Can anyone provide an argument for tokenized stocks, beyond just meme-coins for companies?
24/7 liquidity and near instant settlement, easier access for international investors, and ability to plug token into other apps and products onchain like Aave lending, providing liquidity, etc.
They are permisionless protocols, I don’t see how they can even forbid it. It shows a level of ignorance or ingenuity which I can comprehend.<p>There are also memecoins which as they rise, buy the underlying stock.<p>Being totally naive and asking an honest question: who or are they protecting themselves from? These instruments in reality are at most paired assets but most times have nothing to do with the real stock.
To put it simply: easier for Korean day tradeds to yolo their life savings into.
> 24/7 liquidity and near instant settlement<p>Isnt this offset by large taxes when you have to convert your coin back to real currency?
So that people with off the books defi assets can diversify their holdings as if they bought into the non-defi world, without any of those pesky taxes or KYC requirements.
By definition nothing onchain is off the books. You can download any public chain's history from genesis. Very traceable. Meanwhile KYC is pesky and onerous, but there is nothing precluding an onchain protocol from implementing KYC. Most protocols that deal with real world assets retain the ability to freeze and seize funds if required by law.
Which most governments will be strongly incentivised to prevent.<p>The ones that aren’t (basically rogue states under sanctions like Russia or DPRK) will have the rest of the governments very interested in preventing them from owning these securities.
It offers a way to hide wealth from countries like Venezuela, Russia, Iran, etc... Along with any other country.
My understanding is that it's possible there will be / is a country that you don't have low cost or easy access to US stocks, but can have access to tokenized stocks. If Coinbase and others are smart, they'll collect the KYC info the US requires, regardless of where the person is in the world. In fact, that seems like the other part of this line in the article: "provided the tokens carry the same rights and privileges as the underlying shares, including dividends and voting rights."
It sounds enough like real investing that it might make some more people put real money into crypto, while still being unregulated and vague enough that you can outright steal the money or take risks a regulated market wouldn't allow<p>Or you meant an argument for the person putting their money into it? No idea.
Like all cryptocurrency, it's optimised for evading laws and law enforcement. Fraud, evading sanctions, doing things with fake stock that would be prosecuted by financial watchdogs if it were real stock, grifting people into thinking they're buying real stocks, the list goes on.<p>I suppose it also allows for trading stock without paying brokerage fees (though you need to pay the network in other ways) and it permits trading for people who cannot get access to dollars or the market of origin because of local laws and/or corruption.<p>Honestly, it's kind of genius. All of the tools that caused the Great Depression combined with cryptocurrency grifting. Someone will make a lot of money off this.
I guess the target audience are countries where capital gains on stocks are high-to-ridiculous but simultaneously capital gains on crypto are low for whatever reason or the tax free amount on crypto gains is relatively high. Germany comes to my mind as an example.
Stocks are already tokens. "Tokenizing" stocks makes no sense, if one assumes quite reasonably that "tokenization" involves giving token-ness to something that was not already a token. What it is is wrapping what is already a token in another token, mostly so the second token can get around the limitations of the first. But some of those limitations are incidental and can be eliminated at any time by the underlying token provider, mostly because nothing stops a conventional stock market from being tradeable 24/7. They already are if you're in the club anyhow, per all the "aftermarket" and "pre-market" trading you hear about around quarterly release times.<p>The rest of the limitations are regulatory, and if the wrapping token can get access to regulatory approval to do their thing, so can the stocks.<p>The whole thing feels skeevy as all get out to me. It feels like someone telling me that they'll be happy to hold my mortgage between me and the current holder. There is no good reason for that. Frankly there is already a disturbing amount of indirection in the way you don't actually <i>own</i> the stocks you think you do, but they're held on behalf of you on behalf of your broker at the Depository Trust & Clearing Corporation. Adding another layer of indirection makes me worry about the motives of the people who are very excited about being that layer.
<i>> Stocks are already tokens.</i><p>If it's not happening on a GPU, is it really a "token"? ;-)
I don't think stocks are tokens? Stocks are shares in a company: some fractional ownership that carries legal rights and a claim on assets.<p>Crypto tokens are just some meaningless entries on a blockchain.
- 24 x 7 trading is open to retail (no more waking up finding out the market moved out of hours and your stop loss didn't execute because the price moved 'though' it)<p>- Fractionalization (you can buy $12 worth of NVDA easily)<p>- Fundraising (you can raise public money without needing the large caps of traditional public markets)<p>- Distribution - smart people that know math publish a whitepaper and get investors into their strategy immediately rather than waiting for a hedge fund or bank to get them to market.<p>- Composability - eg, I invested in an app that let's people use the HNWI
'buy/borrow/die' technique as a wealth building strategy - talk into any shop, buy somethng, pay using as small loan taken out of your share holdings.
It's a growth play for financial services to find trading volume they otherwise cannot create. Young retail has no cashflow to speak of, so Coinbase and Robinhood target them for the house rake of trading meme stocks and crypto. The rest is institutional, broker dealer, traditional retail brokerages, etc but there's only so much revenue to be had moving existing securities around amongst those who can obtain exposure to them, managing pensions and 401ks, etc. ~93% of equities are held by the top ~10% of US households, for example.<p>Lots of cost inefficiency to squeeze out, but everyone is incentivized to not cannibalize other participants or their own business. "Its a big club and you're not in it" and "If you're playing a poker game and you look around the table and and can't tell who the sucker is, it's you."<p>If I recall, the most optimal equities market operating model is a short auction window at the open and the close to process order books, but again, no appetite for efficiency over revenue, I'll have to find the paper.<p>(thoughts and opinions always my own)
Most ideal equities markets operating model would be a short auction period at the open and the close<p>This is almost exactly aligned with real life trading experience with retail traders. Retail trader P&L map by weekday and time of day shows that the overwhelming majority of retail losses fall into one of two categories - either choppy hours during the day where liquidity is low (noise from overtrading) or 15 minutes after the NY open where the volatility spike happens and stop hunts take place.<p>Extending equities to 24/7 with tokenization only increases the amount of low liquidity chop, which is good for exchange fees, but not for retail expectancy.
it's for people who live in countries with capital controls and don't have access to normal securities accounts
Blockchain makes a ton of sense as a replacement for the NSCC which is the entity that actually keeps track of the ledger for ownership. But again whenever I say things like that the people that come out of the woodwork are crypto bros vs skeptics which this isn't about the cyberpunk antigovernment anonymous future but just a better cryptographically proven multiparty database.<p>I would probably make trade settlement faster and lower overhead costs.<p>Clearing equities trades with a blockchain between brokers would be beneficial in plenty of ways that are really only all that interesting to very large banks and broker services companies. (like Citadel for example)<p><a href="https://en.wikipedia.org/wiki/Depository_Trust_%26_Clearing_Corporation#NSCC" rel="nofollow">https://en.wikipedia.org/wiki/Depository_Trust_%26_Clearing_...</a>