Equity tokenization Report Interpretation

Overview

Bernstein’s primer examines the regulatory, operational and competitive development of tokenized equities. It argues that the SEC innovation exemption validates public-blockchain and DeFi infrastructure within a securities-market framework, while emphasizing that adoption remains early and that durable advantage will depend on regulated distribution, liquidity and continuous price discovery.

Core views

Bernstein frames equity tokenization as the representation of economic and/or ownership rights in shares through blockchain tokens. The market has expanded from about $0.7bn at the end of 2025 to about $3bn, but remains very small beside more than $100tn of global equity outstanding. The report argues that equities may be the next major blockchain-tokenized asset class after stablecoins and tokenized debt, as regulatory clarity, institutional infrastructure and global distribution improve. The central regulatory development is the SEC’s innovation exemption, an interim five-year framework intended to allow experimentation while permanent rules are developed. It exempts qualifying Tokenized Securities Venues (TSVs) from exchange registration and qualifying liquidity providers from dealer registration, subject to investor-protection and transparency conditions. Tokenized NMS stocks are eligible, but Tier 1 is capped at 75 symbols and 0.25% of prior-month average daily volume, while Tier 2 is capped at 250 symbols and 2.5% of prior-month average daily volume. Primary issuance and IPOs are not permitted on TSVs, leverage is prohibited, and smart contracts must be auditable on public permissionless networks. Bernstein therefore expects limited immediate TSV-driven revenue and volume, but sees greater future volume potential if rules stabilize and limits rise. A key consequence of the exemption is that holders of tokenized NMS stocks must receive the same economic and governance rights as holders of conventional shares, including voting, dividends and liquidation claims. The issuer must receive notice of third-party tokenization and may object. Bernstein sees this as moving the market away from offshore wrappers with incomplete rights toward regulated structures, including third-party arrangements that pass through ownership-related rights. The report identifies three operating models. In issuer-led tokenization, the company authorizes blockchain-native shares, a registered transfer agent maintains the on-chain holder record, and tokenholders are registered shareholders with full rights. In third-party tokenization, an unaffiliated party typically holds shares in custody or an SPV and issues tokens that provide economic exposure; historically, this often left holders without direct ownership rights, although regulatory-compliant structures increasingly pass through shareholder rights. In depository-led tokenization, a central securities depository tokenizes already-custodied shares, preserving fungibility and legal ownership through existing market infrastructure while using blockchain as an alternative settlement layer. Bernstein’s economic case centers on faster settlement, accessibility and programmable financial services. Blockchain can combine trading, clearing and settlement into an on-chain process capable of near-instant T+0 finality rather than traditional T+1/T+2 settlement. It can automate dividends, splits, voting and shareholder communications, offer more direct visibility into ownership, support self-custody, and provide global 24/7 access. The report also highlights DeFi applications: tokenized shares can become collateral for stablecoin borrowing or be lent through smart-contract-based pools, potentially replacing opaque bilateral stock-lending processes with more transparent order books and market-clearing economics. Distribution, liquidity and 24/7 price discovery are, in Bernstein’s view, the emerging competitive moats. Offshore products retain product-market fit for global demand for U.S. equities and can generate trading and blockchain-revenue growth for Robinhood and Coinbase. Robinhood’s chain, launched in July, had more than $160mn of stock tokens and DEX volumes exceeding $10bn. The report notes that Robinhood offers tokenized U.S. stocks in more than 120 countries excluding the United States, while Coinbase has launched tokenized equities on Base for non-U.S. users. Both use tokenized-share structures with around-the-clock trading and DeFi integration. Issuer-led platforms are positioned as regulated infrastructure providers. Bullish is building an end-to-end issuer-sponsored platform and has live tokenized BLSH shares; its planned Equiniti acquisition, expected to close in January 2027, would bring a global transfer agent with roughly 3,000 issuers and 20mn KYC’d shareholders. Figure’s OPEN marketplace uses its transfer-agent license and ATS to support blockchain-native issuance, self-clearing and self-settling trades; its tokenized shares are designed to be 1:1 convertible with NASDAQ-listed shares. Bernstein also discusses Securitize’s regulated infrastructure and partnerships, but explicitly states that Securitize is not covered. Depository-led initiatives could integrate tokenization without displacing existing equity-market rails. DTCC is expected to launch tokenization services in October 2026 after a July pilot involving more than 30 firms, with collaboration from more than 100 industry participants. Its model keeps securities in custody, mints tokens against immobilized shares and preserves conventional ownership rights. Nasdaq’s proposed approach would retain a unified order book and T+1 settlement through DTC, while NYSE has outlined a platform combining interchangeable tokenized shares and blockchain-native securities, with expected 24/7 trading and real-time settlement features. Bernstein tracks market cap, trading volumes and holders, blockchain-network share, platform mix and DeFi adoption as key indicators. Tokenized stocks traded $36bn in August 2026, implying more than 10x velocity on the approximately $3bn market cap, although the report expects velocity to moderate as the asset universe broadens beyond liquid blue chips. Third-party sponsors such as Ondo and Binance currently dominate, while issuer-sponsored tokens including Securitize and Figure account for less than 10% of total tokenized equities. The report expects Layer 2 networks to gain share as platforms such as Robinhood and Coinbase expand proprietary blockchain ecosystems. The report identifies HOOD, COIN and BLSH as broker-exchange beneficiaries, FIGR as a tokenization-platform beneficiary, and CRCL as a settlement-currency beneficiary. It rates HOOD, COIN, FIGR and CRCL Outperform and BLSH Market-Perform. Valuation support includes 35x one-year-forward P/E for HOOD, 25x 2027E earnings for COIN, 20x EV/2028E EBITDA for FIGR, 34x EV/adjusted EBITDA 2027E for BLSH, and a long-term DCF for CRCL using a 10.3% WACC and 2% terminal growth rate.

Analysis framework

Bernstein first defines tokenized equities and sizes their current penetration, then analyzes the SEC framework and the legal rights required for tokenholders. It compares issuer-led, third-party and depository-led operating models, maps platforms and infrastructure participants, and uses market-cap, trading-volume, network and adoption indicators to assess industry progress. It then links the industry thesis to covered companies and applies company-specific valuation methods.

Methodology notes

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Tokenization ecosystem analysis

  The report traces how regulatory rules, transfer agents, exchanges, custodians, blockchains, DeFi protocols and stablecoins interact across the equity-tokenization value chain.

• Industry AnalysisSupply-demand framework

  Adoption and liquidity tracking

  Market capitalization, trading velocity, platform distribution, network share and DeFi use are used to assess demand, liquidity and the maturity of tokenized-equity supply.

• Valuation methodsP/E and PEG Valuation

  Forward P/E valuation

  Bernstein values Robinhood at 35x one-year-forward P/E and Coinbase at 25x 2027E earnings.

• Valuation methodsEV/EBITDA valuation

  EV/EBITDA valuation

  The report values Bullish at 34x 2027E EV/adjusted EBITDA and Figure at 20x 2028E EV/EBITDA.

• Valuation methodsDCF (Discounted Cash Flow)

  Long-term DCF

  Circle’s target price is derived from a DCF using a 10.3% WACC and 2% terminal growth rate.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Robinhood (HOOD)

  Third-party tokenized-equity distributor and blockchain ecosystem participant.

  Strengths

  Global availability in 120+ countries excluding the U.S., 24/7 trading, DeFi compatibility, more than $160mn of stock tokens and DEX volumes above $10bn.

  Weaknesses

  Current tokens are not registered under U.S. securities laws and are unavailable to U.S. investors.

  Comparison

  Competes with Coinbase and other brokers in offshore tokenized-equity distribution.

  Risks

  Regulatory risk to payment-for-order-flow and crypto-trading businesses.

• Coinbase (COIN)

  Broker-exchange and Base-chain tokenized-equity platform.

  Strengths

  Stock tokens are 1:1 backed by real shares, available to non-U.S. users around the clock and integrated with DeFi.

  Weaknesses

  Exposure remains linked to evolving crypto-market adoption and regulation.

  Comparison

  Competes with Robinhood and international exchanges for tokenized-equity distribution.

  Risks

  Competition and delays in U.S. digital-asset regulatory clarity.

• Bullish (BLSH)

  Issuer-led tokenization platform builder.

  Strengths

  Live BLSH stock tokens and an end-to-end tokenization stack; proposed Equiniti acquisition would add transfer-agent capability and a large issuer base.

  Weaknesses

  Token transfers currently require direct registration and KYC, and are not currently available on AMMs or DEXs.

  Comparison

  Positioned as neutral regulated infrastructure alongside Figure and Securitize-type offerings.

  Risks

  Competitive pricing pressure, potential licensing or launch delays, and digital-asset volatility.

• Figure Technology Solutions (FIGR)

  Issuer-led tokenization and marketplace platform.

  Strengths

  OPEN combines a transfer-agent license, ATS, blockchain registry and 1:1 convertibility with traditional shares.

  Weaknesses

  Growth also depends on its lending and private-credit businesses.

  Comparison

  A pure-play tokenization platform relative to traditional exchanges and crypto peers.

  Risks

  Rate-driven HELOC competition, private-credit slowdown and delays in new loan categories.

• Circle Internet Group (CRCL)

  Stablecoin settlement-currency beneficiary.

  Strengths

  USDC is described as a liquid regulated stablecoin with dominant DeFi market share.

  Weaknesses

  Revenue is highly concentrated in interest income.

  Comparison

  Faces emerging competition from banks and payments companies as regulation clarifies.

  Risks

  Rate declines, crypto-capital-markets dependence, competition and digital-asset volatility.

Key data

• Tokenized-equity market capitalization~$3bnUp more than 3x from ~$0.7bn at the end of 2025; still nascent versus $100tn+ global equities.
• Tokenized-stock trading volume$36bnAugust 2026 volume, implying >10x velocity on roughly $3bn market capitalization.
• Robinhood Chain stock tokens$160mn+Reported after its July launch; DEX volumes had crossed $10bn.
• SEC Tier 1 limits75 symbols and 0.25% of prior-month ADVCaps for eligible tokenized NMS stocks under the innovation exemption.
• SEC Tier 2 limits250 symbols and 2.5% of prior-month ADVHigher tier caps under the innovation exemption.
• Issuer-sponsored token share<10%Figure and Securitize-type offerings remain a minority of tokenized equities.
• HOOD valuation assumption35x one-year-forward P/ESupported by expected 2026-28E revenue, EBITDA and EPS CAGRs of 32%, 47% and 49%.
• CRCL DCF assumptions10.3% WACC; 2% terminal growthUsed to derive Bernstein’s $140 price target.

Impact & implications

Bernstein believes the exemption brings public blockchains and DeFi infrastructure within the U.S. securities framework for the first time, strengthening the strategic case for regulated distribution, liquidity provision and tokenization infrastructure. It expects the near-term commercial effect of TSVs to be constrained by guardrails, but sees a larger opportunity if regulatory limits broaden and market infrastructure converges around onshore, rights-preserving models.

Risks

• Tokenized-equity adoption remains nascent and fragmented across platforms and blockchain networks, allowing tokens backed by the same shares to trade at different prices.
• Third-party tokenization can leave investors with a bilateral claim on the issuer rather than central-clearing protection or equivalent investor safeguards.
• Competition among exchanges, brokers and tokenization platforms may pressure pricing and market share.
• Delays in regulatory approvals or broader U.S. digital-asset regulation could constrain launch plans and adoption.
• Digital assets have limited price history and can show high sensitivity to macroeconomic changes.
• Company-specific risks include Bullish licensing and rollout timing, Figure’s private-credit and loan-growth exposure, Robinhood’s PFOF and crypto regulation exposure, and Circle’s interest-income concentration.

What to watch

• Implementation of the SEC innovation exemption, including eligible-symbol and trading-volume caps and whether limits expand over time.
• Growth in tokenized-equity market capitalization, trading volumes, holder counts and trading velocity.
• Adoption of issuer-sponsored models, which currently account for less than 10% of the tokenized-equity market.
• Progress of DTCC’s expected October 2026 tokenization-service launch and exchange initiatives from Nasdaq and NYSE.
• Robinhood Chain token value locked and DEX volumes, along with Coinbase and other Layer 2 expansion.
• Bullish’s expected January 2027 Equiniti acquisition close and U.S. spot and derivatives rollout.