Ethereum is strengthening its role as the leading platform for tokenization of traditional stocks, bridging the gap between DeFi and traditional finance. Exchanges including Kraken and Backed Finance are rolling out ERC-20 tokens representing equities, allowing investors to trade shares through the Ethereum blockchain.
Tokenized stocks and their limits
These ERC-20 based stock tokens bring 24/7 trading and improved liquidity, but they do not grant voting rights or dividends typically associated with equity ownership. The approach is designed to maximize accessibility while avoiding direct regulatory conflicts tied to securities.
Expanding DeFi’s reach
The move comes as DeFi’s total value locked (TVL) sits at around $90.8 billion, and the inclusion of tokenized real-world assets could accelerate growth further. The introduction of stock-backed tokens is viewed as an important step toward mainstream adoption of blockchain technology.
Regulatory questions
Despite the innovation, concerns remain about shareholder rights and compliance. Regulators may scrutinize whether tokenized equities should fall under traditional securities frameworks, which could affect how these products evolve.
