determine the pace of adoption, but the trajectory is clear: public equities are moving toward open, programmable markets.
Exhibit B: Estimated Growth in Tokenization Through 2033
Source: BCG and Ripple. For illustrative purposes only.
Rayo Capital Group (“Rayo”) is a New York City-based investment and advisory firm focused on the digital assets economy. Rayo invests in and advises on the infrastructure, protocols, and founders shaping the future of finance onchain, helping institutions, corporates, and innovators navigate and thrive in this transformative paradigm.
Author: Andoni Almeida
Contributors: Christian Narvaez, Julian Bermeo.
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Disclaimer: This paper is for general information purposes only. It does not constitute legal advice, investment advice or a recommendation or solicitation to buy or sell any investment and should not be used in the evaluation of the merits of making any investment decision. It should not be relied upon for accounting, legal or tax advice, or investment recommendations. This post reflects the current opinions of the authors and does not necessarily reflect the opinions of Rayo Capital, its affiliates, or individuals associated with Rayo Capital. The opinions reflected herein are subject to change without being updated.
*ERC-20: A standard for fungible tokens on Ethereum, used for simple, interchangeable assets like tokenized shares.
*ERC-1400: A security token standard on Ethereum, designed for compliant, regulated assets with built-in transfer restrictions.
*Solana: A high-speed blockchain known for low-cost, scalable transactions, ideal for high-frequency trading.
*Injective Protocol: A layer-1 blockchain for decentralized derivatives and financial applications.
*Aave: A leading DeFi lending protocol allowing users to borrow against collateral like tokenized equities.
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