Edwin Mata, CEO and Cofounder of Brickken.
Tokenized equities are often compared to exchange-traded funds. That comparison is convenient, but it is conceptually wrong.
Tokenized equities are not a wrapper, not a fund structure and not a new financial product layered on top of existing shares. They are a digital form of the same equity security and the same shareholder rights, implemented on programmable market infrastructure. The innovation is not packaging. It is the modernization of issuance, transfer, settlement and corporate actions.
A tokenized equity represents a share, or a legally recognized representation of that share, whose ownership and transfer logic is embedded directly into software. Compliance rules, investor eligibility and transfer restrictions are enforced at the instrument level. This is an upgrade of how market infrastructure operates.
This evolution is already moving from theory to market pilots. Nasdaq has filed (registration required) to enable trading of securities in tokenized form on its market. The New York Stock Exchange is also building a 24/7 platform for tokenized securities, designed around blockchain-based settlement. Intercontinental Exchange Inc., NYSE’s parent company, is working with Citi and BNY on support for tokenized deposits as part of the build-out. Meanwhile, firms are racing to fill the gap, and Kraken has expanded its tokenized equities offerings to the EU.
The market is not waiting for a single standard to emerge.
What Tokenized Equities Change
Settlement has historically taken days, though the U.S. move to a one-day settlement cycle (T+1) in 2024 demonstrates the industry-wide push toward speed and resiliency. Tokenized equities move in the same direction, and they introduce the possibility of near-real-time settlement for eligible transactions once compliance, custody and infrastructure support it.
More importantly, tokenization alters how regulatory and operational controls are implemented.
When a share exists in a programmable form, investor eligibility rules, transfer restrictions and corporate action logic can be enforced directly at the asset layer and at the transfer layer. This does not remove regulation. It changes where regulation is technically applied. The asset becomes part of the compliance infrastructure.
This also challenges the assumption that listings and clearing must be bound to a single national infrastructure stack. A legally recognized digital share can, in principle, move across multiple regulated venues while preserving consistent transfer rules, identity checks and reporting obligations.
Not A Wrapper
An exchange-traded fund is a separate legal and financial product that holds or references underlying securities through a fund structure.
A properly structured tokenized equity is not a fund, derivative, structured product or intermediary vehicle.
It is a digital representation of the same share and the same legal rights. The token does not sit on top of the security. It becomes part of the ownership and transfer infrastructure of the security.
This distinction matters because calling tokenized equities a wrapper implies additional intermediation, new product risk and new layers of legal abstraction. The objective of tokenization is the opposite.
Rethinking Exchanges As Market Infrastructure
Exchanges can treat tokenized equities as an infrastructure upgrade. A marketplace matches buyers and sellers. A financial operating system orchestrates identity, compliance, risk controls, data, settlement and corporate actions across multiple products and platforms. That framing raises a strategic question: whether exchanges position themselves as the regulated infrastructure layer for tokenized flows and how they respond to blockchain-native venues entering parts of the value chain.
Tokenized equities do not need to “beat” an exchange on headline volume to erode strategic leverage. They need to capture high-margin functions, including settlement services, custody-related workflows, collateral movement and post-trade data, where exchanges have historically held pricing power.
Regulatory clarity may favor incumbents, because licensed exchanges already operate with surveillance, market integrity rules and established risk frameworks. Tokenized equities could fit into that direction when rights are equivalent, disclosures remain enforceable and supervision remains robust.
Preparing For Transition
Operational success requires addressing specific friction points in code and governance. To bridge the gap between traditional reliability and blockchain innovation, executives can prioritize the following updates:
• Audit “smart contract” readiness. Governance is no longer just about board meetings; it’s about software code. Define who has the authority to upgrade smart contracts and what specific triggers (like a security breach) will pause trading.
• Treat code audits as financial audits. Just as you wouldn’t release a financial report without an external audit, do not deploy tokenized assets without independent code verification and a documented incident response plan.
• Modernize corporate actions. Issuers need to ensure dividends, voting and shareholder communications are compatible with ownership records that change by the second, not by the day.
• Standardize digital identity. Implement robust “Know Your Customer” (KYC) controls directly at the asset level to ensure that only eligible investors can hold or transfer tokenized equities.
• Build for transparency. Regulators may expect real-time visibility. Instead of quarterly reports, build “adapter layers” that allow for real-time reporting and traceability across different trading venues.
The Challenges
Stock exchanges exploring tokenized equities will face a combination of regulatory interpretation challenges and operational transformation requirements.
On the regulatory side, one of the core questions is how existing securities frameworks apply when compliance and transfer controls are embedded directly into programmable assets. Supervisors will likely expect assurance that investor eligibility, disclosure standards, market surveillance and shareholder rights remain fully enforceable even when settlement occurs on blockchain infrastructure.
Cross-venue interoperability also introduces complexity, as tokenized shares could theoretically circulate across multiple regulated platforms, requiring coordinated standards for identity, reporting and oversight.
For exchange leaders, this means engagement with regulators must evolve from rule interpretation toward co-design of technical control frameworks. Operationally, the transition represents a deeper shift than simply adding a new asset class. Exchanges must modernize core infrastructure.
Governance requires robust smart contract lifecycle management, independent code audits and clearly defined authority over upgrades or emergency interventions. Digital identity infrastructure and continuous compliance monitoring also become foundational capabilities rather than peripheral controls.
Leaders can think in terms of rebuilding exchanges as programmable market infrastructure, balancing innovation with reliability, while ensuring that internal talent, vendor ecosystems and risk management models are prepared for a hybrid environment.
The Era Of Hybrid Markets
I think we are moving toward a hybrid ecosystem where traditional and tokenized markets will coexist for years. The exchanges that survive may be those that stop thinking of themselves merely as marketplaces and start acting as financial operating systems.
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
