{"id":80741,"date":"2025-07-21T13:42:15","date_gmt":"2025-07-21T13:42:15","guid":{"rendered":"https:\/\/www.europesays.com\/us\/80741\/"},"modified":"2025-07-21T13:42:15","modified_gmt":"2025-07-21T13:42:15","slug":"there-are-risks-and-rewards-as-crypto-heavyweights-push-tokenization","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/80741\/","title":{"rendered":"There are risks and rewards as crypto heavyweights push tokenization"},"content":{"rendered":"

As cryptocurrencies<\/a> become more intertwined with the traditional financial system,<\/a> industry heavyweights are racing for a long-sought goal of turning real-world assets into digital tokens.<\/p>\n

\u201cTokenization is going to open the door to a massive trading revolution,\u201d said Vlad Tenev, the CEO of the trading platform Robinhood at a recent James Bond-themed tokenization launch event<\/a> in the south of France.<\/p>\n

Advocates say tokenization is the next leap forward in crypto and can help break down walls that have advantaged the wealthy and make trading cheaper, more transparent and more accessible for everyday investors.<\/p>\n

But critics say tokenization threatens to undermine a century\u2019s worth of securities law and investor protections that have made the U.S. financial system the envy of the world. And Robinhood\u2019s push into tokenizing shares of private companies quickly faced pushback from one of the world\u2019s most popular startups.<\/p>\n

What is tokenization?<\/p>\n

The basic idea behind tokenization: Use blockchain technology that powers cryptocurrencies to create digital tokens as stand-ins for things like bonds, real estate or even fractional ownership of a piece of art and that can be traded like crypto by virtually anyone, anywhere at any time.<\/p>\n

The massive growth of stablecoins<\/a>, which are a type of cryptocurrency typically bought and sold for $1, has helped fuel the appetite to tokenize other financial assets, crypto venture capitalist Katie Haun said on a recent podcast<\/a>. <\/p>\n

She said tokenization will upend investing in ways similar to how streamers radically changed how people watch television.<\/p>\n

\u201cYou used to have to sit there on a Thursday night and watch Seinfeld,\u201d Haun said. \u201cYou tune in at a specific time, you don\u2019t get to choose your program, you couldn\u2019t be watching a program like Squid Games from Korea. Netflix was market-expanding. In the same way, I think the tokenization of real-world assets will be market expanding.\u201d<\/p>\n

Growing momentum<\/p>\n

Robinhood began offering tokenized stock trading of major U.S. public companies for its European customers earlier this month and gave away tokens to some customers meant to represent shares in OpenAI and SpaceX, two highly valued private companies.<\/p>\n

Several other firms are diving in. Crypto exchange Kraken also allows customers outside the U.S. to trade tokenized stocks<\/a> while Coinbase has petitioned regulators<\/a> to open the market to its U.S. customers. Wall Street giants BlackRock and Franklin Templeton currently offer tokenized money market funds. McKinsey projects<\/a> that tokenized assets could reach $2 trillion by 2030.<\/p>\n

Crypto\u2019s golden age<\/p>\n

The push for tokenization comes at a heady time in crypto, an industry that\u2019s seen enormous growth from the creation and early development of bitcoin more than 15 years ago by libertarian-leaning computer enthusiasts to a growing acceptance in mainstream finance.<\/p>\n

The world\u2019s most popular cryptocurrency is now regularly setting all-time highs \u2014 more than $123,000 on Monday \u2014 while other forms of crypto like stablecoins are exploding in use and the Trump administration has pledged to usher in what\u2019s been called the \u201cgolden age\u201d for digital assets. <\/p>\n

Lee Reiners, a lecturing fellow at Duke University, said the biggest winners in the push for tokenization could be a small handful of exchanges like Robinhood that see their trading volumes and influence spike.<\/p>\n

\u201cWhich is kind of ironic given the origins of crypto, which was to bypass intermediaries,\u201d Reiners said.<\/p>\n

Trump bump<\/p>\n

Interest in tokenization has also gotten a boost thanks to the election of President Donald Trump, who has made enacting more crypto-friendly regulations a top priority of his administration and signed a new law<\/a> regulating stablecoins on Friday. <\/p>\n

\u201cTokenization is an innovation and we at the SEC should be focused on how do we advance innovation at the marketplace,\u201d said Securities and Exchange Commission Chairman Paul Atkins.<\/p>\n

Is it legal?<\/p>\n

Securities law can be complex and even defining what is a security can be a hotly debated question, particularly in crypto. The crypto exchange Binance pulled back offerings of tokenized securities in 2021 after German regulators raised questions about potential violations of that country\u2019s securities law.<\/p>\n

Under Trump, the SEC has taken a much less expansive view than the previous administration and dropped or paused litigation against crypto companies that the agency had previously accused of violating securities law.<\/p>\n

Hilary Allen, a professor at the American University Washington College of Law, said crypto companies have been emboldened by Trump\u2019s victory to be more aggressive in pushing what they can offer. <\/p>\n

\u201cThe most pressing risk is (tokenization) being used as a regulatory arbitrage play as a way of getting around the rules,\u201d she said. <\/p>\n

However, the SEC has struck a cautionary tone when it comes to tokens. Shortly after Robinhood\u2019s announcement, SEC Commissioner Hester Peirce, who has been an outspoken crypto supporter, issued a statement<\/a> saying companies issuing tokenized stock should consider \u201ctheir disclosure obligations\u201d under federal law.<\/p>\n

\u201cAs powerful as blockchain technology is, it does not have magical abilities to transform the nature of the underlying asset,\u201d Peirce said.<\/p>\n

All eyes on private companies<\/p>\n

One of the most closely watched areas of tokenization involves private companies, which aren\u2019t subject to strict financial reporting requirements like publicly traded ones.<\/p>\n

Many hot startups are not going public as often as they used to and instead are increasingly relying on wealthy and institutional investors to raise large sums of money and stay private.<\/p>\n

That\u2019s unfair to the little guy, say advocates of tokenization.<\/p>\n

\u201cThese are massive wealth generators for a very small group of rich, well-connected insiders who get access to these deals early,\u201d said Robinhood executive Johann Kerbrat. \u201cCrypto has the power to solve this inequality.\u201d<\/p>\n

\u201cPlease be careful\u201d<\/p>\n

But Robinhood\u2019s giveaway of tokens meant to represent an investment in OpenAI immediately drew pushback from the company itself, which said it was not involved in Robinhood\u2019s plan and did not endorse it.<\/p>\n

\u201cAny transfer of OpenAI equity requires our approval\u2014we did not approve any transfer,\u201d OpenAI said<\/a> on social media. \u201cPlease be careful.\u201d<\/p>\n

Public companies have strict public reporting requirements about their financial health that private companies don\u2019t have to produce. Such reporting requirements have helped protect investors and give a legitimacy to the U.S. financial system, said Allen, who said the push for tokenized sales of shares in private companies is \u201ceerily familiar\u201d to how things played out before the creation of the SEC nearly a century ago.<\/p>\n

\u201cWhere we\u2019re headed is where we were in the 1920s,\u201d she said. \u201cDoor-to-door salesmen offering stocks and bonds, half of it had nothing behind it, people losing their life savings betting on stuff they didn\u2019t understand.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"As cryptocurrencies become more intertwined with the traditional financial system, industry heavyweights are racing for a long-sought goal…\n","protected":false},"author":3,"featured_media":80742,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[11879,64,821,69,440,11289,60,55406,57,55407,55412,59,55413,55410,55411,4659,55405,55408,25799,31596,2527,16266,158,61,67,132,68,55409],"class_list":{"0":"post-80741","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-blackrock","9":"tag-business","10":"tag-cryptocurrency","11":"tag-donald-trump","12":"tag-europe","13":"tag-finance-business","14":"tag-financial-services","15":"tag-financial-technology","16":"tag-general-news","17":"tag-hester-peirce","18":"tag-hilary-allen","19":"tag-inc","20":"tag-johann-kerbrat","21":"tag-katie-haun","22":"tag-lee-reiners","23":"tag-netflix","24":"tag-openai-inc","25":"tag-paul-atkins","26":"tag-robinhood-markets-inc","27":"tag-southeastern-conference","28":"tag-spacex","29":"tag-stocks-and-bonds","30":"tag-technology","31":"tag-u-s-news","32":"tag-united-states","33":"tag-unitedstates","34":"tag-us","35":"tag-vlad-tenev"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/114891518403230511","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/80741","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=80741"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/80741\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/80742"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=80741"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=80741"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=80741"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}