- Tokenised stocks are emerging as the next growth area for decentralised finance (DeFi).
- Major firms such as Robinhood, Kraken, and Coinbase are expanding their tokenised equities offerings.
- A potential drop in central bank interest rates could decrease demand for bond-based DeFi products.
- Tokenised equities account for a small part of the $25 billion real-world asset (RWA) market in DeFi.
- Traditional financial firms are developing tokenisation platforms to keep up with fintech and crypto competitors.
Several financial technology companies, crypto firms, and traditional Wall Street players are moving into tokenised stock trading, a new area of growth for the decentralised finance (DeFi) sector. The shift comes as market conditions point to a potential slowdown in the appeal of tokenised debt, which previously helped DeFi withstand market changes from 2021 to 2022.
According to a recent report by crypto market maker Wintermute, lower central bank interest rates in the next 12 to 18 months could weaken returns on bonds and other debt-based assets. This environment is expected to drive more interest toward tokenised stocks, which are less dependent on interest rates and can offer increased market volatility and retail engagement.
The report points to Robinhood, which launched tokenised stock trading on its app in June, as a key example. “Robinhood’s timing is significant. As the yield trade loses momentum, tokenised equities, less dependent on interest rate dynamics, could emerge as the next major driver of onchain adoption,” Wintermute stated.
Currently, tokenised equities make up only $424 million of the total $25 billion RWA market, with the majority going to tokenised credit and government Treasuries. Competitors such as Kraken, Bybit, and Ondo Finance are also increasing their tokenised stock offerings. Coinbase has applied to the U.S. Securities and Exchange Commission for approval to provide tokenised stock trading, according to Reuters.
Analysts from Galaxy Digital warn that fintech and crypto players could push traditional institutions like the New York Stock Exchange into a limited role as custodians. Meanwhile, leading banks such as JPMorgan, Wells Fargo, and Citigroup are working on their own blockchain and tokenisation solutions.
Galaxy Digital’s analysts suggest that those who control both trading and the underlying blockchain infrastructure will have the strongest position in the developing market.
In other market movements, Bitcoin rose by 0.1% in the last 24 hours to $108,832, and Ethereum increased by 0.5% to $2,575.
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