Wall Street Faces Hurdles in Tokenizing Stocks

Nasdaq and the London Stock Exchange Group have moved to support tokenized equities, but a panel at the Geneva Onchain Leaders Gathering on Sept. 8 reported that onchain shares still face practical problems for institutional use. Panelists included representatives from Zama, G-20 Group, Blobb.io and Rex Change.

Nasdaq has agreed to invest $100 million in Payward, the parent company of Kraken, to develop infrastructure for tokenized equities. LSEG announced a partnership with Payward to offer tokenized U.K. shares and to explore a 24-hour trading venue tied to those tokens.

Speakers said four main gaps remain: reliable liquidity, privacy protections, clear regulatory treatment and enforceable shareholder rights. Antoine Hello, director of financial institutions at Zama, argued that institutions need public blockchain systems that can process significant volume while keeping sensitive data confidential and called for systems that go beyond isolated proofs of concept. François Meurier, founder and managing director of Rex Change, framed the challenge around real-world use: “Not in theory but how it works in practice. We do this every day.”

Event data cited by panelists showed $2.91 billion in distributed tokenized stocks and $13.31 billion in monthly transfer volume as of Sept. 10, with more than 3.17 million addresses holding these assets. Holders rose 174% over 30 days while monthly transfer volume fell about 53%, a mismatch panelists said could weaken market depth and execution reliability.

A dispute over tokenized exposure to AMC illustrated questions about ownership and rights. AMC’s chief executive criticized a broker for offering tokenized products that track the stock but do not grant legal ownership or shareholder privileges. The broker’s chief executive defended the products, and an industry group warned that some third-party tokenized equities can act as “mimics” that may reduce investor protections and market integrity.

Panelists raised specific design and operational issues. Confidentiality tools must prevent exposure of trading positions and client data while allowing regulators access for market surveillance. Settlement arrangements need to preserve current investor protections such as voting, dividends and corporate governance when a stock is represented onchain. Market structures and market-makers must supply continuous liquidity to support price discovery and execution.

Diana-Cezara Toader, head of digital assets at UBS Asset Management, said moving tokenization from pilot projects into live markets will require clearer rules, shared infrastructure and more consistent liquidity. Francesco Ranieri Fabracci, head of tokenization expansion at Tether, summarized an operational requirement: “To tokenize something, you need to make the token useful.”

Panelists described two broad approaches firms are testing: regulated exchanges and custodial models that link tokens to underlying share ownership, and synthetic or derivative-style tokens that track price without conveying shareholder rights. Each approach raises different legal and operational questions.

Speakers urged collaboration among exchanges, infrastructure providers, regulators and incumbent firms to build interoperable platforms, standardize legal wrappers for tokenized assets and design market-making incentives. The panel characterized tokenized stocks as technically feasible but said further work is needed on liquidity, confidentiality, regulatory compliance and shareholder protections before institutions adopt them widely.