SEC Promotes Tokenized Stocks, Is the Traditional Finance Industry Starting to Worry?
The U.S. Securities and Exchange Commission (SEC) is preparing to formally release an "innovation exemption" framework this week. This framework would allow third parties to tokenize U.S. stocks like Apple and Tesla without approval from the listed companies. The move, rooted in a deregulatory vision proposed by pro-crypto commissioners earlier this year, could accelerate the migration of traditional stock markets to blockchain.
This development poses a structural threat of "fragmentation" to traditional finance. Core concerns are liquidity fragmentation—where trading volume disperses across multiple blockchains and platforms, leading to price disparities and reduced market efficiency—and revenue fragmentation—where trading fees and intermediary income shift away from domestic exchanges to overseas or competing platforms.
The report compares the traditional stock market to a monopolistic "supermarket." Tokenization enables countless "street stalls" to operate outside this system, threatening the exchange's dominance, diluting liquidity for large orders, and slicing into revenue streams.
Evidence of this capital fragmentation is already emerging. On the same day the SEC signaled the framework, decentralized platform Hyperliquid saw its RWA (real-world asset) open interest hit a record $2.6 billion, driven by demand for 24/7 on-chain trading of traditional assets.
Traditional institutions face a dilemma: either collaborate to build tokenization infrastructure proactively or lobby regulators to block innovation. Regulators must balance controlling the pace of innovation with preventing domestic revenue from being captured by offshore platforms. Key future battles will revolve around defining shareholder rights for tokenized assets and regulating platforms that have grown in regulatory gray areas. In the digital asset era, inaction risks the permanent loss of long-held fee monopolies and financial leadership as capital continues to disperse.
marsbit05/22 10:36
