GM. This is Milk Road PRO, the truffle pig of crypto newsletters (we sniff out new investment opportunities).
Tokenization is a hot topic these days.
But the real game-changer? Stock tokenization.
It means turning traditional company shares into digital tokens on a blockchain.
👉 Each token still represents ownership, just like a regular stock, but it can be traded anytime, settled instantly, and managed more efficiently thanks to the tech behind it. 🥳
So why do we think stock tokenization is the next big thing?
Because the global stock market is worth over $100 trillion.
That’s a massive space and more and more companies (and investors) are starting to see the potential.
In this report, we’re zooming in on the tokenization of the US stock market.
Why?
Because it alone accounts for over $60 trillion of value, making up more than half of the global market.
Sure, there are plenty of markets worth tokenizing.
But if there’s one market that’s really going to move the needle — it’s the US.
Let’s be honest, everyone wants a piece of companies like Nvidia, Apple, and Tesla.
Or if you're not into picking individual stocks, chances are you're looking to hold something like the S&P 500.
Here’s the thing: all of these (Nvidia, Apple, Tesla, and the S&P 500) are based in the US.
To drive the point home and show how stock tokenization is only just getting started, let’s look at the onchain growth of tokenized stocks.
Right now, there’s only around $400 million worth of tokenized stocks onchain (99% US based) — a tiny drop in the bucket compared to the total addressable market of $100 trillion+.
But that’s starting to change.
For most of the year, growth was flat. Until September, when a few major players finally started gaining serious traction.
We believe this could be one of the biggest onchain trends over the next few years, potentially bringing trillions of assets on blockchains in that time.
A trend like this means there could be plenty of opportunity and upside for investors.
So in today’s report, we’re taking a closer look at this growing trend, what’s driving it forward and how we can capitalize on it.
Here’s what we’re going to cover:
- What stock tokenization actually looks like today
- The key players already making it happen
- Different approaches and what makes each one strong (or weak)
- Real-world use cases and early traction
- How we can profit from this new trend
That sounds like a really exciting and untapped space where we might be able to uncover some serious alpha.
So let’s dive right in.
First up, we’re going to double down on why stock tokenization in particular is turning so many heads.
WHY IS IT SUCH A BIG DEAL
Let’s start by quickly breaking down what stock tokenization really means. We’ve touched on it already, but it’s worth making sure we’re all on the same page.
It’s the process of converting traditional company shares into tokens that live on a blockchain.
👉 These tokens can be traded 24/7, settle instantly, are globally accessible, and sit directly in your wallet — no brokers, no middlemen, and lower costs. Plus, they can be used across DeFi for lending, yield, and collateral.
Here’s why that’s a big deal:
- Backed by real companies Most crypto tokens today are worthless and do not provide any direct ownership of company success. Tokenized stocks, on the other hand, are backed by real companies with real cash flow and performance.
- 24/7 trading Regular stocks only trade during market hours. Pre and after-market access is limited to a few players, and there’s zero trading on weekends or holidays. Tokenized stocks are always on – buy, sell, or move them anytime.
- Instant settlement No waiting days for trades to clear. Onchain settlement is near-instant, thanks to blockchain tech – no middlemen, no clearing houses, no back-office fuss.
- Direct control With tokenized stocks, you hold and manage the tokenized asset directly from your wallet. No broker or trading platform stands between you and your tokens, just your wallet and the blockchain.
- Composability & DeFi integration These tokens can plug into DeFi: earn yield, use them as collateral, lend them out, or build new financial products. They're programmable and flexible in ways traditional stocks just aren't.
- Global access Right now, access to US stocks is limited by borders, brokers, and regulations. With tokenization, anyone with an internet connection could get in, no matter where they are (most tokenized stocks are not set up like this just yet, but we’re hoping it's on the road map).
- Lower costs, fewer gatekeepers By removing layers of intermediaries, tokenized stocks could reduce fees and speed up processes, making investing more efficient and more inclusive.
Together, these changes don’t just improve the experience – they completely reshape how stocks can work in a digital-first, global financial system.
So yes, stock tokenization is a big deal.
But if that’s true, why is there only around $400 million worth of tokenized stocks onchain today?
Let’s dig into that.
WHERE WE ARE TODAY
Today, we’re in a transition phase.
Before 2025, tokenizing stocks in the US was nearly impossible due to strict regulations and an overall lack of government support.
👉 But that changed after Trump took office, bringing a more open and supportive stance toward digital assets and blockchain innovation.
However, these changes won’t happen overnight.
Even though the environment is now more supportive, there’s still a lack of clear rules and regulatory frameworks for how stock tokenization should be handled.
We’re moving in the right direction, but we’re not there yet.
Still, that hasn’t stopped some players from finding ways to tokenize stocks even under today’s unclear rules.
There are a few different ways to technically tokenize stocks, each with its own structure, benefits, and trade-offs.
Let’s break them down.
Asset-backed tokens (wrapped stocks)
This model is simple:
- A licensed company buys real shares of a stock and holds them in custody.
- Then, it creates digital tokens on a blockchain that are backed 1:1 by those shares.
These tokens mirror the price of the actual stock and they rely on audits to ensure everything is fully backed and transparent. In some cases, you can even redeem tokens for real shares.
👉 They're basically digital versions of traditional equities, backed by the real thing.
One of the leading platforms using this approach is Backed Finance, based in Switzerland.
They offer around 64 tokenized stocks and currently manage about $91.5 million in total value.
Their tokens — like $bAAPL or $bTSLA — are fully backed by Apple/Tesla shares held with a regulated custodian.
And you can find their products on public blockchains like Ethereum or Solana. 😉
✍️ If you trust the custodian and don’t mind that you’re not holding the stock directly, but rather a share in a company that holds the stock, this setup might work well for you.
This is how Robinhood is currently offering US stocks in Europe.
The tokens live on the blockchain, but they don't give you direct ownership of the actual stocks.
Instead, Robinhood Stock Tokens are treated as derivatives under MiFID II rules (no need to understand), and the real stocks are safely held by a licensed institution in the US.
It’s good, but not great.
Synthetic stock tokens
Synthetic stock tokens are onchain assets that track the price of a real stock, but without actually owning any shares.
They work like this:
- Users lock up collateral, usually in the form of stablecoins or crypto
- A decentralized protocol creates these tokens (like $sTSLA or $mAAPL) which are backed by that collateral
Because they’re built on smart contracts, synthetic stocks can trade 24/7 and plug right into the broader DeFi ecosystem.
They let anyone get exposure to stocks, but they rely heavily on collateral, oracles (price feeds), and market incentives to stay stable and accurate.
We’ve already seen this model break down in the past.
Mirror protocol was built on the Terra blockchain and allowed users to mint "mirrored" assets like $mAAPL, $mTSLA, or $mAMZN by locking up collateral — using Terra’s stablecoin, $UST.
But when Terra collapsed and $UST lost its peg, the value of that collateral quickly vanished.
That meant there simply wasn’t enough left to cover the synthetic assets, even in a full sell-off.
In the end, everything tied to Mirror lost its backing and its value. 😪
Synthetix, another similar protocol but on Ethereum, took a more cautious approach by only accepting blue-chip assets as collateral, aiming to make the system more secure.
But even with those safeguards, they’ve struggled to attract strong demand or scale the product – another sign that this model still doesn’t fully resonate with users.
✍️ That’s probably not the right model for tokenizing stocks, especially if we’re talking about the potential to handle and attract billions, or even trillions, in total value locked.
Uh, Oh… 😧 The rest of this report is exclusive to Crypto PRO and PRO All Access members!
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WHAT’S LEFT INSIDE? 👀
- What could take real adoption from ‘neutral’ to ‘booming’
- Where the value capture is likely to accrue
- How to profit from this new wave of adoption
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