“How did you go bankrupt?”
“Two ways. Gradually, then suddenly.”
That line from Ernest Hemingway perfectly describes Wall Street’s entrance into crypto.
For years, giants like Visa (V) and JPMorgan Chase & Co. (JPM) “piloted” crypto projects. They dipped their toes in. They ran experiments. But they didn’t commit.
That’s now changing thanks to a flood of pro-crypto announcements that have come out of Washington.
Three major bills recently passed the US House that give crypto much-needed regulatory clarity… and Wall Street the green light to come marching in.
The most important of these is the CLARITY Act. It’s a market infrastructure bill that lays out the rules of the road regarding which cryptos are securities and which are commodities.
This is a game-changer for crypto.
Wall Street was never going to fully commit without a regulatory framework. Now that we have clear rules, we’re about to see a new wave of crypto adoption… and institutional money flooding in.
What’s more, this will have a trickle-down effect on everyday investors like you and me.
We can already see the impact of these rulings in the form of tokenization—the real disruptive power of blockchain that removes the middlemen from traditional finance.
In simple terms, it’s the process of creating a digital representation of a real-word asset on a blockchain.
Imagine you own Manhattan real estate.
In the old world, your ownership is a thick stack of legal documents locked in a vault. To sell a piece of it, you’d need lawyers, brokers, and lots of paperwork.
With tokenization, that building can be converted to, say, 1 million digital tokens. Each token represents a tiny, fractional share of the property. These tokens exist on a blockchain, and owning a token is the digital equivalent of owning a brick in that building.
This token contains all the relevant information: your ownership rights, the asset’s details, and a verifiable history of every time it’s changed hands.
This entire process is underpinned by the security and transparency of the blockchain. Every transaction is recorded on the immutable ledger.
The major benefits of tokenizing assets include…
- Access: Tokenization breaks high-value assets into small digital pieces. You no longer need $50 million to invest in an office building. You can start with $100.
- Speed: Traditional finance takes days or weeks to settle. Tokenized assets settle instantly. No middlemen or delays.
- Global liquidity: A tokenized share of Apple (AAPL) can be bought or sold 24/7 by anyone, anywhere. No more waiting to trade during normal market hours.
- Private market access: The most explosive returns often come from private companies. But these markets have been gated behind “accredited investor” rules—if you’re not a millionaire, you’re not allowed in.
The promise of tokenization isn’t a question of if, but when and how fast this transition will occur. And if recent developments are anything to go on, tokenization will move a lot faster than most think.
- It’s already “game on” for tokenized stocks.
Back in June, Robinhood (HOOD) launched a new tokenized stock-trading platform in Europe. Customers can now buy and sell over 200 US-listed stocks 24 hours a day, Monday through Friday.
That’s impressive. But it’s not the real breakthrough.
What really matters is that Robinhood users will be able to buy shares of sought-after private companies, including SpaceX and OpenAI.
And Robinhood isn’t the only one racing to tokenize the stock market…
Crypto exchange Kraken is launching its own tokenized stocks. Coinbase (COIN) is seeking approval from the SEC to do the same.
Meanwhile, Ondo Finance (ONDO) is working to acquire an SEC-registered broker-dealer license to offer stock trading via blockchain tech to US investors.
Some folks might shrug and say, “It’s just stocks on a blockchain. What’s the big deal?”
Well, people once said the same thing about stablecoins—“just dollars on a blockchain.” Today, they’re crypto’s killer use case, with over $250 billion in circulation.
I believe tokenization (putting stocks on-chain) is about to follow the same growth curve.
This will allow ordinary investors to buy and sell private companies, giving everyday investors a “peak behind the velvet rope” usually reserved for the financial elite.
This is a big win for the little guy. And it’s all thanks to blockchain technology.
- What does tokenization mean for crypto?
It answers the #1 question on every crypto skeptic’s mind: “Blockchain, what is it good for?”
Every time someone trades a tokenized stock on Robinhood, they’ll use the blockchain. Robinhood built its product on Arbitrum, a “Layer 2” network running on Ethereum (ETH).
This increases Ethereum’s network activity, which drives fees, usage, and ultimately… price.
It also signals a shift in how crypto gets valued.
Until recently, prices were mostly driven by speculation and hype. Protocols launching real, valuable products with quality tokens got sued by regulations, while “meme makers” did as they pleased.
Now, the dynamic has flipped.
Institutions like BlackRock (BLK) are moving into crypto. Regulations are taking shape. And tokenization is giving blockchain real-world utility.
Just like the dot-com era separated the Amazons (AMZN) from the Pets.coms… we’re now entering a new phase of crypto where fundamentals matter.
The biggest winners from here will be crypto businesses with real users, real revenues, and solid tokenomics.
Stephen McBride
Chief Analyst, RiskHedge
PS: My readers will be among the first to hear about the real crypto businesses making real money as tokenization takes off. To follow along—and learn about other disruptions reshaping markets before they go mainstream—sign up for my free letter, The Jolt.
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Stephen McBride is Chief Analyst, RiskHedge. To get more ideas like this sent straight to your inbox every Monday and Friday, make sure to sign up for The Jolt, a free investment letter focused on profiting from disruption.