Stock Tokenization Gains Momentum as Wall Street and DeFi Blur the Lines

As traditional finance and crypto begin to converge, tokenized stocks could emerge as the next trillion-dollar asset class.

Traditional Finance Meets Blockchain: A New Asset Class Emerges

The once-clear boundary between Wall Street and the crypto ecosystem is quickly eroding. In 2025, major financial institutions are not only warming up to blockchain, they’re starting to embrace it.

Citibank is reportedly exploring a stablecoin initiative. Bank of America is preparing digital asset pilot programs. And on the other side, Web3-native projects like Injective, Backed Finance, and xStocks are leading a new wave of “stock tokenization,” converting real-world equities such as Apple and Tesla into blockchain-native digital tokens.

The shift signals a larger transformation: traditional financial instruments are being broken into programmable, tradeable, and composable blockchain assets. The implications for global finance could be massive, and irreversible.

What Is Stock Tokenization?

Stock tokenization refers to the process of issuing blockchain-based representations of real-world stocks. These tokens mirror the price of underlying equities, often in a 1:1 ratio, but typically do not carry voting rights or shareholder privileges. 

They’re more akin to equity derivatives than direct ownership, but they offer something traditional equities can’t: composability, borderless access, and 24/7 liquidity.

For example, a retail investor in Indonesia can now purchase a fraction of a Tesla stock as a token, use it as collateral in a DeFi loan, or stake it in a liquidity pool to earn yield, all without ever setting foot inside a brokerage account.

The real kicker? They can do all of this from a smartphone, at any time of day.

From Niche Concept to Strategic Trend

The concept isn’t entirely new. The Mirror Protocol experimented with tokenized stocks during the DeFi boom of 2021, but collapsed alongside Terra’s broader ecosystem due to systemic risk and weak infrastructure. Since then, new players have entered with more mature compliance, liquidity, and risk models.

Projects like Backed Finance, which physically back each token with a share held in custody, and Injective, which uses oracle-fed synthetic representations, are advancing the technology while complying with regulations. Meanwhile, Chainlink ensures reliable price feeds, acting as the industry’s trusted “price GPS.”

As of mid-2025, the tokenized stock market is still small, estimated at just $500 million, according to data from RWA.xyz. But that number represents a grain of sand compared to the $134 trillion global equity market. If even 1% of global stocks move on-chain by 2030, the market could exceed $1.34 trillion, a 2,680x increase from today.

The 2025 Signs of a Breakout

Momentum is already building. In the Solana ecosystem, tokenized stock volume went to $100 million in a single month. 

Fintech players are also entering the game. Robinhood has begun offering 24/5 trading of over 200 tokenized U.S. equities in Europe, without fees. Kraken now supports direct purchases of tokenized shares like xAAPL. Backed Finance’s tokenized assets make up 80% of the top 10 tokenized stocks by market cap.

Why Tokenized Stocks Are Gaining Real Appeal

Tokenized stocks are quickly capturing investor attention by addressing long-standing inefficiencies in traditional equity markets. One of the most compelling advantages is cost reduction. Conventional brokerages often impose foreign transaction fees, custody charges, and hefty commission spreads. Tokenization offers a leaner model that could cut these expenses by 50% to 70% and this creates a more attractive proposition for global investors.

Another key benefit is trading flexibility. U.S. stock markets are confined to limited hours, but tokenized equities enable 24/7 trading across continents. This continuous access allows markets to respond in real time to global events, like a midnight Federal Reserve announcement, without waiting for Wall Street to open. For investors seeking speed and agility, this level of liquidity is unmatched.

The most revolutionary element, however, is composability. Unlike traditional stocks, tokenized versions can serve as collateral for crypto-backed loans, be integrated into automated investment strategies, and earn yields within DeFi platforms. JPMorgan’s recent foray into crypto-backed lending is a prime example of how Wall Street is no longer watching from the sidelines, it’s adapting the DeFi playbook.

What’s Next? Regulation, Scale, and Retail Adoption

As we move deeper into 2025, stock tokenization appears poised to move from experimental to exponential. The groundwork for this transformation is being laid by maturing technology, a surge in institutional interest, and the gradual emergence of global regulatory frameworks. The EU’s Markets in Crypto-Assets (MiCA) and the U.S.-backed GENIUS Act are helping create the legal clarity required for mass adoption.

Still, several challenges remain. For tokenized equities to become a viable alternative to traditional brokerage systems, investors need to experience tangible benefits, such as lower costs and better returns, to justify the switch. Standardization across platforms is another key hurdle. Token formats, liquidity protocols, and user interfaces must become interoperable across chains to ensure a seamless experience for traders.

Though still in its infancy, this sector is rapidly evolving. By 2030, tokenized equities may be as commonplace as traditional stocks, only smarter, more flexible, and accessible to a broader swath of the population.