Tokenization involves issuing digital representations of financial assets that can be transferred via blockchain, potentially making markets more global, continuous and programmable. The Securities and Exchange Commission opened a temporary pathway in September allowing certain platforms to trade tokenized stocks, while DTCC’s tokenization service covers 34 eligible securities and keeps them connected to existing custody and recordkeeping infrastructure. International access to U.S. equities is an initial use case, with Robinhood already available in more than 120 countries, while tokenization could also reduce minimum investment sizes and distribution barriers in private markets. Through smart contracts, tokenized securities could serve as collateral, move between financial applications and improve capital efficiency, although liquidity fragmentation and the lack of final rules remain obstacles.
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