Coinbase's recent exploration into tokenizing its own stock has reignited discussions around Real World Assets (RWA) in the crypto space. According to data from RWA.xyz, the total market capitalization of RWA products, excluding stablecoins, reached $17.93 billion as of March 2025.
A study by Boston Consulting Group (BCG) projects that the RWA market could grow to a staggering $16 trillion by 2030, far surpassing the current total valuation of the entire cryptocurrency market.
The Rise of Tokenized Assets and Regulatory Progress
The trend toward compliance in the crypto industry has gained significant momentum. With traditional finance giants like BlackRock, Fidelity, and J.P. Morgan launching cryptocurrency-related products, the convergence of traditional and crypto finance is accelerating.
Tokenized U.S. Treasuries have emerged as one of the most active segments within the RWA market. This surge is largely driven by macroeconomic conditions: since 2022, the Federal Reserve has raised interest rates multiple times to combat high inflation, leading to tightened global liquidity. In this high-interest-rate environment, investors have shifted toward lower-risk, higher-yield assets, making tokenized government bonds an attractive option.
Despite these developments, tokenized equities remain a niche category. Currently, the market capitalization of tokenized stocks is only $14.51 million—a small fraction of the overall RWA market.
The Complex Landscape of Stock Tokenization
Previous attempts at stock tokenization have faced significant regulatory challenges. For example, Binance introduced tokenized stock products in 2021 but delisted them within months after facing warnings from financial regulators in the UK and Germany.
The main obstacle has been compliance. Tokenized stocks involve complex regulatory considerations, including dividend distribution, shareholder rights, and securities laws. Without clear regulations, achieving "equal equity" between tokenized shares and traditional shares remains difficult.
Coinbase, as a publicly traded company on Nasdaq, is now engaging with the SEC to explore a compliant path toward tokenizing its stock. If successful, this could set a new standard for the integration of traditional equity and blockchain technology.
Benefits of Stock Tokenization
Tokenizing stocks offers several potential advantages:
- Increased Accessibility: Lower barriers to entry for retail investors seeking exposure to traditional equities.
- Improved Efficiency: Faster settlement and transaction processes through blockchain technology.
- Innovation in Financial Products: Enable new applications such as automated dividend distributions via smart contracts and real-time equity registration.
- Capital Inflow: Attract traditional investors into the crypto market, enhancing overall liquidity.
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The Essential Challenge: Equal Rights for Token Holders
A fundamental issue with tokenized stocks is whether holders enjoy the same rights as traditional shareholders. This concept, often referred to as "equal equity," includes voting rights, dividend entitlements, and access to company information.
Without equal rights, tokenized stocks may trade at a discount or diverge in value from their traditional counterparts. This undermines the utility and attractiveness of tokenized equity products.
For instance, Backed, a tokenization issuer, launched a wrapped version of Coinbase stock (wbCOIN) on Base network. However, the product's documentation clearly states that holders do not receive dividends. Unsurprisingly, the token has seen minimal trading volume—just $114 in the past 24 hours.
Obstacles to Achieving Equal Equity
Several challenges must be addressed before true equity parity can be realized:
- Legal Recognition: Most corporate laws do not yet recognize token holders as legal shareholders.
- Regulatory Coordination: Cross-border trading and 24/7 markets complicate jurisdictional oversight.
- Technical Integration: Bridging blockchain systems with traditional shareholder registries and voting mechanisms.
- Governance Adaptation: Companies must adjust their governance structures to accommodate tokenized ownership.
Frequently Asked Questions
What does "equal equity" mean in tokenized stocks?
"Equal equity" means that holders of tokenized stocks should have the same rights as traditional shareholders, including voting privileges, dividend payments, and access to corporate information. This ensures that the digital asset represents true ownership rather than a derivative claim.
Why is regulatory compliance important for tokenized stocks?
Without regulatory approval, tokenized stocks may not be recognized as legitimate securities. This can limit their adoption, liquidity, and legal protection for investors. Compliance ensures that tokenized equities operate within existing financial frameworks and gain institutional trust.
How can blockchain improve stock trading?
Blockchain technology can enable near-instant settlement, reduce intermediary costs, increase transparency through immutable records, and allow for fractional ownership. These features make stock trading more efficient and accessible to a broader audience.
What is the current state of tokenized stock markets?
As of now, the tokenized stock market is still nascent. Major hurdles include regulatory uncertainty, technological integration, and achieving legal parity with traditional shares. Projects like Coinbase’s initiative could pave the way for broader adoption if these challenges are addressed.
Can tokenized stocks pay dividends automatically?
Yes, through smart contracts, dividend payments can be automated and distributed directly to token holders. This reduces administrative overhead and ensures timely payments, although it requires careful legal and technical design.
What role do institutions play in tokenization?
Large institutions like Coinbase have the resources and influence to work with regulators in shaping new standards. Their participation is crucial for establishing trusted, compliant, and widely adopted tokenized equity products.
Conclusion
The tokenization of stocks represents a significant step toward merging traditional finance with blockchain innovation. However, for tokenized equities to gain widespread acceptance, the issue of equal rights must be resolved. This requires not only technological solutions but also legal and regulatory advancements.
Coinbase’s initiative may serve as a catalyst for broader change, encouraging clearer guidelines and more robust frameworks for asset tokenization. As the industry moves forward, collaboration between regulators, companies, and technologists will be essential in realizing the full potential of tokenized stocks.