The Industry Used to Tokenize the Wrong Things - Not Anymore
For most of the past decade, one of the easiest ways to dismiss blockchain was to ask a very reasonable question: Why does any of this need to be on-chain?
And for much of that period, the skeptics had a point.
The earliest attempts at tokenizing real-world assets weren’t particularly inspiring. Blockchain entrepreneurs took perfectly functional technology and used it to tokenize obscure real estate projects, small private companies, and other assets that very few investors actually wanted to own. We proved that an asset technically could be put on a blockchain, but we never proved that it should be.
Meanwhile, traditional investors could already buy stocks and bonds through Schwab or Fidelity in seconds. Why would they open a crypto wallet, wire money to an exchange, buy ETH, move it to another platform, and figure out how to custody a token simply to gain exposure to an investment they could already access elsewhere, or didn’t want in the first place?
This wasn’t a technology problem. It was a product/market fit problem.
In fact, we wrote almost exactly that seven years ago. In June 2019, we wrote about the disappointing early market for Security Token Offerings (STOs):
“The problem is not that these tokenized security offerings are bad ideas, the problem is a lack of product/market fit.”
At the time, more than 150 digital securities had already been created, yet virtually none had meaningful liquidity. Crypto investors weren’t particularly excited about securities promising normal 10-20% annual investment returns, while traditional investors weren’t going to jump through a series of crypto-specific hoops simply to buy tokenized versions of assets they could already purchase through the stock and bond markets.
But we also wrote about what would eventually change that equation:
“Some beloved company or asset will become a pioneer, offering a tokenized asset that will blow people’s minds…”
We even speculated that perhaps Amazon or Domino’s Pizza would tokenize its equity, creating an asset with enough natural demand that investors would finally be motivated to figure out how the new infrastructure worked.
We didn’t get Amazon or Domino’s in 2019. But seven years later, we’re finally getting the assets we were waiting for. Virtually every layer of the financial system is now moving in the same direction, driven by the biggest TradFi companies:
There are dozens of other examples we could add, but the important part isn’t any individual announcement; it’s that these companies occupy completely different parts of the financial system and are independently arriving at the same conclusion—from asset management, banking, clearing, exchanges, and retail distribution.
And all of a sudden, the assets aren’t the problem anymore.
Investors already want to own Apple, Nvidia, U.S. Treasuries, money-market funds, private companies like OpenAI and SpaceX, dollars, and real estate. The question is increasingly becoming: “What is the best infrastructure for owning, transferring, trading, borrowing against, and settling these assets?” And blockchain has a pretty compelling answer.
This is an important distinction because we’ve probably spent too much of crypto’s history trying to convince investors to care about an asset because it was on a blockchain. We had it backward. The breakthrough comes when the assets investors already care about move onto a blockchain.
We revisited this concept last year in our “12 Crypto Hills I Will Die On,” calling it the Crypto Investing Paradox:
“The tech works, but it works with the wrong assets. We need assets that people care about (stocks/bonds/real estate) on blockchain rails.”
We argued that once stocks, bonds, crypto, and hard assets could move seamlessly back and forth on the same infrastructure, blockchain usage could increase 10-50x. That sounded aggressive at the time. Today, it might be conservative.
Robinhood CEO, Vlad Tenev, wrote this week that when Robinhood launched Stock Tokens on Robinhood Chain just over two months ago, the initial questions were basic: “Can we build them, and will anyone care?” Those aren’t the questions anymore. Now people are debating how tokenized stocks should be structured, whether issuers should have approval rights, what rights token holders should receive, and whether companies should be able to prevent investors from putting their shares on-chain. That’s an enormous change.
The debate is no longer whether stocks can or should exist on a blockchain. The debate is increasingly about how they should exist on a blockchain. Tenev takes the argument even further: if an investor legally owns a freely transferable security, moving or using that economic interest on-chain shouldn’t suddenly grant the issuer veto rights it didn’t have when the asset lived off-chain.
And that’s usually what technological inevitability looks like. The argument quietly moves from “Why would anyone ever use this?” to “Okay, but what rules should govern it?”
Larry Fink may have summarized the destination best in BlackRock’s 2025 annual letter:
“Every stock, every bond, every fund—every asset—can be tokenized.”
For years, that sounded like something a crypto founder would say at a conference. Now it’s being said by the CEO of the world’s largest asset manager while Robinhood, Nasdaq, NYSE, DTCC, JPMorgan and Franklin Templeton are actively building the infrastructure to make it happen.
The earliest iterations of tokenization didn’t fail because blockchain didn’t work. The industry simply tokenized the wrong things. Now we’re starting to tokenize the right ones.
From Paper… to Databases… to Blockchains
Of course, putting assets people actually care about on-chain only matters if blockchain is actually better financial infrastructure. To understand why we think it is, it’s helpful to remember that the infrastructure underneath today’s financial markets isn’t nearly as modern as the assets trading on top of it might suggest.
In the 1960s, buying a stock literally involved moving pieces of paper. Every transaction generated physical stock certificates that had to be delivered, processed, and recorded. As trading volumes exploded late in the decade, Wall Street couldn’t keep up. The resulting “paperwork crisis” became so severe that the New York Stock Exchange shortened trading hours and eventually closed every Wednesday simply so brokerage firms could process the backlog of transactions.
The solution was eventually to immobilize physical certificates in centralized depositories and replace paper movement with electronic book-entry records. It was a massive technological improvement, and it ultimately helped produce the financial infrastructure we still use today. It wasn’t designed to be perfect forever, but it was designed as the best solution available given the technology of the time.
Today, when you buy a stock through a brokerage account, your name generally doesn’t appear directly on the issuer’s official shareholder register. Most publicly traded shares are registered to Cede & Co., the nominee of the Depository Trust Company (DTC). Your broker has an entitlement through DTC, and you, in turn, have a beneficial ownership interest through your broker.
In other words, beneath the simplicity of clicking “Buy” on an iPhone lies an enormous series of ledgers, intermediaries, and databases that must constantly agree with one another.
Usually, they do. Sometimes, they don’t.
One of the best examples occurred following the 2013 take-private transaction of Dole Food Company. Following litigation related to the transaction, shareholders became entitled to additional compensation. There were 36.8 million shares eligible to participate in the class. But when the claims came in, investors submitted facially valid claims representing 49.2 million shares.
Somehow, the financial system had produced claims for roughly 12.4 million more shares than were actually eligible to receive the settlement.
Nobody had secretly printed millions of counterfeit Dole stock certificates. Rather, the discrepancy was a byproduct of the enormously complicated system of beneficial ownership, brokers, short sellers, securities lending, settlement, and DTC’s records sitting between the corporation and its ultimate shareholders. A Delaware court was ultimately left trying to determine how to distribute money among investors when valid-looking claims existed for significantly more shares than legally existed in the class.
Think about how absurd that is.
We have built financial markets capable of trading trillions of dollars of securities at nearly the speed of light, yet determining exactly who owned a relatively small public company at a particular moment became an accounting puzzle.
This isn’t really an indictment of DTC. In fact, DTC was part of the solution to the previous generation’s infrastructure problem. It’s just an illustration of something much bigger – financial infrastructure evolves whenever the previous infrastructure is no longer good enough.
Paper → Electronic Databases → Blockchains
Robinhood CEO Vlad Tenev made essentially this exact argument this week.
“The paperwork crisis of the late 1960s overwhelmed a system built around moving physical stock certificates. The solution was immobilization and electronic book-entry settlement. That was the right solution for the technology of the time. But we shouldn’t assume it is the endpoint of market design.”
We tend to look at today’s financial system as if its structure is somehow inherent to finance. Exchanges close every night. Securities take time to settle. Money sits with custodians. Assets live inside individual brokerage accounts. Transfer agents maintain shareholder records. Clearinghouses sit between buyers and sellers. Banks reconcile their databases with other banks’ databases.
But almost none of those things are laws of finance. They’re artifacts of the technology we used to build the financial system.
Larry Fink made a similar point in BlackRock’s 2025 annual letter, comparing the existing financial infrastructure to the postal service:
“If SWIFT is the postal service, tokenization is email itself.”
That’s a useful analogy because email didn’t make the written word obsolete. It simply created a vastly better infrastructure for transmitting it. Blockchain doesn’t make Apple stock better just because a token is attached to it. It potentially makes the ownership and movement of Apple stock better. As we’ve always said, “the internet is for information transfer, as blockchain is for asset transfer.”
A tokenized security can theoretically trade around the clock. Ownership can transfer nearly instantaneously. The asset can move between platforms and be used as collateral. Corporate actions can be automated. Investors can interact directly with assets rather than through multiple layers of intermediaries. And because the ownership record itself exists on a shared ledger, market participants no longer need to spend nearly as much time and money making sure Database A agrees with Database B.
And perhaps the strongest evidence that this isn’t merely a theoretical crypto argument is who’s building it. DTC itself. DTC today sits at the center of the U.S. securities market and custodies more than $100 trillion of assets. Yet the organization created to help Wall Street transition away from physical stock certificates is now actively building infrastructure to tokenize the securities it holds.
Earlier this year, DTCC began developing its tokenization service alongside dozens of institutions spanning traditional finance and crypto. Then, in July, DTCC moved beyond prototypes and converted actual DTC-held securities into tokens that were used in real production transactions, including Treasury repo transactions, Treasury purchases and sales, and equity trades. Its full tokenization service is expected to launch this fall.
There is something wonderfully circular about this. The institution created to help solve the problems created by paper is now helping solve the problems created by the database architecture that replaced paper.
And this is why the current tokenization movement feels different from previous crypto cycles. We’re not asking the existing financial system to disappear. The existing financial system is upgrading itself. Increasingly, the question isn’t whether DTC, Nasdaq, NYSE or Robinhood will be replaced by blockchains. It’s what happens when DTC, Nasdaq, NYSE and Robinhood start using blockchains themselves.
Blockchain doesn’t need to replace stocks, bonds, dollars, real estate, or investment funds either. It just needs to become a better way to issue, own, transfer, and use them. And increasingly, the institutions responsible for today’s financial infrastructure seem to agree.
Putting an Asset On-chain Is Only the Beginning
Of course, simply putting a stock or bond on a blockchain isn’t particularly revolutionary.
If Apple stock moves from a traditional brokerage database onto a blockchain but can still only be bought and sold inside one closed platform, we’ve basically just replaced one database with another. There may be some settlement and operational efficiencies, but that’s hardly enough to rebuild the global financial system.
The real opportunity begins with what happens to an asset once it’s on-chain.
A tokenized stock can theoretically trade 24 hours a day, seven days a week. It can settle instantly against stablecoins. It can move between applications rather than remaining trapped inside a brokerage account. It can be pledged as collateral, borrowed against, lent to someone else, or incorporated into automated financial transactions.
In other words, the asset becomes programmable.
This is why we’ve long viewed Real World Asset (RWA) tokenization, stablecoins/payments and decentralized finance (DeFi) as three of the largest opportunities in digital assets. Increasingly, however, we’re not sure they’re actually three separate themes. There are three layers of the same financial system.
Consider what happens when all three exist simultaneously. Today, an investor who owns Apple stock and wants to borrow against it may need to keep those shares at an approved brokerage or custodian, establish a lending relationship, satisfy the lender’s collateral requirements, wait for the relevant institutions to communicate with one another, and ultimately receive dollars through the banking system.
In an on-chain financial system, that same investor could theoretically move tokenized Apple shares into a lending protocol, post them as collateral, and borrow tokenized dollars against them almost instantly. No banking hours. No settlement window. No need for three different databases to reconcile with each other.
The Apple stock hasn’t changed. What you can do with it has changed.
This is also why the growing connection between tokenized securities and stablecoins is so important. NYSE isn’t designing a 24/7 tokenized securities platform merely so investors can look at stocks inside a crypto wallet. Its vision includes tokenized equities trading instantly against stablecoins. Robinhood has discussed Stock Tokens eventually interacting with lending markets and other on-chain applications. Franklin Templeton’s tokenized money-market funds can increasingly move across blockchain networks and be used as collateral. The asset and the funds used to purchase it are moving onto the same infrastructure.
Once that happens, many of the distinctions we’ve created between trading, settlement, custody, payments and lending begin to blur. And this is where tokenization becomes much bigger than an efficiency upgrade for Wall Street. It creates the possibility of a global, always-on financial system where assets can interact with one another programmatically.
A Treasury can become collateral for a loan. A money-market fund can serve as a payment instrument. A stock can secure a stablecoin loan. A real estate interest can potentially be fractionalized and transferred globally. And applications can be built on top of these assets without every new financial product requiring an entirely new stack of intermediaries and infrastructure.
We wrote about a version of this future back in 2024, when Aave crossed $30 billion in deposits despite operating almost entirely with crypto-native assets: “Imagine what will happen when your stocks, bonds, and hard assets can be used for collateral.”
Take that idea to its logical conclusion, and even the concept of holding “cash” begins to look antiquated. If every asset in your portfolio is liquid, divisible, transferable, and instantly exchangeable, why leave 5% or 10% of your wealth sitting idle? In theory, investors could remain nearly fully invested at all times and simply sell, borrow against, or transfer tiny amounts of their portfolio whenever money is needed. Your investment portfolio effectively becomes your checking account.
This is the part of tokenization that is still easy to underestimate. Moving an asset on-chain is not the end product. It’s what makes everything else possible. And it helps explain why we continue to believe that DeFi, stablecoins/payments, and RWA tokenization represent the most important long-term opportunities in digital assets. As more of the world’s assets migrate on-chain, the protocols that facilitate trading, lending, borrowing, collateral management and payments suddenly have a much larger universe to serve.
For most of DeFi’s history, we’ve built increasingly sophisticated financial infrastructure around a relatively small collection of crypto-native assets. But soon the collateral universe expands to include stocks, bonds, Treasuries, money-market funds, private securities, and real estate, and eventually, perhaps, almost anything that has an owner and a price.
That’s when the opportunity set changes dramatically. Because the ultimate promise of tokenization isn’t simply that every asset will exist on-chain. It’s that every on-chain asset can eventually interact with every other on-chain asset.
Stocks and Bonds Are Just the Beginning
Everything we’ve discussed so far assumes that blockchain simply recreates assets that already exist. Apple stock becomes tokenized Apple stock. A Treasury bond becomes a tokenized Treasury. A money-market fund becomes a tokenized money-market fund.
But we’ve long believed the opportunity goes far beyond that.
In March 2022, we wrote:
“Every company, university, municipality, and entity will soon find a way to introduce a token into its capital structure.”
At the time, we used companies like Soho House, Equinox, and Netflix as examples. Why couldn’t Soho House issue a token that provides membership benefits while also aligning the economic interests of its best customers with the company's? Why couldn’t Equinox do the same thing? Or Netflix? And by 2025, we expanded the prediction again. The point was never that Harvard needs a memecoin or that the Cleveland Guardians should replace their equity with an ERC-20 token. The point is that blockchains create an entirely new toolkit for capital formation and ownership.
Today, organizations generally have a fairly limited menu. Companies can issue debt or equity. Municipalities issue municipal bonds. Universities rely on donations, tuition, and endowments. Sports teams sell tickets, merchandise, sponsorships, and media rights.
Tokens can potentially create something different: a programmable asset that combines economics, ownership, access, loyalty, governance, and utility in ways that don’t fit neatly into the traditional definitions of debt or equity.
And the first step may simply be moving the world’s existing financial assets on-chain. Once investors become comfortable holding stocks, bonds, dollars, funds, and real estate in tokenized form, issuing an entirely new type of asset doesn’t feel nearly as foreign. That’s why we’ve repeatedly argued that we’re approaching the end of the “dot-crypto” phase of blockchain.
Nobody calls Amazon an “internet stock” anymore. Nobody describes JPMorgan as an “internet bank” because customers use its website. And virtually every company in the world uses the internet without needing to identify itself as an internet company. Blockchain should eventually follow the same path. The interesting question won’t be whether an asset is “crypto.” It will simply be: what does the asset represent, what rights does it provide, and what can you do with it?
For most of the past decade, investors have treated crypto as its own asset class. Stocks over here. Bonds over there. Real estate somewhere else. And then crypto—a strange collection of Bitcoin, smart-contract platforms, DeFi tokens, memecoins and everything else that happened to use blockchain technology.
We’ve never thought that categorization made much sense. As we wrote last year: “Crypto is simply a wrapper that houses all asset classes.” That distinction becomes increasingly obvious as traditional assets move on-chain. If Apple stock exists on a blockchain, is it crypto or a stock? If a BlackRock Treasury fund exists on Ethereum, is it crypto or fixed income? If dollars move around the world as stablecoins, are they crypto or cash? If a building is tokenized, is it crypto or real estate?
The answer, of course, is that the underlying asset never changed. Only the infrastructure did. And that’s why the current wave of tokenization feels so much more important than the first one. Seven years ago, this industry was trying to convince investors to buy assets they didn’t particularly care about simply because someone had put them on a blockchain. Today, the world’s largest financial institutions are putting the assets investors already care about onto blockchain rails, opening them up to new buyers and new uses.
Tomorrow, those assets will become programmable, transferable, and interoperable with one another. Stocks can become collateral. Treasuries can become payment instruments. Stablecoins can settle transactions instantly. DeFi protocols can connect borrowers, lenders, traders, and assets globally. And organizations may create entirely new securities and capital structures that aren’t possible within today’s financial architecture.
Eventually, we may look back at the phrase “crypto asset” the same way we now look back at the phrase “internet company.” A useful description during the transition, but eventually, a completely unnecessary one.
The winning version of blockchain may ultimately be the one where nobody even bothers to call it blockchain anymore.
And That’s Our Two Satoshis!
