The most direct way to invest in the rise of tokenization is to buy leading public chains and infrastructure projects: Ethereum, Solana, XRP, Chainlink, etc.
Written by: Matt Hougan, Ryan Rasmussen, Bitwise
Translated by: AididiaoJP, Foresight News
Some changes are happening in the crypto industry.
Tokenization has arrived, when will the market reprice?
Tokenization, the technology of transferring stocks, bonds, and other real-world assets to blockchain instead of traditional networks, is now reaching a critical moment.
Just in the past month, the following events have occurred:
Robinhood and Kraken launched tokenized stock trading. Robinhood chose to build on Ethereum's Layer 2 network Arbitrum, while Kraken's xStocks system is based on Solana. Although these systems are currently limited to non-US investors, Coinbase has filed with the SEC to conduct tokenized stock trading in the US, calling it a key strategy.
Financial institutions invested $135 million in the "Canton Network", a new Layer 1 blockchain for stock and bond trading. The round was led by market maker DRW Capital and bond trading center Tradeweb Markets, with participation from Citadel, DTCC, and Goldman Sachs.
SEC Chairman Paul Atkins called tokenization an important "innovation" and added that the SEC "should focus on how to advance tokenization in the market", and the days of regulating through enforcement are "over".
That's not all.
One of Latin America's largest crypto exchanges announced plans to tokenize $200 million of real-world assets on the XRP Ledger; Galaxy Digital said tokenized stocks could threaten NYSE's revenue; the total amount of real-world assets tokenized on-chain hit a new historical high.
Clearly, something is changing. But when will it affect the prices of Ethereum, Solana, XRP, Chainlink, and related assets?
The Prospects of Tokenization
I have always had two views on tokenization.
On one hand, it seems inevitable. It's unreasonable that stocks are only traded from 9:30 to 16:00 on workdays. Imagine if your email closed at 16:00 every Friday and only reopened at 9:30 the following Monday.
Not to mention how slow the settlement is. Do you remember the headlines when stock settlement changed from T+2 to T+1 last year?
In what other industry would we celebrate 1934 operating speeds?
Although it feels inevitable, I often thought we shouldn't rush. Market structure changes slowly, just ask those who witnessed how long it took to transition from floor stock trading to electronic stock trading.
But with the recent series of developments, I'm beginning to think the narrative of tokenized stocks might affect related targets' prices earlier than expected.
Why It Might Start Affecting Prices Now
The tokenized stock market is enormous.
BlackRock CEO Larry Fink (arguably the most important person in asset management) wrote in his letter to shareholders this year: "Every stock, every bond, every fund, and even every asset can be tokenized."
Let's analyze this.
The stock market is valued at $117 trillion. The bond market is valued at $140 trillion. This means the tokenization battle involves a $257 trillion market, not including more niche assets.
People have been excited about the stablecoin market recently, with many (including US Treasury Secretary Scott Bessent) believing the stablecoin market will grow from about $250 billion to $2 trillion by 2030.
$2 trillion is a lot of money, and the growth of stablecoin investment does provide a real opportunity. But compared to tokenization, $2 trillion is just a drop in the bucket, less than 1% of Larry Fink's tokenization market dream.
I still believe most stock and bond trading moving on-chain will take more than ten years. But with major financial companies like Robinhood and Tradeweb already laying the groundwork for transformation, I can't help but ask: Can tokenization achieve a 1-5% penetration rate in just a few years? Can a dozen major pilot projects drive us to this market penetration level? This seems possible, and would mean a scale of trillions of dollars larger than any other crypto application or asset, including Bitcoin.
The narrative about tokenization will only accelerate. If Robinhood is launching tokenized trading, you can bet companies like Charles Schwab are actively researching. I expect a new wave of announcements this fall.
How to Invest in the Rise of Tokenization
The most direct way to invest in the rise of tokenization is to buy a basket of top Layer 1 blockchains and infrastructure projects: Ethereum, Solana, XRP, Chainlink, etc.
Some might argue for concentrated betting, especially since Ethereum is currently the leader in tokenization and likely to win market share, but this seems too limited to me. Look at the announcements above: Many different participants are getting a piece of the pie. It would be a shame to bet too early on the tokenization trend and choose the wrong target.
You can also complement core blockchain assets with a group of stocks that might benefit from tokenization, including Robinhood, Coinbase, Circle, etc.
If Larry Fink is right, the tokenization market could grow more than 4,000 times in the coming years - don't miss the opportunity.
