Tokenized US stocks are not the "liquidity killer" of the crypto market

Author: Hu Tao, ChainCatcher

I. The Unestablished Liquidity Controversy

In the past few months, tokenized U.S. stocks have rapidly become one of the most discussed topics in the crypto industry.

From the emergence of platforms supporting on-chain stock trading to an increasing number of exchanges and DeFi protocols beginning to lay out related businesses, and to the gradual clarification of the regulatory environment, the tokenization of U.S. stocks has evolved from a marginal concept to the most explosive direction in the entire RWA (Real World Assets) track.

However, alongside the rapid rise in interest, there has also been a concern in the market: when high-quality stock assets like Nvidia, Tesla, Apple, and Coinbase are moved on-chain, will the funds that originally belonged to the crypto market be siphoned off by these traditional assets? Will Bitcoin, Ethereum, and even altcoins face greater liquidity pressure as a result?

This concern is not unfounded. For many ordinary investors, when trading can be done through on-chain accounts, one side features volatile and cash flow-deficient crypto assets, while the other side consists of stocks from leading global tech companies with real businesses, profits, and valuation systems, the latter seems more likely to gain recognition from traditional funds.

But if we extend the time dimension, people may find that this wave of U.S. stock tokenization does not pose a direct threat to the crypto industry; rather, it is more likely to be the most significant expansion for the crypto industry since DeFi Summer—of course, it could also be one of the most important events in crypto history.

Essentially, U.S. stock assets and the vast majority of crypto-native assets belong to different categories of assets. Historical data and on-chain capital flows indicate that when on-chain asset categories expand, there may be short-term capital reallocation frictions, but in the medium to long term, capital with different risk appetites will form a complementary rather than substitutive relationship on-chain.

More critically, the prosperity of tokenized U.S. stocks heavily relies on stablecoins and the settlement layer of native public chains. Without USDC and USDT, there would be no payment tools for buying stock tokens; without Ethereum, Solana, or Base, there would be no vehicles for issuance, trading, and clearing; without DeFi protocols, holders of stock tokens would not be able to unlock their capital efficiency.

Investors may enter the on-chain world to purchase stock tokens, but a significant portion of them will gradually engage with stablecoin payments, on-chain lending, yield products, and even crypto-native assets.

"Stablecoins, tokenization of U.S. stocks, etc., once they are on-chain, will not simply lie dormant on the chain; they must become liquid, and the composability of crypto will be fully utilized. Once there is a good narrative and good projects, not only will funds from the crypto circle come in, but funds from outside the circle will also flow in; this is merely a competition in the same arena," said well-known crypto researcher Blue Fox.

According to DeFillama, the total TVL of tokenized stocks and ETFs has now exceeded $1.7 billion, making it the fastest-growing vertical in DeFi.

Recently, exchanges such as Binance, Bitget, and Gate have announced the launch of U.S. stock trading features, supporting tokenization and bringing it on-chain, which means that the market size for U.S. stocks will continue to expand rapidly, and its market demand has been fully validated.

More significantly, an increasing number of traditional financial giants are also accelerating their layouts. In mid-May, the U.S. Securities Depository Trust & Clearing Corporation, a global securities clearing giant, announced the integration of Chainlink to build the data and orchestration layer for its tokenized collateral platform, and later at the end of the month announced that it would launch DTC custodial asset tokenization services on the Stellar network. These developments have directly stimulated the rise in related token prices and brought direct benefits to the adoption rate of infrastructure service providers in the crypto market.

Such dynamics convey an extremely clear signal: the traditional financial world has not viewed blockchain as a "competitor"; rather, it is actively embracing public chains as the infrastructure for asset clearing and settlement. The choice of DTCC is not an isolated case—JPMorgan's Onyx platform, Citibank's tokenization services, BlackRock's BUIDL fund, and the tokenization stock plans approved by Nasdaq and the New York Stock Exchange are all pointing in the same direction: the underlying architecture of global finance is undergoing a system-level "on-chain" migration.

This has dual value for the crypto industry. On one hand, it provides the strongest endorsement for the regulatory legitimacy and market credibility of tokenized assets—when institutions like DTCC choose public chains, it is equivalent to declaring to thousands of financial institutions worldwide that "on-chain assets are trustworthy." On the other hand, the entry of these institutions directly drives the adoption rate of existing crypto infrastructure service providers, with Chainlink's data oracles, Stellar's asset issuance standards, and Ethereum's smart contract capabilities all gaining actual demand validation in this process.

II. Driving a System-Level Upgrade of the Global Financial Underlying Architecture

From a more macro perspective, the greatest significance of the U.S. stock tokenization craze for the crypto circle may not be how much "new money" it can bring, but rather that it has, for the first time, irrefutably demonstrated the actual value of blockchain technology to the traditional financial world.

Over the past decade, the crypto industry has always tried to prove the importance of blockchain to the outside world, but many narratives have remained at the level of technical vision. Tokenization of U.S. stocks, however, directly corresponds to the core demands of the global capital market—more efficient issuance, lower-cost circulation, more transparent settlement, and broader global accessibility. When Wall Street begins to actively embrace these capabilities, blockchain finally becomes more than just a story of the crypto industry; it starts to become a foundational infrastructure upgrade that the entire financial industry participates in.

Today, tokenization is shifting from early marginal experiments driven by DeFi projects to a mainstream financial track led by large asset management institutions, custodians, exchanges, and financial market infrastructure providers. The change in leadership itself signifies that this "on-chain movement" is not a "downgrade" of a financial game, but rather a system-level upgrade of the global financial underlying architecture.

And when global investors begin to get accustomed to holding stocks, bonds, funds, and various real assets through blockchain, what the crypto industry gains will not just be a hot speculation, but a fundamental expansion of value-bearing capacity.

"Every time the market matures, it is essentially a process of funds flowing from low-efficiency assets to high-efficiency assets. As junk coins are gradually eliminated, protocols, infrastructures, and financial products that can truly create value will have the opportunity to obtain more reasonable valuations. Tokenization of U.S. stocks may not be the endpoint of the crypto market, but it is likely to be an important turning point for the crypto market to transition from a 'speculative market' to a 'capital market,'" said crypto trader @WinWinBro.

Therefore, rather than viewing the tokenization of U.S. stocks as a threat to the crypto industry, it is better to see it as one of the most important milestones in the process of blockchain moving towards the mainstream financial system.

The moment the $75 trillion U.S. stock market connects with crypto infrastructure—even if only achieving a 2% penetration rate—will also represent $1.5 trillion of new on-chain value. By then, no one will argue whether the tokenization of U.S. stocks has drained liquidity or injected unprecedented value anchoring into blockchain.