Nasdaq tokenization plans could split trading into two markets — TD Securities
Why it matters: The tokenization trend could fragment markets, creating new opportunities and risks for investors.
- Nasdaq is pursuing three parallel tokenization initiatives: upgrading trade settlements, enabling tokenized share issuance, and supporting offshore trading platforms like Kraken, which could lead to two distinct market systems.
- TD Securities warns that expanding into offshore tokenized platforms could create separate venues for trading the same assets, operating outside US regulation and potentially leading to different prices for the same stock.
- Kraken's xStocks platform has surpassed $25 billion in cumulative trading volume for tokenized shares, reflecting 150% growth since November, highlighting the rapid expansion of this market.
- Coinbase is also expanding into tokenized stocks as part of its "everything exchange" strategy, intensifying competition between crypto platforms and traditional exchanges for equity trading.
- NYSE is exploring tokenization through a partnership with Securitize, aiming to develop a platform for tokenized securities that could support extended trading hours.
Nasdaq's foray into tokenization could create a dual-market structure, with traditional exchanges coexisting alongside offshore blockchain platforms, potentially leading to fragmented trading and price discrepancies, according to TD Securities. This shift, also explored by NYSE and embraced by platforms like Kraken and Coinbase, signals a move toward 24/7 trading but introduces risks like lower liquidity and price divergence across venues.
