Tokenization in Action: Securities Trading
We believe tokenized securities trading represents the future of global securities trading
By Vanessa Malone
In our last piece, we explored stablecoins as a leading example of tokenization in action. But stablecoins are just one piece of a much larger transformation. Another rapidly growing application is the digitization of traditional securities.
Securities trading, leveraging tokenization technology, is unlocking next generation capabilities including fractional ownership, instant settlement, and global accessibility like never before. It is no longer a distant future, securities trading powered by blockchain technology is happening now. From equities and bonds to private funds, tokenized securities are updating financial markets, making investing more efficient, inclusive, and borderless. Companies leading the way in tokenized securities trading include:
Upstream
We start with our very own Upstream, part of MERJ Exchange, pioneering the first direct-access stock market built on a blockchain. Upstream is live with issuers dual-listed from major exchanges like Nasdaq, NYSE, and CSE, giving investors (non-U.S.) of all levels access to stocks they might otherwise struggle to trade. By leveraging tokenization behind the scenes, Upstream enables seamless trading with 20/7 market access, instant settlement, public order books, and streamlined onboarding. This works to remove many of the barriers global investors face on traditional exchanges while maintaining a familiar stock trading experience. Example: A retail investor in Latin America who can’t open a U.S. brokerage account can open an account and trade dual-listed U.S. stocks on Upstream using USDC, USDT, PayPal or traditional payment methods.¹
Ondo Finance
Ondo Finance is making U.S. Treasuries and corporate bonds more accessible to investors and institutions outside of the U.S. In partnership with Ripple, Ondo is launching tokenized U.S. Treasuries on the XRP Ledger (XRPL), enabling non-U.S. investors to easily trade these yield-bearing assets in a digital format. Ripple and Ondo are providing initial liquidity for Ondo Short-Term U.S. Government Treasuries (OUSG), which is backed by the BlackRock USD Institutional Digital Liquidity Fund (BUIDL). Investors can buy and redeem OUSG 24/7 using Ripple’s USD stablecoin RLUSD.²
SIX Digital Exchange (SDX)
SIX Digital Exchange (SDX), a Swiss-regulated platform, is working to offer tokenized bonds for institutional investors. In May 2024, the World Bank priced a CHF 200 million digital bond on SDX, bringing the platform’s total issuances past CHF 1 billion. SDX has achieved major milestones, including integrating a digital central securities depository (CSD) with a traditional one to settle transactions using a live wholesale central bank digital currency (CBDC). This innovation is helping to make digital bonds more accessible and scalable.³
INX
INX is leveraging tokenization to enable live trading of select digital assets and real-world securities on its platform, INX.One. Investors can currently trade popular cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) against the U.S. Dollar and access tokenized shares of major companies such as Microsoft, Google, and Tesla. By tokenizing these assets, INX enhances liquidity potential and accessibility, allowing users to trade high-value stocks on the platform. It’s important to note that these tokenized shares do not grant direct ownership of the actual stock in a traditional brokerage account. Instead, they provide a blockchain-based way for investors to gain exposure to the performance of these companies.⁴
Franklin Templeton
Franklin Templeton is leveraging the use of tokenization in traditional fund management through the Franklin OnChain U.S. Government Money Fund (FOBXX). Launched in 2021, it became the first U.S.-registered fund to utilize a public blockchain for processing transactions and recording share ownership. Each share of the fund is represented by a BENJI token, which facilitates peer-to-peer transfers of shares directly between shareholders. The fund’s transfer agent maintains the official share ownership record using a blockchain-powered system for transparent transaction activity. As of March 31, 2024, the fund holds over $360 million in assets under management, showcasing the growing adoption of blockchain for traditional financial products.⁵
Conclusion
While decentralized exchanges have long facilitated crypto trading with tokenization built in, applying this model to legacy systems and traditional equities presents a much greater challenge. Seeing successes from the companies mentioned offers an exciting glimpse into the future of trading.
Stay connected to hear about upcoming opportunities for traders on Upstream. Issuers interested in listing on Upstream can get started here. Investors (non-U.S.) can download Upstream on iOS or Android.
Sources
1 Upstream | 2 Ondo | 3 Ledger Insights | 4 INX | 5 Franklin Templeton
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