Wall Street pushes tokenized stocks, but institutions aren’t eager to trade them

Finance Share Share this article Copy link X icon X (Twitter) LinkedIn Facebook Email Wall Street pushes tokenized stocks, but institutions aren’t eager to trade them Exchanges are racing toward blockchain-based equities and 24/7 trading. Institutions, however, fear liquidity and funding risks. By Helene Braun | Edited by Stephen Alpher Mar 14, 2026, 4:00 p.m. Make us preferred on Google (Spencer Platt/Getty Images) What to know : Exchanges and crypto platforms are pushing toward tokenized stocks and near-24/7 trading, but many institutional investors are uneasy with instant settlement. Large trading firms say real-time settlement would require trades to be fully prefunded, raising financing costs, straining liquidity at peak times and complicating day-to-day market operations. Retail investors, especially overseas, are more likely to adopt tokenized markets first, potentially shifting liquidity and forcing institutions to follow while raising new risks of market fragmentation and confusion over what investors actually own. Wall Street is racing toward tokenized equities and 24/7 trading, but many institutional investors are wary of the instant settlement model. Tokenization refers to representing traditional assets such as stocks on blockchain networks. In theory, the approach could modernize market infrastructure that dates back decades, allowing securities to move and settle instantly while potentially enabling 24/7 trading. That vision has gained momentum in recent months. Both ICE , the owner of the New York Stock Exchange, and Nasdaq , have recently announced large partnerships with native crypto exchanges, aimed at bringing tokenized stocks to market. But for many institutional traders, the shift raises practical concerns about liquidity, financing and how markets function day to day. “Institutional investors generally do not like instant settlement,” said Reid Noch, vice president of U.S. equity market structure at TD Securities. While the technology could streamline the back end of markets, he said, forcing trades to settle immediately would create new frictions for professional investors. The current U.S. system settles stock trades one business day after execution, known as T+1 settlement. That delay allows brokers and trading firms to net positions and manage funding throughout the day. Instant settlement, by contrast, would require transactions to be fully funded before they occur. “No one really wants to be prefunded,” Noch said. If instant settlement became the standard across the market, trading firms would need to arrange financing throughout the day, potentially increasing costs and reducing liquidity at key moments. The impact could be especially visible during periods of heavy activity, such as the market close when large volumes of trades are executed simultaneously. Balance sheet constraints could make those periods more expensive for investors, spreading liquidity more unevenly throughout the trading day. Retail traders, however, may embrace tokenized markets more quickly. Many of the proposed benefits — such as holding shares directly in digital wallets or trading outside traditional market hours — are aimed at individual investors rather than large institutions. Retail already accounts for roughly 20% of U.S. equity trading volume, though in certain stocks the share can rise to more than half of daily activity. In highly speculative “meme stocks,” retail participation has at times exceeded 90%. Tokenized trading venues could particularly appeal to international retail investors seeking access to U.S. stocks when American markets are closed, Noch said. For those investors, opening accounts with crypto platforms may be easier than navigating the requirements of traditional brokers. Over time, institutional investors may follow if liquidity shifts to tokenized venues. “If retail liquidity migrates there and becomes meaningful, institutions won’t really have a choice but to participate,” Noch said. Still, the transition carries risks. One concern is market fragmentation if multiple versions of the same stock exist across different blockchains or tokenized platforms. That could weaken the transparency and price discovery that underpin the U.S. equity market. “Generally, most companies only have one stock,” Noch said. “If suddenly there are multiple tokenized versions with different rights or liquidity profiles, that could create confusion about what investors actually own.” Despite those concerns, industry momentum continues to build. Exchanges are already exploring longer trading hours, with some proposing nearly round-the-clock markets within the next few years. Tokenization could ultimately become part of that shift — modernizing infrastructure behind the scenes while gradually reshaping how investors access stocks. But for now, the technology may advance faster among retail traders than the institutions that dominate today’s markets. Tokenized Equity Wall Street More For You Brazil industry giants representing 850 companies decry stablecoin tax threat By Francisco Rodrigues , AI Boost | Edited by Aoyon Ashraf 1 hour ago They argue the tax would be illegal, violating Brazil's Constitution and Virtual Assets Law, as stablecoins are not considered fiat currency. What to know : Brazilian crypto groups oppose expanding the IOF financial transaction tax to stablecoin operations. They argue the tax would be illegal, violating Brazil's Constitution and Virtual Assets Law, as stablecoins are not considered fiat currency. The industry warns that the new tax would harm innovation and slow the growth of Brazil's large digital asset sector. Read full story Latest Crypto News Brazil industry giants representing 850 companies decry stablecoin tax threat 1 hour ago The math behind Strategy’s path to 1 million bitcoin by the end of 2026 2 hours ago AI developers may not be keen on crypto, but stablecoins are the secret to agentic finance, crypto insiders say 2 hours ago Bitcoin holds $71,000 despite Trump warning of strikes on Iran's oil-rich Kharg Island 9 hours ago Bitcoin can survive 72% of the world's submarine cables being cut, but a targeted attack on five hosting providers could cripple it 12 hours ago A huge gap between network use and token value is the most important thing happening in XRP right now 16 hours ago Top Stories Circle overtakes BlackRock in tokenized Treasuries as market hits record $11 billion 20 hours ago Court closes Custodia fight with Federal Reserve just as Fed opens master-account door 18 hours ago Arthur Hayes: Strong Revenue and Real Trading Could Send HYPE to $150 22 hours ago One mysterious investor made $2.5 million profit in hours by betting big on the latest Trump gala news 23 hours ago Ethereum Foundation publishes new mandate defining its role, core principles Mar 13, 2026 SEC's advisory group backs tokenized securities push, outlines how to keep it safe Mar 12, 2026