Blockchain.com and the New York Stock Exchange have signed a memorandum of understanding to give Blockchain.com users access to tokenized US-listed stocks and exchange-traded funds through NYSEs planned digital trading platform.
Under the proposed arrangement, Blockchain.com would distribute tokenized US equities and ETFs traded on NYSE‘s digital alternative trading system (ATS), subject to regulatory approval. The deal would extend NYSE’s planned tokenized securities offering to Blockchain.coms global customer base.
The agreement also covers an exchange of market data. NYSE affiliate ICE Data Services plans to distribute Blockchain.coms crypto market data and analytics to its clients, while Blockchain.com would add certain ICE and NYSE market data feeds to its platform.
Reid Noch, vice president of US equity market structure at TD Securities, told Cointelegraph that NYSEs planned tokenized ATS appears “primarily like a play for retail flow,” pointing to its planned 24/7 trading and request-for-quote functionality. Because retail trades are already pre-funded, Noch said the shift to instant settlement would require little change to existing retail workflows.
“The bigger differentiator is true weekend trading,” Noch said. “This could be impactful for retail heavy names or around episodic news events, similar to what we saw with tokenized oil PERPs during the start of the Iran conflict that started over the weekend.”
Related: Ondo lets institutions convert stocks directly into tokenized shares
Exchanges race into tokenized stocks
“Crypto venues are becoming multi-asset platforms, and traditional assets are adopting the 24/7, programmable structure crypto pioneered,” Tanay Ved, senior research associate at institutional digital asset technology firm Talos, said in comments shared with Cointelegraph.
That shift is playing out across major exchanges. Kraken offers xStocks and has partnered with Nasdaq on a separate tokenized equity model, while Binance, Coinbase and Robinhood have rolled out their own approaches to bringing equities onchain.
However, Ved said the different approaches involve trade-offs between ownership and accessibility:
The models of tokenization sit across a spectrum, from issuer-native equity to custodial exposure to pure derivatives. Each trades ownership for accessibility. Which model wins out is yet to be seen, as we sit in the early innings of adoption. For exchanges, the opportunity is a more diversified revenue base and for the market, the line between crypto and traditional assets continues to blur.
Meanwhile, the tokenized stock market has been expanding rapidly. Distributed value reached $3.14 billion as of Wednesday, up more than 18% over the past 30 days, while the number of holders climbed nearly 72% to 3.87 million, according to RWA.xyz data.
Tokenized stocks. Source: RWA.xyz
SEC opens path for tokenized stocks
The partnership also comes less than a week after the US Securities and Exchange Commission (SEC) introduced a five-year “Innovation Exemption” for certain tokenized securities venues.
Under the exemption, eligible tokenized securities venues can use permissioned automated market maker liquidity pools to facilitate trading without being treated as exchanges under the Exchange Act. Among the conditions, venues must ensure that tokenized stocks carry the same rights and privileges as equivalent traditional shares.
Those requirements exclude some existing products from the exemption in their current form, including Kraken‘s xStocks and Robinhood’s Stock Tokens, which provide exposure to underlying equities but do not give holders the same rights as conventional shareholders.
However, SEC Commissioner Hester Peirce has said that while the exemption covers one specific model for tokenized securities, it leaves open the possibility of other approaches outside the framework.
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