NYDIG claims that stock tokenization will bring in more profits through deeper on-chain integration
According to NYDIG, stock tokenization won’t deliver major gains to crypto right away, though deeper on-chain integration could change that over time.
NYDIG’s global head of research, Greg Cipolaro, explained, “The initial utility that tokenized stocks provide to blockchain networks such as Ethereum (ETH) is limited, but as their integration with blockchain expands accessibility, interoperability, and composability, those benefits will gradually grow.”
He added that the most direct benefit that blockchain receives in the early stages is the transaction fees generated during the trading process of tokenized assets, and also, networks that store and manage tokenized assets will see their network effects strengthened over time.
Cipolaro says tokenization will grow into a major trend in the years to come
Tokenized real-world assets are drawing growing interest across the crypto space, particularly in U.S. stocks, as Coinbase and Kraken explore launching similar platforms stateside after their overseas success.
Earlier this month, SEC’s Paul Atkins said the U.S. financial system could be ready to support tokenization in the coming years. According to Cipolaro, Atkins’ statement suggests that tokenization will become a significant theme in the market.
One of the most important drivers of tokenization’s growth continues to be regulatory certainty and regulatory clarity. Although Atkins’ statement signals openness, existing frameworks treat a great deal of tokenized assets almost as if they are traditional securities. So, even as issuers face the burden of abiding by existing investor protections, disclosure requirements, and custody rules, this means they have a lack of autonomy in free-flowing within open DeFi worlds.
Capilaro asserted that RWAs could be integrated into DeFi through composability, acting as collateral, lending assets, or tradable products. Still, their progress will depend on how quickly technology, infrastructure, and regulation develop. RWA.xyz analysis shows that tokenized versions of traditional financial products are a promising market development, totalling close to $400 billion in represented value.
The Canton Network, built by Digital Asset, is currently the largest RWA network, hosting about $380 billion in repurchase agreements — roughly 91% of all RWA represented value. However, it’s a privacy-preserving but permissioned system, meaning public participation is restricted.
Nonetheless, Ethereum dominates the open-network space with $12.1 billion in RWAs, followed by BNB Chain at $1.8 billion. On Ethereum, tokenized U.S. Treasury funds are the biggest application, representing $8.6 billion.
Cipolaro claimed that tokenized assets are challenging to make interoperable
Cipolaro argued that tokenized assets are hard to make interoperable because they vary in form and function and are hosted on both public and permissioned networks.
He expounded, nonetheless, that on a network like Ethereum, tokenized assets can be designed in a very different manner. Cipolaro also noted that most RWAs are securities and involve compliance elements like KYC, broker-dealers, transfer agents, and whitelisted wallets.
Should regulatory and technical barriers ease, tokenized stocks can also serve as collateral for decentralized lending protocols, integrated in automated trading strategies, or combined with other on-chain assets in structured products. These use cases would boost blockchain activity and deepen liquidity, although NYDIG cautions that these developments remain long-term prospects.
Cipolaro added that, despite the need for conventional financial structures, blockchain offers tokenized assets benefits such as near-instant settlement, always-on operations, programmatic ownership, transparency, auditability, and efficient collateral management.
He further remarked, “In the future, if things become more open and regulations become more favourable, as Chairman Atkins suggests, access to these assets should become more democratised, and thus these RWAs would enjoy expanded reach. Investors should pay attention, even if the economic impacts on traditional cryptocurrencies are minimal today.”
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