Tokenized stocks may be a tough sell in the U.S., TD Cowen says
TD Cowen says tokenized U.S. stocks are unlikely to catch on with American investors anytime soon, even after the SEC opened a new path for them. The reason is simple: for most U.S. traders, regular shares already work just fine, and blockchain wrappers do not automatically make for a better product.
- TD Cowen expects limited demand for tokenized stocks in the U.S.
- Liquidity and complexity are bigger problems than hype
- Stock perpetual futures may draw more interest from crypto traders
Reid Noch, TD Cowen’s vice president of U.S. equity market structure, wrote in a Friday paper that demand for tokenized stocks will likely stay weak in the early going. His core argument is plain enough: U.S. investors already have efficient access to listed shares, so tokenized versions need to offer something genuinely better to win attention.
That is the awkward truth for a lot of tokenization pitch decks. If the pitch is basically, “same stock, but onchain, ” many investors will react with the financial equivalent of a blank stare. Why This Investment Bank Expects Little Demand for
The SEC recently opened a five-year route for qualifying tokenized stock products, allowing approved venues to trade tokenized National Market System stocks under a set of conditions. The framework, as described in the research notes, allows venues to use permissioned automated market makers and liquidity pools, gives some liquidity providers temporary relief from dealer-registration requirements, and places limits on both the number of stocks and the volume a venue can handle.
That matters, but it is not a free-for-all. The point is not to let crypto venues cosplay as exchanges with no rules. The point is to test tokenized trading inside a regulatory box. Whether that box is big enough to matter is another question.
Why TD Cowen thinks demand will stay thin
Tokenized stocks are blockchain-based representations of equities. Depending on the structure, they may preserve economic interest and other shareholder rights, or they may be little more than synthetic exposure dressed up in Web3 clothing. That difference matters a lot.
TD Cowen’s view is that U.S. investors already have deep, liquid access to stocks through existing brokers and exchanges. So tokenized versions face a high bar: they have to solve a real problem, not just create a new wrapper for an old asset.
Reid Noch put it plainly, saying tokenized platforms need “a compelling benefit to offset their operational complexity and restricted liquidity.” That is the issue in a nutshell. If a tokenized market is thinner, more complicated, and more awkward than the market people already use, why would they switch?
For most U.S. investors, that answer is not obvious. Regular exchanges already offer tight pricing, strong legal rights, and familiar settlement rails. A blockchain version has to beat that, not just imitate it.
The Figure example is a useful warning sign
TD Cowen points to Figure as a telling case. In a 24-hour period it studied, Figure’s conventional FIGR shares accounted for 99.9% of notional trading, while the company’s blockchain-native FGRS shares barely registered.
Notional trading means the dollar value of the trades, not the number of shares changing hands. And this comparison is not some vague dashboard screenshot from nowhere; it is a snapshot TD Cowen used to show how dominant the traditional market still is, even when a company offers both versions of its stock exposure.
That does not prove tokenized equities will never find a market. It does show how hard it is to pull trading away from the existing system when the old system already does the job well.
One 24-hour window is not destiny, of course. But it is enough to puncture a lot of the “line goes up, therefore adoption is inevitable” nonsense that tends to follow anything with a blockchain attached.
What the SEC framework is trying to preserve
The SEC’s framework is not just about letting a new asset class loose on the internet. It is trying to preserve the core rights tied to stock ownership: economic interest, dividends, voting rights, and liquidation rights.
That matters because a lot of “tokenized stock” chatter in the wild is really about price exposure, not ownership. A product that tracks a stock price is not the same thing as being a shareholder. If you do not have the rights, you do not have the same asset, full stop.
The framework also gives listed companies notice and an opportunity to object. That is a big deal. Issuers can make life harder for tokenized versions of their shares, which means supply may stay limited even if demand exists.
In plain English: this is not just a technical rollout. It is a legal and corporate politics problem too.
Why perpetual futures may be the stronger demand story
TD Cowen says the bigger opportunity may be stock perpetual futures, not tokenized stocks. That lines up better with how crypto traders actually behave.
Perpetual futures, or “perps, ” are derivatives with no expiration date. They use funding payments to keep prices near the underlying asset, and they let traders take leveraged exposure without owning the stock itself.
That makes them a much more natural fit for crypto markets, where users often want speed, leverage, and nonstop access more than they want shareholder rights and corporate governance.
TD Cowen’s Binance data backs that up. In a 24-hour period it studied, Nvidia-related trading on Binance was 96% perpetual futures and just 4% spot. That is not a subtle preference. It is a market telling you exactly what it wants.
Coinbase Eyes Tokenized Stocks for Non-U.S. Users as Wall appears to see the same opening. On Sep. 18, it submitted proposals for 50-plus stock perpetuals tied to companies including Nvidia, Microsoft and Tesla. If approved, the products would offer 24-hour trading from Monday through Friday.
That may be the cleaner bet. Not a tokenized stock that tries to mimic ownership, but a derivative that gives traders what they actually seem to want: leveraged exposure, more trading hours, and less friction.
Kraken Launches CFTC-Regulated U.S. Perpetual Futures for is another sign that the market is leaning hard into regulated derivatives. And if regulators are going to bless this lane, they should do it with eyes open, not pretend every shiny onchain wrapper is some grand democratization of finance.
CFTC Chair Michael Selig Defends US Approval of Crypto also matters here, because regulatory approval does not magically make products good. It just makes them legal. Big difference.
Ondo’s offshore numbers show demand, but not necessarily U.S. demand
Ondo Finance said its Panama-based affiliate processed $8 billion in cumulative volume in about six weeks. The platform settles contracts in stablecoins and is unavailable to American users.
That is a meaningful number, but it should not be oversold. Offshore volume shows there is interest in tokenized or synthetic exposure somewhere in the market. It does not prove that U.S.-regulated tokenized stocks will become a mainstream product for domestic investors.
Stablecoin-settled trading aimed at crypto users is a different animal from regulated U.S. stock ownership. Same broad theme, very different audience. One is trying to satisfy traders who want flexibility and leverage. The other is trying to fit within a much stricter legal and market structure.
The bigger lesson
Tokenization is not automatically progress just because it lives on a blockchain. If the product is thinner, more complicated, and less useful than the thing it is supposed to replace, the market will mostly ignore it.
That does not mean tokenized stocks are dead. They may still find niches, especially among crypto-linked firms or in markets where traditional access is weaker. But for most U.S. investors, the bar is high. Existing brokerage and exchange access is already good enough that “new” is not the same thing as “better.”
The more interesting question may be whether stock perpetuals end up being the real onchain winner. They are messier from a pure ownership standpoint, but they fit crypto trading behavior far better. That is not exactly noble finance. It is just honest about what the users want.
Key takeaways
-
Will U.S. investors rush into tokenized stocks?
Probably not. TD Cowen says most U.S. investors already have efficient access to listed shares, so tokenized versions need a clear advantage to gain traction. -
What is the biggest obstacle?
Liquidity. If a tokenized market is thin, prices get worse and trading becomes less attractive than using the existing stock market. -
Why does TD Cowen favor perpetual futures instead?
Because they fit crypto trading habits better. Perps offer leveraged exposure and broader trading hours without trying to imitate stock ownership. -
Does the SEC framework guarantee success for tokenized stocks?
No. It creates a regulated path, but it does not create demand, liquidity, or issuer enthusiasm. -
What does the Figure example show?
In TD Cowen’s 24-hour snapshot, Figure’s traditional FIGR shares accounted for 99.9% of notional trading, while the blockchain-native FGRS shares saw very little activity. -
Are perpetual futures the same as owning stock?
No. Perpetual futures provide price exposure, often with leverage, but they do not make you a shareholder or give you the same rights as owning the stock outright.
