Key Takeaways:
(Bloomberg) -- Open interest on the decentralized finance protocol Hyperliquid reached $2.5 billion on May 25, a new high driven by surging demand for tokenized versions of traditional equities on the Arbitrum-based platform. The milestone highlights a growing appetite for on-chain financial products that mirrors the infrastructure being built by traditional financial giants.
"The story of tokenization so far has been about issuance, but no one has addressed the challenge of how to get those products to mainstream investors," Aaron Kaplan, co-founder and co-CEO of Prometheum, told CoinDesk. Prometheum is one of several firms building regulated infrastructure to bridge the gap between crypto and traditional finance.
The surge in open interest on platforms like Hyperliquid comes as U.S. regulators signal a clearer path for tokenized assets. The Securities and Exchange Commission is finalizing an “innovation exemption” that would permit regulated platforms to offer tokenized stocks, according to a Bloomberg Law report. This follows previous SEC approvals for Nasdaq and the NYSE to trade tokenized versions of Russell 1000 components and benchmark ETFs, with the Depository Trust & Clearing Corporation (DTCC) set to roll out broader support for tokenized assets in October.
This regulatory clarity is creating a tailwind for the tokenized asset sector, which could reshape the structure of the $126 trillion global equity market. While tokenized U.S. Treasurys currently dominate the real-world asset (RWA) market with a 46% share, tokenized equities represent just 4.3%, or about $1.45 billion, according to CoinGecko data. The new SEC framework could significantly close this gap by creating a compliant and regulated pathway for on-chain stock trading.
The primary beneficiaries of this shift are the infrastructure platforms that enable the trading, settlement, and custody of tokenized securities. Firms like Prometheum are building the pipes to connect traditional broker-dealers with on-chain assets, allowing them to offer products like tokenized stocks through existing brokerage accounts.
“Until tokenized and digitally-native securities can reach investors through the broker-dealer channels they already use, tokenization is a solution without a market,” Kaplan said.
Other crypto-native projects are also positioned to benefit. Protocols with high throughput and low latency, such as Bitcoin Hyper ($HYPER), a Bitcoin Layer 2 with SVM integration, are designed to provide the programmable settlement infrastructure that institutional-grade tokenized markets will require.
The move toward on-chain equities is not without risk. Critics warn of potential market fragmentation, where price discovery is split between centralized and decentralized venues, potentially reducing transparency. There are also concerns about maintaining Know Your Customer (KYC) and anti-money laundering (AML) standards in a permissionless DeFi environment.
However, the institutional momentum appears to be building a foundation for a new market structure. The involvement of the DTCC, Nasdaq, and major asset managers like BlackRock and Franklin Templeton with their own tokenized funds suggests that the financial industry is preparing for a future where a significant portion of securities trading occurs on-chain. For now, the growth in platforms like Hyperliquid indicates that both retail and institutional traders are not waiting for Wall Street to build it first.
This article is for informational purposes only and does not constitute investment advice.
