In one of the biggest developments yet of traditional finance moving onto the blockchain, The New York Stock Exchange (NYSE) has just announced plans for the tokenization of US equities and ETFs, allowing for 24/7 trading and instant settlement. The around-the-clock operations would rely on digital tokens mirroring the shares of listed companies, the NYSE’s parent company said in a statement.
The move is pending approval by the Securities and Exchange Commission (SEC), and if approved, would amount to a major transformation of how global capital will move the market. It would also put blockchain technology and infrastructure at the heart of traditional financial markets.
From a broader perspective, the appeal of tokenization lies in its ability to address several core pain points in capital markets.
“First, settlement efficiency. In the existing system, stock trades typically require T+1 or even longer to settle. On-chain settlement, however, allows for near-instant settlement, reducing counterparty risk. Second, trading time and accessibility. Traditional exchanges operate on an open-and-closed trading system, requiring cross-border investment to go through layers of intermediaries. Tokenized stocks, on the other hand, can theoretically be traded 24/7 and more easily reach overseas investors through blockchain wallets. Finally, asset programmability means that proxy voting, dividend distribution, and even corporate governance can be automated and transparent with the support of smart contracts.”
Moreover, the tokenization of US equities on the NYSE will open-up a massive market of equity investors that previously were sidelined due to geographical, logistical and / or regulatory reasons. In essence, this would be another major step in the democratization of global market access – a process that began last year when several crypto exchanges launched tokenized versions of a wide-range of US equities, including Apple, Tesla and Nvidia.
Ethereum or Solana?
A key development to watch will be the blockchain chosen for the NYSE’s initiative. In our view, the top contenders will be Ethereum and Solana. Both blockchains, governed by their native cryptocurrencies ETH and SOL, have so far taken the lion’s share of blockchain migration by traditional finance. Regardless of the blockchain chosen, what we are seeing is a transformative shift of traditional finance moving onto the blockchain. While not long ago cryptocurrencies such as ETH and SOL were viewed primarily as speculative bets, now they are increasingly being recognized as financial infrastructure plays – and the investment vehicles of the blockchain revolution.