Associated Press, by Alan Suderman
As cryptocurrencies become more intertwined with traditional financial systems, the heavyweights of the industry are competing for a long-standing goal of turning real-world assets into digital tokens.
“Tokenization will open the door to a massive trading revolution,” said Vlad Tenev, CEO of trading platform Robinhood at the recent James Bond-themed tokenization launch event in southern France.
Advocates say tokenization is the next leap in cryptography, which can help the wealthy benefit and break down the barriers that are cheaper, more transparent and more accessible to everyday investors.
However, critics say that tokenization threatens to undermine the securities laws of the century and the protections of investors that have made the US financial system a world’s vy wish. And Robinhood’s push to tokenize private companies’ stocks was quickly faced with a pushback from one of the world’s most popular startups.
What is tokenization?
The basic idea behind tokenization: Using blockchain technology to enhance cryptocurrency, digital tokens can be created as stand-in for bonds, real estate, or even partial ownership of works of art, virtually anyone can trade like a crypto, anywhere.
According to Crypto Venture capitalist Katie Haun, the huge growth of Stablecoins, a kind of cryptocurrency that was usually purchased and sold for $1, has fueled an appetite for tokenizing other financial assets.
She said tokenization would overturn investments in a way similar to how streamers have fundamentally changed the way people watch TV.
“I had to sit there on Thursday night and see Seinfeld,” Havn said. “You can’t tune at a certain time and choose a program. You couldn’t see programs like squid games from Korea. Netflix was expanding the market. In the same way, I think the tokenization of actual assets will be a market expansion.”
The momentum is gaining
Robinhood began offering tokenized stock trading for major US public companies to European customers earlier this month, handing out tokens to some customers aimed at representing stocks in two highly regarded private companies, Openai and SpaceX.
Several other companies are jumping in. CryptoExchangeKraken also allows non-US customers to trade tokenized stocks, but Coinbase is petitioning regulators to open a market for US customers. Wall Street giants BlackRock and Franklin Templeton currently offer tokenized money market funds. McKinsey predicts that tokenized assets could reach $2 trillion by 2030.
The Golden Age of Code
The push for tokenization comes at a fierce period in Crypto, an industry that saw great growth from the creation and early development of Bitcoin over 15 years ago, as computer enthusiasts supported by libertarians expand to accepting mainstream finance.
The world’s most popular cryptocurrency now regularly sets its all-time highs on Monday, but other forms, such as other forms of encryption, exploded in use, and the Trump administration has promised to lead what it calls the “golden age” of digital assets.
Lee Reigns, a lecture fellow at Duke University, said the biggest winner in the tokenization push could be a small exchange like Robin Hood, who will affect the spikes by looking at their trading volume.
“This is kind of ironic considering the origins of the code, which was to bypass the intermediary,” Reiners said.
Trump’s uplift
Interest in tokenization was also boosted by President Donald Trump’s election. President Donald Trump signed a new law regulating stability coins on Friday, making more encryption-friendly regulations a top priority for his administration.
“Tokenization is innovation, and we at the SEC should focus on how we move forward with innovation in the market,” said Paul Atkins, chairman of the Securities and Exchange Commission.
Is it legal?
Securities law is complex, and even defining what security is can be a question that has been heavily discussed, especially in crypto. Crypto Exchange Binance pulled back the offering of tokenized securities in 2021 after German regulators raised questions about potential violations of the country’s securities laws.
Under Trump, the SEC took a much less broad view than its previous administration, dropping or suspending lawsuits against crypto companies that it had previously accused its agents of violating securities laws.
Hillary Allen, a professor at the American University of Washington, said that Trump’s victory is encouraging to see crypto companies become more aggressive in pushing up what they can offer.
“The most pressing risk is that (tokenization) is used as a play of regulatory arbitrage as a way to avoid rules,” she said.
However, the SEC has encouraged attention when it comes to tokens. Shortly after the Robinhood announcement, SEC Commissioner Hester Peirce, a candid crypto advocate, issued a statement saying companies that issue tokenized shares should consider “their disclosure obligations” under federal law.
“Like blockchain technology, there is no magical ability to change the nature of the underlying asset,” Perth said.
All eyes of private companies
One of the most closely monitored areas of tokenization involves private companies that are not subject to strict financial reporting requirements, such as public companies.
Many hot startups aren’t as frequently published as they used to, and instead rely more and more on wealthy and institutional investors to collect large amounts of money and stay private.
That’s unfair for a little guy, says advocates of tokenization.
“These are large wealth generators for very small groups of very small groups that have early access to these transactions,” said Robinhood executive Johann Carblatt. “Cryptocurrency has the power to resolve this inequality.”
“Please be careful.”
However, the Robinhood token prize was intended to represent an investment in Open Eye. This was quickly pushed back from the company itself.
“Applications for Openai equity require approval. The transfers were not approved,” Openai said on social media. “Please be careful.”
Public companies have strict public disclosure requirements for financial health that private companies do not have to generate. Such reporting requirements have helped protect investors and provide legitimacy to the US financial system, Allen said. Allen said the push for tokenized sales of private companies’ stocks was “esquely familiar” about how things unfolded before the creation of the SEC almost a century ago.
“We were heading out to the place we were in the 1920s,” she said. “Door-to-door salesmen offer inventory and bonds, half of which had nothing behind it.
Original issue: July 21, 2025, 12:31pm EDT
