Tokenization has emerged as a prominent concept in finance, which involves transferring traditional assets like stocks, bonds, or other securities onto a blockchain. The theory behind tokenization suggests the creation of a decentralized, always-available market with instant settlement and the removal of intermediaries. However, the practical outcomes so far have been relatively limited.
The market value of tokenized equities is still under $400 million, a small fraction compared to major companies like Nvidia, which is valued at $4 trillion. While pilot projects generate attention, they often lack substantial activity. Issues such as low liquidity, unclear investor protections, and concerns about the rights associated with tokenized assets have raised doubts. The European Securities and Markets Authority has issued warnings about tokens marketed as shares, cautioning that they could mislead investors if they do not include full shareholder rights.
In a discussion with Mpost, Jamie Elkaleh, CMO of Bitget Wallet, highlighted the challenges and potential of tokenized equity platforms, noting that while technology enables tokenization, its success largely depends on its integration with existing legal frameworks to ensure proper ownership, accountability, and liquidity.
According to the expert, the gap between ambition and reality reflects a fundamental truth: technology alone cannot fix securities markets. These markets are inefficient not only due to outdated legacy systems, but also because they are governed by rules that ensure ownership, disclosure, and accountability. Any effort to bypass these regulations results in instruments that may appear innovative but ultimately function poorly.
In the United States, three key licenses form the foundation of a credible tokenized equity platform. A Transfer Agent (TA) ensures that tokens are aligned with shareholder records, while a Broker-Dealer (BD) manages subscriptions and redemptions, connecting fiat inflows and outflows to the underlying assets. Additionally, an Alternative Trading System (ATS) authorizes regulated secondary trading. Without the integration of all three components, tokenization cannot offer enforceable ownership or meaningful liquidity, noted Jamie Elkaleh.
“Many early projects sidestepped this by using special-purpose vehicles or synthetic derivatives,” he told Mpost. “These products offered price exposure but not shareholder rights, leaving investors with fragile structures vulnerable to regulatory scrutiny. Their limited uptake underscored the market’s demand for legal certainty, not just technological novelty,” he added.
However, liquidity makes the point clearer. Tokens can be minted with ease, but unless they can be exchanged on a regulated venue, they remain stranded assets. “This is why many tokenized products today show negligible daily volumes. Real secondary-market liquidity depends on compliance, not code alone,” Jamie Elkaleh told Mpost.
“The challenge, then, is not whether tokenization works technically—it does—but whether it can be embedded within existing legal frameworks. If it succeeds, the benefits are significant: capital tied up in T+2 settlement cycles could be freed, cross-border securities trades could be streamlined, and layers of intermediation could be reduced without discarding investor protections,” he noted.
One recent example is Ondo Finance, which launched a platform in September offering over 100 tokenized equities, with plans to expand to 1,000 by the end of the year. Unlike previous experiments, its approach prioritizes securing U.S. licenses for issuance, brokerage, and trading. This compliance-first strategy seems to have helped the platform gain traction quickly—its total value locked (TVL) surpassed several incumbent offerings within days of its launch.
According to Jamie Elkaleh, the case illustrates a broader trend. Projects that build within regulatory frameworks may progress more slowly, but they are better positioned to attract users and capital.
“Those that sidestep compliance tend to face thin liquidity and higher enforcement risk. For tokenization to move beyond pilots, the market will need more of the former and fewer of the latter,” he told Mpost.
The expert made a verdict, saying that tokenized equities could evolve into a pillar of the next financial system, or fade into irrelevance if they fail to earn legal legitimacy. What is already clear is that regulation is not the enemy of tokenization.
“It is the foundation. Technology can modernize the plumbing of finance, but law still decides who owns what. In tokenization, that distinction marks the line between revolution and rhetoric,” Jamie Elkaleh concluded.
The post Stock Tokenization Requires Regulation To Succeed, Says Bitget Wallet’s Jamie Elkaleh appeared first on Metaverse Post.
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