NYDIG’s Greg Cipolaro indicated that while the tokenization of stocks currently may not drastically benefit the crypto sphere, the prospects may improve if these assets can seamlessly integrate into blockchain networks.

“The benefits to networks these assets reside on, such as Ethereum, are light at first, but increase as their access and interoperability and composability increase.”
— Greg Cipolaro in a note on Friday.

The initial impact is expected to be derived from transaction fees on tokenized assets, which should bolster the blockchain that hosts them, according to Cipolaro’s remarks.

The discussion around tokenizing real-world assets (RWAs), like US stocks, has gathered momentum in the crypto industry. Major trading platforms, including Coinbase and Kraken, are eager to introduce platforms for tokenized stocks in the US market, following international successes.

Paul Atkins, chair of the SEC, suggested that the US financial landscape could adopt tokenization in a few years, indicating a growing trend.

“In the future, one could see these RWAs being part of DeFi (composability), either as collateral for borrowing or as assets for trading.”
— Greg Cipolaro

Cipolaro elaborated that creating interoperable tokenized assets is complex due to significant variances in their form and function and their hosting on both public and private networks.

He mentioned the Canton Network as a notable non-public blockchain for tokenized assets, holding up to $380 billion in represented value, while Ethereum leads as the most utilized public blockchain for RWAs with $12.1 billion deployed.

Cipolaro emphasized that despite the need for conventional financial structures in tokenization, leveraging blockchain technology offers several advantages, including rapid settlement, operational efficiency 24/7, and greater transparency.

Should regulations become more amenable, as suggested by Chairman Atkins, access to these assets might become more widespread, enhancing their utility and market reach. Investors should be vigilant, even if the immediate economic impacts on traditional cryptocurrencies remain muted.