Cryptocurrency exchanges begin offering tokenized securities

[seanhunter]

One 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

[lxgr]

ADRs 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.

[matthewaveryusa]

Would tokenized shares remove the need for VIEs and contractual custodians in the Cayman islands for Chinese ADRs?

[lxgr]

Approximately 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.

[csdreamer7]

If you can shift these tokens around like Bitcoin my first thought was tax or sanctions evasion. Buy some VOO tokens from a 3rd party since you know your corrupt government (and you made money from that corruption) will seize your bank account for any reason. You hold these tokens in a private wallet stored somewhere for a few decades as your escape plan.

There was an article on how cut-throat (pun intended) low the margins are for money laundering in the competition between businesses to get drug trafficked US dollars from Mexico to China.

[NickNaraghi]

The 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.

[FollowingTheDao]

"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.

[Jessibot]

‘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.

[toenail]

Yeah.. 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.

[rtkwe]

Normal stocks exist in a similar way for 99% of people. You don't own them directly you're the 'beneficial owner' and your ownership is just a database entry in your broker's database backed up contractually. It's the legal hack that lets you just press buy or sell and have it happen almost instantly instead of taking days to move around the paper stock certificates from one vault to another. Even if you go through the trouble of direct registration it's still basically a database entry.

[conception]

“They could just be a database record” is the response for pretty much all legal crypto uses.

[yk]

So NFTs for stocks?

[Ekaros]

With similar levels of actual ownership I take...

[dreamcompiler]

I 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]

Have 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)

[TrackerFF]

Someone 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?

[dmoy]

It's naked forwards, except with even less regulation.

Matt Levine has a good rundown here: https://www.bloomberg.com/opinion/newsletters/2025-06-26/any...

[theragra]

Equity of private companies is bought from employees and investors (not real equity, often, but promise to give equity after exit), then tokenized

[lvl155]

Always amazed what scams and traps crypto community comes up with next.

[w4yai]

All aboard the rage train !

[richwater]

When this whole thing crashes to the ground it will the digital equivalent of tulip bulbs of Netherlands.

[liquidise]

Tulip 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.

[kklisura]

I 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.

[latchkey]

https://www.smithsonianmag.com/history/there-never-was-real-...

[Fade_Dance]

How so? Tokenization is securitized, in this case with equities that have a huge and liquid market (the stock market).

[tossandthrow]

What?

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.