Tokenized stocks and ETFs could drive a $5 trillion leap! What is the next move for the market?

Securitize CEO Carlos Domingo emphasized in New York this week that tokenized stocks and ETFs, rather than private credit or Treasury products, may become the real engines of growth as real world assets migrate onto blockchains. Speaking at Tuesday’s ETHConf event, Domingo argued that bringing shares and exchange traded funds onto blockchain rails could massively expand the currently $30 billion market for tokenized assets.Stocks and ETFs in the spotlightTreasuries lead today, equities may fuel tomorrow’s growthEthereum stands out for institutions Stocks and ETFs in the spotlightAccording to Domingo, the global stock and ETF market is now worth nearly $150 trillion. He projected that transferring as little as 2 to 3 percent of that value onto blockchains could push the tokenized asset market toward an astounding $5 trillion. This signals a major shift in the types of real world assets that may soon be represented on-chain, with implications for how the market could evolve in the years ahead.Domingo highlighted that the worldwide stocks and ETFs market stands at approximately $150 trillion, and shifting only a fraction of that on-chain could approach $5 trillion in size.Securitize, recognized as one of the largest companies offering tokenization services to institutional clients, collaborates with industry giants such as BlackRock and is itself preparing for a public listing. Domingo’s remarks come as the company aims to further strengthen its position in this rapidly expanding field.Treasuries lead today, equities may fuel tomorrow’s growthOver the past two years, tokenized US Treasury bonds have risen to dominate the real world asset sector on blockchain. Yet, Domingo sees the next major wave coming from tokenized stocks. To facilitate this, Securitize has formed partnerships with the New York Stock Exchange and Computershare, a leading transfer agent, to enable stock trading and settlement directly on-chain. Asset categoryCurrent statusDomingo’s viewTokenized US Treasury bondsDominant sector over the past two yearsCurrent market leaderTokenized stocks and ETFsEmerging areaPotential primary growth engineDomingo also cautioned that many so-called tokenized stocks currently in the market do not actually confer direct ownership of traditional shares. He noted that a significant portion of these products are based on derivatives or synthetic structures. As a result, Domingo stressed that true tokenized stock models should provide direct ownership of underlying assets and grant investor rights similar to those of regular shares.Domingo contended that many present-day schemes claiming to tokenize shares actually offer exposure to derivative or synthetic versions, rather than direct ownership.Ethereum stands out for institutionsIn the long run, blockchain-based securities are expected to deliver the same investor rights as their traditional counterparts, while also offering instant settlement, round-the-clock transfers, and seamless integration with decentralized finance tools. Despite ongoing debates regarding transparency and compliance, Domingo pointed out that public blockchains such as Ethereum remain highly preferred for institutional tokenization purposes.Mini glossary: Tokenization refers to creating a digital representation of a financial asset on the blockchain. An ETF is an investment fund traded on an exchange that tracks an index, basket, or group of assets.Securitize employs smart contracts that allow assets to move freely across permissionless networks while restricting ownership solely to verified investors. According to Domingo, blockchain-based markets will, in the coming period, develop parallel to traditional financial infrastructure and gradually command a greater share.Domingo underlined that traditional markets will not disappear, but a new, more efficient market infrastructure will emerge alongside, running on blockchain rails.Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should conduct their own research.