The Rise of Tokenized Stocks: Is Bitcoin Safe?

Source: Crypto Tips blogger

Tokenized Stocks are sweeping the financial markets at an astonishing pace. According to data from July 2025, the global cryptocurrency market capitalization has reached about $3.2 trillion, with Bitcoin accounting for roughly half of that share. However, a new player—tokenized assets, particularly tokenized stocks—is rapidly emerging. According to predictions from Ripple and the Boston Consulting Group (BCG), the market size for tokenized assets is expected to reach nearly $19 trillion by 2033. Is this a huge opportunity or a “Trojan Horse” lurking in the crypto world? This article will explore the similarities and differences between tokenized stocks and cryptocurrencies from three perspectives: technology, investment, and philosophy, as well as their implications for investors.

Tokenized Stocks and Cryptocurrencies: Definitions and Background

Tokenized Stocks: Blockchain Packaging of Traditional Finance

Tokenized stocks are digital tokens based on blockchain technology that represent price exposure to traditional assets (such as stocks or ETFs) rather than actual ownership. In other words, holding tokenized stocks does not mean you have voting rights or dividend rights in the company, but merely gain returns linked to the price of that asset. These tokens are typically issued by centralized custodians or intermediaries. For example, in July 2025, Robinhood launched over 200 tokenized U.S. stocks and ETFs in Europe, including Nvidia, Apple, and even non-public companies like OpenAI and SpaceX. These tokens are issued on Arbitrum (Ethereum’s layer 2 network), and Robinhood plans to enable 24/7 trading through its proprietary blockchain.

Other platforms like Kraken and Coinbase are also actively positioning themselves. Kraken offers tokenized stocks (called X Stocks) for non-US users through the Solana blockchain, while Coinbase is pushing for US regulators to approve similar products. Additionally, decentralized finance (DeFi) platforms like Camino Finance are integrating tokenized stocks into the lending market. According to BCG data, the tokenized asset market has grown from $2 billion in 2021 to $10 billion in 2024, and is expected to continue expanding at a compound annual growth rate of 80% until 2033.

Cryptocurrency: Decentralized Native Asset

Unlike tokenized stocks, cryptocurrencies such as Bitcoin, Ethereum, and various altcoins are native digital assets on the blockchain. Bitcoin has a market capitalization of approximately $1.6 trillion, making it the “gold standard” of decentralized finance; Ethereum has a market capitalization of about $480 billion and supports most of the DeFi ecosystem; while other altcoins, such as Chainlink, Solana, and meme coins (such as Pepe and Dogecoin), each have their own characteristics in terms of speculation and volatility. These assets do not rely on banks, brokers, or custodians, transactions require no permission, assets can be self-custodied, and the network is open to global users.

Tokenized stocks are essentially a mapping of traditional finance (TradFi) onto the blockchain, while cryptocurrencies represent a new financial system built from the ground up. Although both operate on the blockchain, their philosophical foundations are fundamentally different: tokenized stocks inherit the rules of traditional finance, whereas cryptocurrencies attempt to rewrite those rules.

The similarities between tokenized stocks and cryptocurrencies

Although tokenized stocks and cryptocurrencies have differences in their original design intentions, they still share astonishing similarities in certain aspects:

Blockchain Basics: Both rely on blockchain technology to achieve transaction settlement, transparency, and prevent double spending. For example, Robinhood’s tokenized stocks run on Arbitrum and can process 40,000 transactions per second, far exceeding Ethereum’s mainnet at 15 transactions per second; whereas Bitcoin focuses on security and decentralization, sacrificing transaction speed.

Speculative appeal: Tokenized stocks and cryptocurrencies have attracted a large number of retail investors chasing opportunities for rapid gains. Robinhood sparked a speculative frenzy similar to meme coins (like Pepe or Dogecoin) when it launched tokenized OpenAI and SpaceX stocks in Europe. According to Robinhood data, 80% of its 24 million active users are retail investors, which aligns with the retail-dominated trend in the crypto market.

Around-the-clock trading: The cryptocurrency market has always been a 24/7 trading environment, and tokenized stocks are also moving in this direction. Robinhood currently offers all-day trading 5 days a week and plans to achieve true 24/7 trading through its blockchain infrastructure, breaking the limitations of traditional stock market closures on weekends and holidays.

Accessibility for Retail Investors: Both attract investors with low barriers to entry and zero trading fees. When Robinhood launched in the EU, it offered users a sample of tokenized stocks worth 5 euros, lowering the investment threshold, similar to the low-cost entry characteristic of cryptocurrencies.

These commonalities make tokenized stocks and cryptocurrencies “speak the same language” in market mechanisms: blockchain-based, speculation-driven, always online, and retail-centric. However, this is only half of the story.

The differences between tokenized stocks and cryptocurrencies

Although the two appear similar on the surface, the differences in their functions, risks, and philosophical foundations should not be overlooked:

Functional differences: Tokenized stocks are the “packaged version” of traditional stocks, providing only price exposure rather than actual ownership. For example, Robinhood’s OpenAI tokenized stocks provide valuation exposure solely through special purpose vehicles (SPVs). In contrast, cryptocurrencies are native assets; Bitcoin can serve as a currency, collateral, or store of value, while Ethereum supports smart contracts and decentralized applications (DApps). Cryptocurrencies do not rely on traditional finance, whereas tokenized stocks are entirely based on their underlying infrastructure.

Speculation Driven: The volatility of tokenized stocks is driven by the company’s fundamentals, such as Nvidia’s strong earnings report boosting its token price. In contrast, the speculation in cryptocurrencies is more driven by narratives and social sentiment, for example, Dogecoin surged by 200% in the first quarter of 2025 due to community hype. Kraken data shows that the 30-day volatility of tokenized Nvidia stocks is around 15%, while Bitcoin’s is as high as 40%.

Risk Differences: Tokenized stocks carry counterparty risk, as investors must trust that custodians (like Robinhood or Kraken) actually hold the corresponding assets. If these intermediaries fail, the tokens may become worthless. According to Chainalysis, 30% of tokenized stock platforms do not clearly disclose asset backing, for example, OpenAI publicly denied any relationship with Robinhood tokens, raising issues of transparency and legality. In contrast, the risks of cryptocurrencies lie in market volatility, regulatory uncertainty, and technical vulnerabilities, but users can avoid trusting centralized entities through self-custody.

Market Share Threat: Tokenized stocks may siphon liquidity away from low market cap altcoins and meme coins, as they provide exposure to well-known brands (like Nvidia and Apple) with lower volatility. After Robinhood launched tokenized stocks, its stock price rose by 13%, while the altcoin market lagged behind. According to Coingeek, 60% of active altcoins in 2023 are expected to lose over 80% of their value by 2025. However, Bitcoin and Ethereum continue to hold strong as market cornerstones due to their robust network effects and institutional adoption.

Philosophical Divergence: Decentralization or Pseudo-Innovation?

The core idea of cryptocurrency is decentralization, resistance to censorship, and financial sovereignty. Bitcoin was born out of the 2008 financial crisis, aiming to eliminate reliance on centralized intermediaries; Ethereum, on the other hand, promotes the development of a decentralized ecosystem through open-source collaboration and permissionless innovation. Tokenized stocks, however, are in direct contrast to this. Robinhood’s tokenized assets are issued by centralized custodial entities, non-transferable, and locked within its ecosystem, essentially functioning as a “walled garden” dressed in blockchain attire.

This trend of centralization may erode the core values of cryptocurrency culture. If tokenized stocks are widely accepted as “crypto assets,” people may gradually become accustomed to centralized issuance, restricted access, and opaque risks, thereby undermining the revolutionary significance of cryptocurrencies. More concerning is that traditional finance (TradFi) may, in the name of blockchain, reinforce its existing system rather than being disrupted.

However, some projects are trying to bridge this gap. For example, the tokenized stocks offered by Camino Finance on Solana can be used in the DeFi lending market, allowing users to use them as collateral or for yield farming. Although still in the early stages, such projects showcase a possibility: combining the convenience of traditional finance with the decentralized principles of cryptocurrency.

Investment Strategy: Balancing Opportunity and Principles

In the face of the rise of tokenized stocks, how can crypto investors find a balance between opportunity and principles? Here are a few suggestions:

Intent to Diversify: Tokenized stocks can serve as part of an investment portfolio, offering lower volatility and exposure to blue-chip companies (such as Nvidia, Apple) and non-public companies (such as SpaceX, OpenAI). If holding high-risk altcoins or meme coins, some funds can be reallocated to tokenized stocks to increase stability, but they should never be viewed as alternatives to Bitcoin or Ethereum, as they are derivatives rather than native assets.

Choose a DeFi-compatible platform: Prioritize platforms that support DeFi, such as Camino Finance, whose tokenized stocks can be used for lending or yield farming, retaining the decentralized nature of cryptocurrencies. Avoid complete reliance on centralized platforms (such as Robinhood) to ensure control over your assets.

Leveraging Non-Public Market Opportunities: Tokenized stocks provide retail investors with the opportunity to invest in non-public companies like OpenAI, which is typically limited to venture capitalists and insiders in traditional finance. However, caution is required; for example, OpenAI denies any relationship with Robinhood tokens, highlighting risks of transparency and legitimacy. It is essential to carefully research the token structure and endorsing institutions before investing.

Monitor Regulatory Developments: In May 2025, Robinhood submitted a 42-page proposal to the U.S. SEC seeking to launch tokenized stocks in the United States. If approved, Coinbase and Kraken may quickly follow suit. U.S. investors need to closely monitor regulatory progress, as this could present significant investment opportunities.

Reduce exposure to weak altcoins: Many altcoins are just “noise” in the market, and tokenized stocks may further squeeze their liquidity. It is recommended to reallocate 20-30% of altcoin holdings to Bitcoin, Ethereum, or DeFi-compatible tokenized stocks to respond to market changes.

Use mixed platforms with caution: Platforms like Robinhood (for EU users) and Kraken (for non-US users) offer tokenized stocks and cryptocurrencies, making portfolio management easier. However, it is important to note that the tokenized stocks on these platforms are often not withdrawable or transferable, posing custodial risks. It’s essential to understand the platform rules before investing.

Conclusion: Control rather than price

The rise of tokenized stocks marks the migration of traditional finance to blockchain, bringing new opportunities and risks for crypto investors. They offer exposure to high-growth companies, round-the-clock trading, and greater stability than altcoins, but are also accompanied by compromises on centralization, opacity, and counterparty risk. These products do not fully align with the decentralized ideals of cryptocurrencies, and investors should choose cautiously to ensure they do not sacrifice sovereignty for convenience.