Disclosure: The views and opinions expressed herein are solely those of the author and do not represent the views and opinions of crypto.news editorial.
With 2026 just around the corner, efforts to move stock markets on-chain are accelerating as the promise of 24/7 trading and near-instant settlements gains increasing traction globally. What was previously stuck behind broker-dealer infrastructure is now being hailed as a ‘modernization’ by its proponents, but there’s something they’re not considering.
summation
- Tokenized stocks promise speed, not immunity from risk or regulation. Moving stocks on-chain does not eliminate securities laws, market inequalities, or systemic risk, and pretending otherwise undermines investor protections.
- Liquidity and governance are real fault lines. Fast settlement without deep liquidity, disclosure, custody and shareholder rights creates the risk of crashes and “ghost assets” that lie outside reliable market structures.
- Tokenization must carry out market safeguards. On-chain assets will only work if they maintain full regulatory compliance, enforceable ownership, and institutional-level standards. Otherwise, modernization erodes.
Behind the veneer of efficiency is the fact that moving stocks to the blockchain does not eliminate regulation, structural inequality, or risk. If the industry proceeds in this direction without discipline, the transition to on-chain stock trading could strip us of the safeguards that make public markets trustworthy.
Stock tokenization is effectively a new experiment in market structure, but the stakes go far beyond convenience. Investor demand for these tokenized options is growing, and companies like Nasdaq are already working with regulators to list and trade tokenized stocks.
If the ambition is real, the protections investors expect from regulated stock markets should be fully translated into tokenized equivalents. The transition must have a trading mechanism based on smart contracts and ultimately preserve the governance, disclosure, and governance that underpins the legal markets that already exist.
promise of speed
On-chain stocks allow for near-instant settlement of transactions, reducing the cumbersome cycles associated with this form of trading, and freeing up capital faster for better utilization. It’s easy to see the appeal when you get easier access for cross-border investors, fractional ownership, fewer jurisdictional hurdles, and a key advantage over non-tokenized options: speed.
Analysts at the World Economic Forum have already highlighted the benefits of on-chain stock trading, including predictable settlement, low reconciliation overhead, and programmable corporate actions, as a bold step toward tokenization. For the first time, retail investors won’t need a managing broker to access segmented blue chip stocks.
Blockchain’s participation and speed capabilities open up stock markets to global accessibility rather than geographic stratification. These are all real benefits that on-chain stock trading offers, but speed without proper governance quickly reveals itself as an empty victory for everyone involved.
With the hype around tokenized stocks moving faster than the law, the U.S. Securities and Exchange Commission and others are already making moves. Sensing both opportunities and threats, the SEC is considering a limited exemption to allow blockchain-based stock trading, but only under controlled conditions.
Liquidity mirage and regulatory loopholes
Amid all the excitement, the risks of on-chain stock trading are often overlooked, namely the liquidity threat that is not discussed enough. On-chain assets are traded quickly, but that doesn’t necessarily mean they’re traded deeply.
Academic research has shown that tokenized assets (even those with real-world backing) face severe liquidity cliffs, especially during periods of spikes in volatility. Synthetic stocks with low order volume and insufficient liquidity to handle the sell-off are just waiting for a flash crash to occur.
If a company or exchange attempts to circumvent securities laws by claiming that on-chain is the same as ‘out-of-jurisdiction’, they could be labeled a shadow market and the entire system could take a nosedive.
The SEC has already stated that tokenized stocks will be classified as securities and subject to full regulatory obligations. And tokens that look like stocks, trade like stocks, and act like stocks are stocks.
Anything less and lacking compliance checks is just a ghost asset.
The standards must be raised. Otherwise it will be low.
The time has come to embrace tokenized stocks as a true upgrade to protect investors, or to weaponize blockchain to weaken the safeguards that make public markets trustworthy.
Tokenized shares must confer true shareholder rights, include enforceable claims for dividends and corporate actions, and must adhere to the same disclosure and reporting rules as modern markets. Regulators have already made their position clear. Now safety measures and regulatory compliance must take the lead.
The upside potential of on-chain stock trading is enormous, but only if governance, liquidity and legal protections are implemented in tested public markets. Tokenization should elevate stock markets, not empty them, ensuring that tokenized stocks maintain the accountability that modern stock markets demand.
Standards must be raised to meet economic requirements for investor safety. Otherwise, tokenized stocks will be marginalized. The industry will disclose the choices made at the appropriate time.
