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Cryptocurrency exchanges begin offering tokenized securities
- richwater 1y agoWhen this whole thing crashes to the ground it will the digital equivalent of tulip bulbs of Netherlands.
- Fade_Dance 1y agoHow so? Tokenization is securitized, in this case with equities that have a huge and liquid market (the stock market).
- tossandthrow 1y agoWhat? Why does we risk a crash more by using crypto exchanges over regular exchanges? This is an incredibly lazy comment and reads like an involuntary spasm.
- liquidise 1y agoTulip mania lasted 3 years: 1634-1637 in part of a single country. Surely we should keep comparing it to a decades old globalized financial system with formalized state support from many nations and a market cap measurable in the trillions.
- SpicyLemonZest 1y ago"Market cap" as applied to cryptocurrency is a completely fake metric that exists only because it produces viral big numbers. Cryptocurrencies don't have a market capitalization, because they don't represent fractional ownership of any asset; there's absolutely no reason to think that multiplying the most recent price of 1 ETH by the notional supply of 120 million produces a good estimate of the Ethereum network's aggregate value.
- kklisura 1y agoI thought the same, but... I don't think it will ever go down. Stock prices are already divested from the company fundamentals, but they can only get so high, so the next _logical_ step would be to create something entirely divested from the stock prices itself. Enter tokenized stock.
- tossandthrow 1y agoNot really. Some markets are. But when NASDAQ100 trade at PE = 30 I do think it is reasonably discounted cash flow under growth assumptions. But you can trade EU, FTSE100, EM, etc. at a PE range of 15-20. While this is not historically cheap, it is also ont over-rated.
- latchkey 1y agohttps://www.smithsonianmag.com/history/there-never-was-real-tulip-fever-180964915/ https://www.smithsonianmag.com/history/there-never-was-real-...
- Jessibot 1y ago‘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. But critics say tokenization threatens to undermine a century’s worth of securities law and investor protections that have made the U.S. financial system the envy of the world’. The problem with securities laws is that they are complex, and even defining what is a security is a hotly debated question, esp in crypto. I believe back in 2021, Binance had to pull back their offerings tokenized securities bc of german regulators, so its a very opaque environment.
- lxgr 1y agoApproximately everybody in the US is able to get a brokerage account for trading public shares (with actual SIPC insurance, very limited liability for fraud etc). At the same time, the publicly investable stock market constitutes less and less to the total universe of US companies. Unless tokenized securities will somehow make private investments accessible to non-accredited investors, this initiative seems to be entirely missing the elephant in the room, at least in the US.
- NickNaraghi 1y agoThe main value proposition is faster settlement. The big institutions can measure their profits in terms of settlement time, going from 2 days to 1 day (previous infrastructure upgrades) to instantaneous (this) makes them more money.
- lxgr 1y agoI see how it can make sense on the settlement layer, but that's of absolutely no relevance to individual investors, which is who Robinhood are targeting. In the EU, as far as I remember most modern brokers let you buy shares with unsettled proceeds of others without restrictions; in the US, getting a margin account takes no effort at all and bypasses the freeriding rules too.
- NickNaraghi 1y agoUnfortunately, Robinhood makes money by selling individual investor orderbook data to the big guys so they can front-run them
- lxgr 1y agoPayment for order flow is not front running. The PFOF trader only gets right of first refusal on every trade; whether they take it or not, the broker is still obliged to execute the trade at NBBO or better. It actually gets retail investors better prices than institutional or professional ones, since the counterparty can safely assume that there's "dumb money" on the other side of the trade. That's not to say it's not controversial in some aspects, but it's not as simple a situation as you make it out to be. Also, somewhat ironically, the front running risk on many decentralized exchanges is much higher due to MEV being a hard problem to solve trustlessly.
- yk 1y agoSo NFTs for stocks?
- Ekaros 1y agoWith similar levels of actual ownership I take...
- dreamcompiler 1y agoI assume customers will by buying into this stuff with stablecoins, which have the amusing property of being nonvolatile until the day their value plunges to zero over the course of a few minutes.
- tossandthrow 1y agoHave you looked at DEI / MakerDAO? They appear to be quite stable. But they are over collateralized as a stable coin should be. Also the dollar backed ones would only fail if the foundations behind them fail (Eg. USDC)
- latchkey 1y agoThe interesting thing here is that it was TradFi screwing things up for Crypto... https://www.cnbc.com/2023/03/11/stablecoin-usdc-breaks-dollar-peg-after-firm-reveals-it-has-3point3-billion-in-svb-exposure.html https://www.cnbc.com/2023/03/11/stablecoin-usdc-breaks-dolla...
- tossandthrow 1y agoIt seems to be at 0.999 - which like prices in the counter party risk. (Whether the risk is prices correctly can be discussed)
- latchkey 1y agoAs always, actual price depends on the exchange you use. You're probably looking at coinmarketcap, which sets the price based on the trade pairs. It is always $1.00 on coinbase.
- tossandthrow 1y agoWell coin bases price is not a fair market price as they have ties to circle - they don't price in the counter party risk. Any who, even USDC appears to be relatively robost, though with another risk landscape than dai.
- seanhunter 1y agoOne thing to note for people who don't have a securities background is that exchanges have offered "depositary receipts" which is essentially the same thing for some time - the innovation here is making the depositary receipt into a crypto token. Depositary receipts are used typically to provide a secondary listing for a stock outside the country of its primary listing. So for example on Nasdaq I can trade a "Vodaphone depositary receipt", which will be denominated in USD but relate to 1 share of Vodaphone, which is listed in GBp in the UK. Somewhere in the pipeline a depositary institution has the actual shares and keeps track of who is the beneficial owner of each share for which a receipt has been issued. This is an easy way for large companies to generate more liquidity (from foreign investors) and often has tax or other advantages for investors in that they don't need to report an FX pnl- they can just hold the stock in their main currency even though its primary listing is actually in a different currency. These are usually called ADRs (American Depositary Receipts) and EDRs (European depositary receipts) based on whether the instrument is listed in the US or Europe. So the Vodaphone example above of a UK public company trading a depositary receipt on Nasdaq would be an ADR. https://www.investopedia.com/terms/d/depositaryreceipt.asp https://www.investopedia.com/terms/d/depositaryreceipt.asp
- lxgr 1y agoADRs are largely a US thing, as far as I know. For example, many US companies list on European exchanges as a secondary listing using their US ISIN, not as an EDR.
- seanhunter 1y agoYes, although without getting too deep in the weeds, in the UK and Europe, asset-backed bonds are often issued using a similar process. The actual bonds are often held by a depositary and the holder just gets a depositary receipt rather than the bond itself. This is done largely for ease of settlement I believe. The point is the mechanism here is reasonably well-established in normal finance.
- matthewaveryusa 1y agoWould tokenized shares remove the need for VIEs and contractual custodians in the Cayman islands for Chinese ADRs?
- FollowingTheDao 1y ago"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." They LOVE playing this game. "We are doing this so you can now be the whale you always dreamed you would be!" But mean while they cut you to shreds with fees.
- toenail 1y agoYeah.. as long as a judge can say that a security belongs to party X and not to the owner of tokens... tokenized securities are useless, they could just be a database record.
- conception 1y ago“They could just be a database record” is the response for pretty much all legal crypto uses.
- ToucanLoucan 1y agoIt's almost like it was never designed at all to solve any of the actual problems with the finance system and just create a new one next to it with a different set of assholes at the top of it.
- cindyllm 1y ago[dead]
- toenail 1y agoSaving in bitcoin to escape inflation works fine for me and is perfectly legal.
- johnecheck 1y agoThat sounds like a strategy that's going to work really well until it doesn't. Perhaps I'm wrong. Good luck!
- deleted 1y ago[deleted]
- lvl155 1y agoAlways amazed what scams and traps crypto community comes up with next.
- w4yai 1y agoAll aboard the rage train !
- throwaway1777 1y ago[dead]
- TrackerFF 1y agoSomeone explain to me like I’m 5 how tokenization makes it possible to trade private companies. Wouldn’t that mean that the owners of those private companies are somehow issuing tokens related to their ownership? Or is this yet another magical crypto thing where we collectively agree/imagine that tokens are somehow pegged to private companies, without any direct ownership to said companies?
- theragra 1y agoEquity of private companies is bought from employees and investors (not real equity, often, but promise to give equity after exit), then tokenized
- dmoy 1y agoIt's naked forwards, except with even less regulation. Matt Levine has a good rundown here: https://www.bloomberg.com/opinion/newsletters/2025-06-26/anyone-can-sell-you-spacex-stock https://www.bloomberg.com/opinion/newsletters/2025-06-26/any...
- TrackerFF 1y agoThanks Makes me wonder what happens if/when the next WeWork or Theranos rolls around, and people are invested via these types of trades.