Rayo Capital Group

Tokenization of Public Equities: Democratizing Global Markets

rayocapital@newsletter.paragraph.com (Andoni Almeida) — Tue, 07 Oct 2025 21:46:48 GMT

October 7, 2025

Introduction

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.

Overview

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.

Key Use Cases

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.

Benefits and Opportunities

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.

Challenges and Regulatory Landscape

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.

Milestones and What's Been Done

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.

Who's Doing It Today

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.

The Role of AI in Tokenized Public Equities

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.

Future Outlook

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.

The Evolution of Digital Assets and U.S. Policy Responses

rayocapital@newsletter.paragraph.com (Christian Narvaez) — Mon, 29 Sep 2025 14:17:44 GMT

September 29, 2025

The New Wave of Innovation

Since 2009, blockchain-based digital assets have grown into a trillion-dollar industry transforming global finance. Much like the internet revolution decades earlier, digital assets are scaling fast, expected to reach $4T by the end of 2025. From Bitcoin to stablecoins, tokenized assets to network tokens, blockchain is enabling digital-native ownership, instant value transfer, and decentralized exchange. Blockchain innovation challenges the limitations of fiat currency and centralized banking, opening the door to faster, cost effective, and more transparent systems while sparking new waves of innovation alongside AI and frontier tech.

Given the rapid growth and systemic implications of digital assets, the question is no longer if they will reshape global finance, but how governments will respond. Around the world, regulators are now prioritizing frameworks to protect users, preserve market integrity, and foster responsible innovation, setting the stage for the next phase of growth.

Exhibit A: Technology is Driven By Major Waves of Innovation

Source: Coatue EMW/2025 as of June 2025. For illustrative purposes only.

Global Regulatory Frameworks

The digital assets industry remains in its infancy, and as such, regulatory frameworks are beginning to develop across the globe to ensure the protection of users and industry growth, tackling concerns about its potential misuse in illicit activities such as money laundering and tax evasion. Foreign governments are slowly starting to implement regulatory frameworks, particularly around custodial services, oversight, tax reporting, and fund inclusion. These regulations remain far less strict than those applied to traditional currencies, aiming to preserve industry core principles and encourage innovation. Global markets have been far more responsive to the changes in technology as the industry progresses, adopting new regulatory regimes in waves.

Select Regulatory Frameworks Introduced Globally

Hong Kong published discussion for the need of a full regulatory regime as early as 2019, with adopting a framework in 2020, and continues to amend and introduce new rules for technology developments in tokenization.
The European Union for example published MiCA as their regulatory regime in 2023, coming to varying degrees of effect in 2024.
The UAE has adopted VARA as their regulatory regime in 2022, coming into force in 2023.
Brazil applied some previous laws for transmitting money using the internet, then supplemented with a new law published in 2022, and enforced starting in 2023. Brazil continues to adopt ad hoc regulations as its use increases.

Similarly, the current United States administration has brought the digital assets industry into focus, introducing key legislation and proposing new regulatory frameworks aimed to help boost US industry relevance. While foreign governments have adopted regulatory regimes over the past decade, the United States is at long last laser-focused on defining its own industry regulations to accommodate cryptocurrencies and blockchain technologies, and thus, facilitating the integration with traditional financial markets. Since its inception in 2009, the total value of virtual currencies is tracked to be as high as 4-trillion dollars in 2025. Yet in these years little progress has been made to address this industry by federal lawmakers. Until now.

United States Regulatory Framework

Currently, the United States Securities and Exchange Commission, or “SEC” is seeking to adopt a regulatory regime that will create consumer protection and encourage industry growth in the United States. The SEC is encouraging legal scholarship through their SEC Crypto Task Force Roundtable discussions and is now publishing guidance on issues of limited scope, periodically. This marks a shift from the previous administration of Gary Gensler, former SEC Chairman, who is credited with using a style of regulation by enforcement. The SEC under Gensler refused to work proactively with crypto companies and provide regulatory guidance, instead electing to initiate enforcement actions pursuant to, at times, dubious legal theories, which caused many crypto projects to avoid the United States.

There have been several bills introduced to address the lack of regulatory framework for digital assets. Specifically, to outline compliance requirements, at what stage compliance requirements come into effect, and what digital assets can be categorized as securities. There have been some attempts to introduce legislation to tackle some of these overarching issues, such as FIT21 (H.R.4763), which was introduced to the House July 2023 but was ultimately put on hold, and the Market Structure bill (H.R.5745) which was introduced in September 2023 and was also been put on hold. Most recently, new legislation establishing a broad regulatory framework has garnered greater popularity like the CLARITY Act (H.R.3633) which was introduced in May 2025, passing the House, and is currently awaiting review by the Senate. Most notably, the Genius Act (S. 1582) was introduced in May 2025 and passed July 2025, establishing a comprehensive federal regulatory framework for payment stablecoins and relevant disclosures.

Source: Summary compiled using congress.gov. For illustrative purposes only.

Summary of Passed US Legislation for Digital Assets

Bit License: (State - Passed and in Effect)

Overview: The New York Bit License, considered New York’s landmark crypto regulation, is a regulatory oversight regime set up by the New York State Department of Financial Services (“NYSDFS”) to oversee the registered and licensed virtual currency businesses (“VCB”) operating in New York.
When: Introduced Jul 23, 2014, with a 45-day discussion period after its publication, and passed the following month on August 8, 2015.
Main highlights:
1. Defined Jurisdiction: Defines VBC as those businesses that on behalf of a consumer hold, transmit, exchange, maintain custody or control over cryptocurrency. Any business defined as a VBC falls under the jurisdiction.
2. Licensing Requirement: Firms must obtain a BitLicense to legally operate in New York’s crypto market.
3. Reserve Requirements: Issuers are required to hold 100% of the nominal value of all outstanding stablecoins. Low risk highly liquid assets that can match the daily circulation of stablecoins. Reserves must be held separately from the issuer's proprietary assets.
4. Disclosure and Transparency: Attestations and audits by independent CPAs are required to occur during regular intervals. The CPA must be able to affirm the adequacy of reserves.
5. Capital Adequacy: VBCs falling under custodian, exchange, and transmission services are required to meet broader capital adequacy evaluations determined by NYDFS to ensure financial stability.

GENIUS Act: (Federal - Passed)

Overview: The first federal legislation in the United States to establish a comprehensive regulatory framework for USD payment stablecoins, pegging digital assets to fiat currency like the US dollar, and forming eligibility regulatory standards for permitted issuers to issue USD stablecoins.
When: Introduced May 1, 2025 and passed both Senate and House July 18, 2025. It will become effective on ~January 18, 2027, or the date that is 120 days after regulators issue any final regulations, whichever comes first.
Main highlights:
1. Oversight: The GENIUS Act specifies that payment stablecoins meeting its terms are excluded from the definition of a “security” under the federal securities laws and “commodity” under the Commodity Exchange Act, effectively removing them from regulation by the Securities and Exchange Commission (“SEC”) and Commodity Futures Trading Commission (“CFTC”).
2. Issuers & Scope: Only designated “permitted payment stablecoin issuers”, which include approved bank subsidiaries, OCC-chartered entities, and certain state-regulated issuers, can issue stablecoins in the US. Some limited set of foreign issuers may participate if they meet stringent US standards and compliance. Additionally, imporant to note this Act prohibits stablecoin issuers from directly paying interest or yield on payment stablecoins.
3. Reserve Requirements & Disclosure: Issuers must maintain 1:1 backing of stablecoins with highly liquid assets like US dollars, short-term Treasuries, demand deposits, certain repos, and tokenized equivalents in addition to monthly disclosure requirements for composition of reserves for added transparency.
4. Regulatory Classification & Oversight: Payment stablecoins issued by permitted entities are not considered securities or commodities, placing them outside SEC and CFTC oversight, and instead, under banking regulators. Issuers must adhere to anti-money laundering and sanctions laws under the Bank Secrecy Act.
5. Consumer Protection: Marketing that implies government backing (federal deposit insurance, US government guarantee, or legal tender status) is explicitly banned. In the event of issuer insolvency, stablecoin holders are granted first priority claims on reserves, with expedited court proceedings.
6. Interoperability & Treasury Oversight: The Secretary of the Treasury may enact interoperability agreements to support cross-border usage and recognition of US dollar-denominated stablecoins issued abroad.
7. Compliance: Creates three regulatory pathways for nonbank companies to issue payment stablecoins, enabling issuers to operate without being subject to the full banking regulatory framework applied to commercial banks.

Clarity Act: (Federal - Passed House, awaiting Senate)

Overview: Legislative proposal seeking to establish a regulatory framework for digital assets. It aims to differentiate “digital commodities” from securities, introduce a "mature blockchain system" concept for regulatory exemptions, and protect individual self-custody rights.
When: Introduced on May 29, 2025 and passed the House on July 17, 2025. Currently awaiting Senate approval.
Main highlights:
1. Jurisdictional Clarity: Seeks to resolve the regulatory overlap between the SEC and CFTC. It gives the CFTC exclusive regulatory authority over spot market transactions in digital commodities, while the SEC retains authority over investment contract assets. This provides legal certainty for developers, investors, and exchanges.
2. “Digital Commodities”: Digital commodities are defined based on their inherent characteristics, excluding securities, derivatives, and stablecoins. In other words, digital commodities are intangible and are represented on blockchain networks, examples include cryptocurrencies like Bitcoin, digital tokens, or other blockchain-based assets that hold value and can be exchanged.
3. Maturity Framework: Provides a four-year regulatory window for new token projects, issuers on mature blockchains can access a limited SEC registration exemption for capital raising under specific conditions. The act also introduces a maturity framework to determine if a blockchain system is not controlled by a single entity.
4. Regulation of Intermediaries: Establishes new CFTC registration requirements for Digital Commodity Exchanges, Brokers, and Dealers, requiring them to adhere to standards similar to traditional financial markets.
5. Decentralized Finance (“DeFi”): Provides safeguards for DeFi by exempting protocols and applications without discretionary control or custody of customer assets from intermediary regulations. However, any DeFi actor performing such functions would be subject to full registration and oversight.
6. Impact on Treasury Companies: An amendment could extend the CFTC's regulation of commodity pools to spot digital commodities, potentially impacting digital asset treasury companies and requiring additional registration for operators and advisors.
7. Consumer Protection: Requires developers to disclose project ownership, governance, and structure. It also mandates that Brokers, Dealers, and Exchanges register, provide customer disclosures, segregate assets, and operate transparently to prevent conflicts of interest.

BONUS: Decentralized Autonomous Organization (“DAOs”): (Not Federal, passing on many State levels)

Overview: Community-governed entity that operates transparently on a blockchain, with rules encoded into smart contracts that define its structure and operations without central leadership. Members hold digital tokens and vote on decisions, allowing for collective decision-making and management of shared goals and resources.
When: First DAO was introduced and formed in 2016 on a project basis, since, States have begun to discuss State-legislation to govern and provide frameworks for DAOs, notably, Wyoming and Utah. Other States likely to follow suit.
Main highlights:
1. Structure: DAOs can set up structures using smart contacts to permit and schedule dividend/reward allocations to qualifying participants.
2. Governance & Voting: Built on blockchain technology distributed governance using membership through token ownership, and participation through collective decisions and smart contracts. Rules are transparent, and enforced through smart contracts.
3. Coordination: Enabling communities to coordinate without a central control mechanism. Borderless participation is possible through token ownership. Token ownership alone determines governance rights.
4. Themes: DAOs can focus on a particular goals or topics. Ranging from running a DeFi protocol, distributing grants and philanthropy to projects, organizing services distribution, or building cultural communities.

Other Legislation in the Pipeline

Additionally, there are several bills in the pipeline that will be reviewed by Senate and the House, and consequently continue to strengthen the regulatory frameworks to boost the Digital Assets ecosystem:

CBDC Anti-Surveillance State Act [H.R.5403 - 118th Congress (2023-2024)]
Uniform Treatment of Custodial Assets Act [H.R.5741 - 118th Congress (2023-2024)]
Equal Opportunity for all Investors Act [S.3921 - 117th Congress (2021-2022)]
Promoting Resilient Supply Chains Act of 2025 [H.R.2444 - 119th Congress (2025-2026)]
Digital Commodity Exchange Act of 2022 [H.R.7614 - 117th Congress (2021-2022)]

Contributors: Christian Narvaez, Julian Bermeo, Orlando Cosme, Joel de la Cruz.

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Tokenization Across Asset Classes: The Future of Finance Onchain

rayocapital@newsletter.paragraph.com (Rayo Capital Group) — Mon, 15 Sep 2025 23:36:33 GMT

September 15, 2025

In our earliest days, we bartered goods, exchanging grain for cattle or tools for fish. Over time, societies began to use more standardized mediums of exchange such as seashells, salt, and precious metals. With the rise of empires and trade, coins were minted to represent value more uniformly. Eventually, paper money emerged as a tool of convenience, backed first by gold and later, through the rise of fiat currency, by the trust of sovereign governments.

As commerce expanded and economies became more complex, we built banks to safeguard capital, issue credit, and facilitate transactions. Central banks followed, establishing monetary policy and regulating money supply. In the 20th century, credit cards, SWIFT, and digital banking brought capital online, but the architecture of the financial system remained fragmented, slow, and opaque.

Exhibit A: Technology is Driven By Major Waves of Innovation

Source: Coatue EMW/2025 as of June 2025. For illustrative purposes only.

Now, we are entering a new era. Tokenization is not just the digitization of value; it is the transformation of how value is created, represented, and transferred in a programmable, permissionless, and global way. By placing financial assets onchain, tokenization introduces a financial operating system where ownership is transparent, markets operate continuously, and settlement is instant.

At Rayo, we believe tokenization marks the next chapter in this millennia-long evolution of value. Just as the printing press transformed commerce and the internet redefined information, blockchain is re-architecting capital markets from the ground up. As Coatue described in its Emerging Money World 2025 keynote, we are at the precipice of a “New Money Moment,” where capital becomes faster, programmable, and accessible by default.

We are in the early innings of the tokenization movement, but the long-term implications are clear: finance is going onchain. Every asset class is being reimagined with programmable ownership, global liquidity, and transparent settlement. This primer is not just a snapshot of where we are; it is a map of where we are going. The following sections introduce our upcoming series, exploring how tokenization is transforming each asset class in depth.

Rayo Capital Group’s mission is to stay ahead of this curve, investing in the infrastructure, protocols, and founders building this new financial internet, while advising institutions, corporates, and innovators on how to navigate, adopt, and thrive in this new paradigm.

Exhibit B: Twin Flywheels of Tokenization Market Adoption

Source: Approaching the Tokenization Tipping Point by Ripple and Boston Consulting Group, April 07, 2025.

1. Public Equities

Overview: Public equities represent shares of companies listed on stock exchanges, forming a cornerstone of global capital markets. Tokenization enables 24/7 trading, global access, programmable compliance, and near-instant settlement.

Use Cases:

Global, fractional access to blue-chip public equities via tokenized representations.
Real-time settlement with onchain recordkeeping and automated compliance workflows.
Synthetic equity markets offering derivative exposure to public companies.

What’s Been Done:

Backed Finance launched tokenized versions of U.S. stocks such as TSLA, AAPL, and NVDA onchain, backed 1:1 and tradable on Solana.
Galaxy Digital partnered with Superstate to tokenize 32,374 shares of its Class A Common Stock on Solana in September 2025, enabling compliant, onchain representation of public equity.
Injective Protocol introduced decentralized derivatives including synthetic exposure to public equities.

Who’s Doing It Today:

Backed Finance: Powering tokenized U.S. equities accessible globally via Solana-based platforms.
Kraken and Bybit: Listing tokenized equities through partnerships with xStocks and custody-backed infrastructure.
Galaxy Digital (with Superstate): tokenizing its own public stock on Solana for 24/7 trading and settlement, limited to KYC-approved investors.

2. Private Equities

Overview: Private equities represent ownership in companies not listed on public exchanges. Tokenization opens these traditionally illiquid investments to global, fractional participation, enabling programmable ownership rights and streamlined secondary trading.

Use Cases:

Tokenized LP interests in private equity funds with programmable carry and compliance rules.
Fractionalized private company shares for early liquidity events.
Secondary markets for global investor access to private growth companies.

What’s Been Done:

Hamilton Lane has tokenized multiple feeder funds for private equity strategies on Securitize.
KKR tokenized a portion of its Health Care Strategic Growth Fund on Avalanche via Securitize.
ClearToken is building global clearing and settlement infrastructure for tokenized private markets.

Who’s Doing It Today:

Hamilton Lane: Offering tokenized feeder funds for private equity strategies.
KKR: Pioneering tokenized private fund offerings.
ClearToken: Infrastructure for institutional settlement in tokenized private markets.

3. Fixed Income

Overview: Fixed income includes assets such as bonds and debt instruments that generate regular income. These assets can be transformed through tokenization to provide instant settlement, global investor reach, and programmable yield distribution.

Use Cases:

Tokenized government or corporate bonds with onchain coupon payments.
Programmable debt instruments with embedded compliance.
Collateralized lending markets using tokenized bonds.

What’s Been Done:

Franklin Templeton issued a tokenized U.S. government money market fund on Stellar and Polygon.
Ondo Finance launched tokenized U.S. Treasuries for DeFi integration.
The U.S. Federal Reserve TechLab analyzed tokenized bonds issued on Ethereum (Santander 2019, EIB 2021), validating transparency and programmable execution for fixed income on public chains.

Who’s Doing It Today:

Franklin Templeton: Operating tokenized money market funds with billions under management.
Ondo Finance: Tokenized U.S. Treasuries accessible through DeFi and institutional channels.
Chainproof: Offering insurance for Ethereum staking to protect against slashing losses, supporting yield generation.

4. Cash and Cash Equivalents

Overview: These include stable, short-term instruments like Treasury bills and commercial paper. Tokenization of these assets offers seamless global liquidity, 24/7 transferability, and improved transparency.

Use Cases:

Global, permissionless stablecoins backed by U.S. Treasuries.
Treasury-backed savings instruments usable in DeFi.
Institutional cash management with instant redemption and settlement.

What’s Been Done:

Circle’s USDC and Tether’s USDT dominate the stablecoin market.
BlackRock’s BUIDL fund offers tokenized short-term U.S. Treasuries.
Sky (formerly known as MakerDAO) uses real-world assets including short-term debt as collateral.

Who’s Doing It Today:

Circle (USDC): Issuer of the second-largest stablecoin, integrated across global payment, DeFi, and institutional platforms.
Tether (USDT): Largest stablecoin issuer, with reserves including short-term U.S. Treasuries and cash equivalents.
Anchorage: Mountain Protocol — enabling tokenized T-bills for non-U.S. investors, combining regulated custody with programmable yield access.

5. Real Estate

Overview: Real estate includes physical properties such as residential, commercial, or land assets. Real estate tokenization fractionalizes physical assets, improving liquidity, reducing investment thresholds, and offering global participation.

Use Cases:

Fractional ownership of rental properties with onchain cash flow distribution.
REITs managed and settled via smart contracts.
Global access to regional property markets through token issuance.

What’s Been Done:

Ondo Finance has capabilities for tokenizing real-world assets, including real estate, as part of its broader RWA suite.
Parcel enables DAO-style ownership of land parcels, creating onchain governance and income-sharing models.
Chintai Network (Chex) powered a $100M tokenized real estate fund and supports tokenization of real estate debt.

Who’s Doing It Today:

Ondo Finance: Expanding into real-world asset markets including real estate-backed tokens.
Parcel: DAO-driven real estate tokenization on public blockchains.
Chintai Network (Chex): Compliant RWA infrastructure with Singapore licensing and global partnerships.

6. Commodities

Overview: Commodities include physical goods like metals, energy, or agricultural products. Tokenizing commodities brings transparency, liquidity, and programmability to traditionally opaque markets, whether metals, energy, or agricultural products.

Use Cases:

Tokens representing grains (e.g., soy, corn, wheat) collateralized at 1 ton = 1 token, usable as collateral or payment.
Commodity-backed stablecoins enabling farmers to access credit and DeFi.
Traceability-enabled commodity supply chains integrating payment, certification, and ESG tracking.

What’s Been Done:

Paxos Gold (PAXG) and Tether Gold (XAUT) issued gold-backed tokens.
Open Commodities piloted decentralized trading protocols for commodity markets.
Agrotoken in Latin America tokenized over 200,000 metric tons of grains, partnering with Visa, Santander, and Algorand.

Who’s Doing It Today:

Paxos (PAXG): Gold-backed commodity tokens with institutional-grade custody.
Tether (XAUT): Providing digital gold exposure.
Agrotoken: Grain-backed tokens used for credit, merchant payments, and financial products in LatAm.

7. Alternative Investments

Overview: Alternative investments include assets like hedge funds, private equity, collectibles, infrastructure, and crypto-native assets, often characterized by lower liquidity but potential for high returns. Tokenization enhances accessibility and liquidity for these assets.

Use Cases:

Tokenized LP interests with programmable carry and management fees.
Art, wine, or collectible NFTs enabling fractional access.
Infrastructure projects tokenizing revenue rights or ownership.

What’s Been Done:

Apollo launched the ACRED tokenized feeder fund for its Diversified Credit Fund, providing exposure to private credit alternatives.
BlackRock and Hamilton Lane have begun tokenizing fund structures.
Numerous NFT platforms are enabling fractionalized collectible ownership.

Who’s Doing It Today:

Apollo: Offering tokenized fund structures.
BlackRock: Tokenizing alternative investment funds.
Masterworks: Enabling fractional ownership of high-value art.

8. Foreign Currency (Forex)

Overview: Foreign currency (Forex) markets involve the exchange of one currency for another. Forex tokenization enables frictionless FX exposure, stablecoin-based remittances, and decentralized currency markets accessible 24/7.

Use Cases:

Onchain FX markets offering reduced fees and real-time execution via stablecoin pairs.
Stablecoin rails for remittances and business transactions in emerging markets.
Synthetic FX stablecoins pegged to regional currencies, enabling access and hedging strategies.

What’s Been Done:

Protocols like Curve and Maverick enabled FX trading using stablecoin pools.
Regionally pegged stablecoins (e.g., EURC, GBPC) supported by platforms like Circle.
Synthetic currency tokens created via Synthetix to model forex exposure.

Who’s Doing It Today:

Circle (USDC, EURC): Providing fiat-pegged stablecoin liquidity across global markets.
Curve Finance: Facilitating stable-swap pools for efficient FX liquidity.
Zabio: Enabling the FX informal economy in Colombia by bridging USDT and local currency through combined digital and physical infrastructure.

BONUS. The Future of Tokenization and AI

Overview: Artificial intelligence (AI) is a technology involving advanced computational systems that can perform tasks like data analysis, automation, and decision-making. AI is accelerating every layer of tokenization:

Use Cases:

Underwriting & Credit: AI models can score borrowers in real time, even in opaque emerging markets.
Compliance & Monitoring: Automated surveillance of tokenized asset flows, detecting risk anomalies instantly.
Decentralized AI Agents: Decentralized AI agents can execute smart contract logic and inference across distributed nodes, supporting automation in compliance, fund audits, and asset servicing.

What’s Been Done:

Zoniqx launched its AI-driven Tokenized Asset Lifecycle Management (TALM) platform, automating valuation and compliance for tokenized RWAs across Ethereum, XRP Ledger, and Polygon.
Gaia deployed decentralized AI agents for smart contract execution, enabling automated compliance checks for tokenized funds.
Bittensor’s dTAO upgrade and Ritual partnership enabled AI-driven subnets to automate analytics for tokenized assets in DeFi, supporting over 113 independent economic subnets.

Who’s Doing It Today:

Zoniqx: Using AI to optimize multi-chain RWA tokenization, automating valuation and compliance workflows.
Gaia: Providing decentralized AI agents for smart contract automation, enhancing compliance and audits in tokenization.
Bittensor: Operating a decentralized AI network that incentivizes machine learning through TAO tokens and subnets, enhancing tokenization processes by automating data analysis and compliance in DeFi and RWA ecosystems.

As AI continues to mature, it will create faster, smarter, and more autonomous capital markets.

Conclusion

Tokenization is poised to redefine global finance, unlocking unprecedented levels of efficiency, accessibility, and programmability across every asset class. As blockchain technology matures, it paves the way for a future where capital flows seamlessly, ownership is verifiable, and markets are truly global.

This primer serves as an introduction to an upcoming series, where we will dive deeper into each asset class covered here, exploring their unique opportunities and challenges in the tokenized economy.

Exhibit C: Tokenization Cube - Growth Methodology to 2033

Source: Approaching the Tokenization Tipping Point by Ripple and Boston Consulting Group, April 07, 2025.

Author: Andoni Almeida
Contributors: Julian Bermeo, Christian Narvaez

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, its affiliates, or individuals associated with Rayo. The opinions reflected herein are subject to change without being updated.