Episode 15: Tokenizing Public Equity: The Next Frontier

Welcome back to Old Men, New Money®. I’m Ali Davoudi. In our exploration of real-world asset tokenization, we’ve discussed the two extremes: real estate, which isn’t working yet, and treasuries, which are operating effectively. Today, we’re diving into the middle ground—something that could potentially reshape global equity markets: tokenizing public companies.

The New Middle Ground: Public Equity Tokenization

A fascinating development is unfolding. Galaxy Digital has just tokenized their equity on Solano. This innovative step is part of a growing trend where companies are experimenting with bringing traditional stocks on-chain 24/7. This represents a potential future of equity markets, or perhaps a solution to a problem no one asked for. I’ll present both sides before sharing my thoughts.

Understanding Public Equity Tokenization

Public equity tokenization involves two models currently in play:

1. Direct Tokenization: Companies like Galaxy Digital issue tokenized shares directly on a blockchain. These shares exist as legitimate company stock, now capable of being traded on a blockchain instead of traditional systems.

2. Wrapped Tokenization: Companies like Backed store shares with a custodian and issue tokens that represent ownership. This model allows trading of these tokens on digital platforms, representing economic returns akin to traditional shares.

Both models aim to offer 24/7 trading, instant settlement, fractional ownership, and global access. However, they differ legally and regulatory-wise.

Galaxy Digital’s Trailblazing Move

Galaxy Digital’s approach is groundbreaking. In September 2025, they tokenized their common stock on the Solano blockchain. By partnering with Securitize for token issuance and NASDAQ for compliance, they align with Canadian securities regulations—allowing tokenized shares to trade alongside traditional shares, providing full shareholder rights.

Their rationale: demonstrating crypto infrastructure’s readiness for real equity trading, brand alignment, and positioning for future equity markets potentially moving on-chain.

Wrapped Tokenization by Backed and INX

The wrapped tokenization model offers its own set of advantages and challenges. By holding shares of public companies and issuing tradable tokens, Backed provides a platform for users to engage with popular stocks like Apple and Microsoft around the clock. This method is scalable as it doesn’t require company participation but comes with additional counterparty risk.

Value Propositions of Tokenized Equity

There are compelling reasons for considering tokenized equity over traditional avenues:

• 24/7 Trading: Trade beyond traditional market hours.

• Instant Settlement: Faster transactions, enhancing capital efficiency.

• Fractional Ownership: Access to expensive stocks at minimal cost.

• Programmable Compliance: Smart contracts automate compliance tasks.

• Compatibility with DeFi: Use tokenized equity as collateral.

Yet, the critical question remains—are these advantages compelling enough to usher in an infrastructure transformation?

The Challenges

Several challenges inhibit widespread adoption:

1. Liquidity Fragmentation: Trading on multiple venues can split liquidity.

2. Custody Complexity: More complex than traditional brokerage.

3. Regulatory Uncertainty: Cross-border regulations remain unclear.

4. Corporate Actions: Adjusting to stock splits, mergers, and dividends.

My Personal View

As a business and investment evaluator, I see tokenization as more relevant for branding and positioning rather than immediate practical benefits. While 24/7 trading is intriguing, it’s not always needed. The transformational opportunity lies in the potential growth of sophisticated financial infrastructure on tokenized platforms.

Regulatory Framework and Predictions

Regulatory clarity is essential. Tokenized securities remain under traditional regulatory frameworks. Over the next 5 to 10 years, we expect growth in crypto-native and tech company adoption, but traditional industries will likely wait. Wrapped tokenization may grow more due to scalability, and we’re going to witness consolidation among platforms.

Conclusion

Public equity tokenization represents a frontier in asset trading. Galaxy Digital and INX are leading, but adoption is still experimental. The question isn’t its viability—it’s whether the benefits surpass the structural complexities. Although exciting, for those waiting for an internet-level revolution from 1995, more maturity in infrastructure is required. The groundwork is laid, but a smarter application could trigger a breakthrough.

Stay tuned for our next discussion on private equity tokenization, exploring where tokenization might achieve its most significant impact.

I’m Ali Davoudi. Thanks for joining me on Old Men, New Money®. If this episode demystified tokenized public equity for you, feel free to share it with fellow investors.