Tokenized Stocks Face Weak Demand Despite SEC's New Trading Rules, Says Investment Bank

Despite the U.S. Securities and Exchange Commission (SEC) introducing new trading rules that could pave the way for tokenized stocks, one major investment bank remains skeptical about near-term demand. According to the bank's latest research note, the appetite for tokenized equities is likely to stay limited, even as regulatory clarity improves. The SEC's updated framework is seen as a step toward legitimizing blockchain-based trading of traditional securities. However, the investment bank argues that structural, operational, and market-driven barriers will continue to hold back adoption. Key concerns include insufficient liquidity, lack of standardized infrastructure, and limited interest from institutional investors. Tokenized stocks — digital representations of publicly traded equities issued on a blockchain — have long been pitched as a way to enable 24/7 trading, fractional ownership, and faster settlement. Yet, the bank notes that most market participants still prefer conventional trading venues due to their proven reliability and deep liquidity. The report also highlights that regulatory approval alone does not guarantee market traction. Without strong demand from retail and institutional players, tokenized equities may remain a niche product. The bank suggests that broader adoption will depend on clearer custody rules, integration with existing brokerage systems, and demonstrable cost savings. While the long-term potential of tokenization remains intact, the investment bank's cautious stance signals that the road to mainstream adoption for tokenized stocks could be longer than many crypto advocates expect.