Investment Bank Sees Limited Demand for Tokenized Stocks Despite New SEC Rules

A major investment bank is predicting weak near-term adoption of tokenized stock trading in the US, even after regulators recently opened a new legal pathway for the technology.

New Framework, Limited Enthusiasm

The Securities and Exchange Commission introduced a five-year framework allowing qualifying platforms to trade tokenized versions of stocks using automated pricing pools rather than traditional exchanges, without requiring full exchange registration. Despite the regulatory green light, analysts at TD Cowen expect limited interest from both everyday investors and large institutions, arguing that US investors already have easy, efficient access to the underlying shares, meaning tokenized alternatives must offer a clear advantage to justify additional complexity and thinner liquidity.

Strict Rules Could Limit Adoption

The new trading model allows tokens to trade continuously, but analysts caution that round the clock access does not guarantee better pricing, especially with limited market depth. The SEC has also imposed strict conditions, requiring tokens to preserve full ownership rights tied to underlying shares and giving companies advance notice before their stock can be tokenized, along with a window to object. Trading volume under the program is also capped, making the framework more restrictive than some tokenized stock products already available overseas. Conversations with numerous public companies reportedly revealed little interest in participating outside firms already closely tied to the crypto industry.

Perpetual Futures Seen as Bigger Competitor

According to the bank’s research, most trading activity tied to a major tech company’s shares on a large crypto exchange came through leveraged perpetual futures contracts rather than actual token ownership, suggesting that demand for leveraged, derivative-based stock exposure may pose a bigger challenge to traditional markets than tokenized shares themselves.