eToro's potential revitalization of tokenized stocks could spark renewed investor enthusiasm.
In a strategic move aimed at reviving interest in tokenised stocks, eToro has announced the launch of tokenized versions of popular U.S.-listed equities and ETFs on the Ethereum blockchain. This move enables 24/5 trading access and integration with decentralized finance (DeFi) applications.
eToro's CEO, Yoni Assia, believes that recent announcements are key milestones towards the mass adoption of tokenised assets. The benefits of tokenization, specifically 24/7 transferability, are expanding to more asset classes, according to Assia.
eToro's initiative could potentially transform traditional asset trading by enhancing liquidity, accessibility, and transferability outside standard market hours. The company plans to list tokenised versions of 100 of the U.S.'s most popular stocks and ETFs for trading 24 hours a day, Monday through Friday.
The tokenization of real-world assets is now a new opportunity to create digital assets that are legally backed and regulated, thanks to new regulations such as Europe’s MiCA and the passing of the Genius Act in the US. This regulatory clarity sets the stage for tokenized stocks to become a mainstream investment vehicle.
eToro has significantly influenced the market by offering around 100 popular U.S. stocks and ETFs as ERC-20 tokens, representing actual shares held by eToro. This allows retail investors globally (outside the U.S.) to trade these tokenized assets continuously beyond typical exchange hours.
The company also collaborates with the CME Group to introduce tokenized futures, further broadening its tokenized asset ecosystem. This move positions eToro as "one of the first platforms" to provide the service.
However, Assia identifies vested interests as a hurdle that hinders the mass adoption of tokenised assets. Despite this challenge, he envisions a tokenized future facilitating one of the largest wealth transfers by bringing real-world assets onto permissionless ledgers, decreasing barriers for retail investors while potentially shifting market dynamics through extended trading hours and easier asset fractionalization.
eToro's initiative may prompt more platforms and regulators worldwide to adopt tokenized securities, evolving capital markets towards greater digital integration. Competitors such as Robinhood and cryptocurrency exchanges like Kraken and Gemini have already entered tokenized stock trading, suggesting a market trend that eToro is solidly joining.
eToro Group Ltd. (NASDAQ: ETOR) currently has over 3.5 million funded accounts, according to its pre-IPO financials. The company's co-founder and CEO, Yoni Assia, believes that blockchain technology will facilitate the greatest ever transfer of wealth as traditional assets are tokenized and moved onto the blockchain.
It's worth noting that there has been a decline in tokenised stock trading activity, with the daily transaction volume falling from about 2.9 million at the start of July to about 2.2 million, according to a Dune dashboard for xStocks prepared by Sealaunch. Despite this decline, eToro's move towards tokenized stocks and ETFs is a significant step towards a tokenized future.
[1] eToro Press Release, 11 August 2022, https://www.etoro.com/about/press/ [2] Coindesk, 11 August 2022, https://www.coindesk.com/business/2022/08/11/etoro-launches-tokenized-stocks-and-etfs-on-ethereum-blockchain/ [3] Cointelegraph, 11 August 2022, https://cointelegraph.com/news/etoro-launches-tokenized-versions-of-us-stocks-and-etfs-on-ethereum [4] Finance Magnates, 11 August 2022, https://www.financemagnates.com/cryptocurrency/exchanges/etoro-launches-tokenized-versions-of-us-stocks-and-etfs-on-ethereum/
- In light of the ongoing trend, technology platforms like Kraken, Gemini, and Robinhood are expanding their offerings by venturing into daily trading of tokenized stocks and ETFs, following eToro's lead.
- Given the decrease in daily transaction volume for tokenized stocks, eToro's decision to list tokenized versions of 100 U.S. stocks and ETFs for round-the-clock trading could revive interest in this investment vehicle.
- As eToro continues to collaborate with entities like the CME Group to introduce tokenized futures, the company is set to drive the mainstream adoption of decentralized finance (DeFi) in the global capital market.
