How does tokenized stock work? Conversation with BlackRock's Head of Digital Assets

Tokenized Episode 76, Speaker: Pet Berisha (Tokenized Co-Founder) Guests: Rob Hadick (Dragonfly GP), Robert Mitchnick (BlackRock Head of Digital Assets), Noah Levine (Partner at Andreessen Horowitz)

Timeline:

00:00 Introduction

02:17 Tokenization is essentially an “access” story, enabling more investors to reach asset classes that were previously difficult to access.

05:51 Tokenized equity can roughly be divided into three structural types.

08:41 For tokenized assets under a whitelist mechanism, transferability is subject to certain restrictions.

11:21 The New York Stock Exchange is partnering with Securitize to explore a 7×24-hour trading model.

15:00 Stablecoins are evolving into a new generation of financial infrastructure.

18:58 US regional banks are building tokenized deposit networks.

24:21 Stablecoins and tokenized deposit services serve different types of user groups.

25:42 Demand for privacy in on-chain capital markets is increasing significantly.

31:06 Future market structures will reduce intermediaries and become more flattened.

Takeaways:

Stablecoins are evolving from a “payment tool” into “account-layer infrastructure.” Users no longer just use them to transfer; they hold balances directly, which naturally extends to investment, yield management, and asset allocation. For financial products, stablecoin wallets will gradually replace traditional accounts as entry points.

The biggest value of tokenization is not efficiency improvements, but expanding investment access. It allows users who previously only participated in crypto markets to access a broader range of traditional assets, while also enabling more global investors to enter a unified market—fundamentally expanding demand rather than optimizing supply.

Most “tokenized stocks” in the current market are still transitional forms. In essence, they are derivative wrappers rather than real assets being put on-chain. Issues such as inconsistent trading times, inability to redeem in real time, and unclear asset ownership indicate that the underlying infrastructure for a true on-chain capital market is not yet mature.

The truly valuable model in the future is “native on-chain issuance,” rather than mapping off-chain assets onto the chain. Only when assets are generated, traded, and settled directly on-chain will new capabilities such as collateralization, bundling, and governance emerge—this is the starting point of structural change.

Whitelist and compliance restrictions are the core bottlenecks for liquidity in current tokenized assets. As long as assets must be transferred between restricted addresses, true liquidity and DeFi composability cannot be achieved. The industry is looking for solutions that meet regulatory requirements without sacrificing liquidity.

7×24-hour trading is not the most core demand; the real demand comes from “asset utilization efficiency.” After users hold stablecoins, they don’t just want to trade anytime—they want these funds to seamlessly participate in scenarios such as investment, lending, and yield. That is the key driver of tokenized growth.

Stablecoins and tokenized deposits will not replace each other; they serve different scenarios. Stablecoins are more geared toward cross-border use, crypto markets, and USD-denominated needs; tokenized deposits are more focused on internal bank fund flows and efficiency optimization. In the future, structures with multiple forms of capital coexisting will take shape.

The main obstacle for banks to push tokenization is not technology, but regulatory uncertainty. Things like AML, compliance frameworks, and capital requirements are still not fully clear, which forces banks to proceed cautiously—even if they already realize this is a transformation they must participate in.

Privacy is becoming a key infrastructure demand for on-chain capital markets. In payment scenarios, it can be bypassed through mechanisms such as net settlement, but it cannot be replaced in scenarios like collateral, settlement, and trading. Therefore, technologies like ZK will be prioritized in capital markets rather than payments.

In the long run, financial market structures will become significantly flatter. Currently, trading involves many intermediaries (brokers, exchanges, clearing institutions, custodians, etc.), but tokenization can compress these layers. The result is lower costs for investors, expanded reach for asset management institutions, and an opportunity for crypto infrastructure to enter mainstream finance.

Pet Berisha: Welcome to Tokenized, a show focused on stablecoins and the institutional adoption of tokenized real-world assets. This time, we’re recording live at the New York Digital Asset Summit. That intro was pretty good. Hi everyone, I’m Pet Berisha, filling in for Simon this week, though at least the accent is about the same. Sitting next to me is a guest who has been consistently excellent—and might have already tied the show’s guest appearance record—Rob Hadick from Dragonfly GP. How are you?

Rob Hadick: I’m doing well, and clearly not as fluent as you are, because last time I didn’t manage to say the entire opening speech.

Pet Berisha: Well, that’s just practice.

Rob Hadick: Yeah, just practice. Okay, I’ll need to come a few more times.

Pet Berisha: Also, we have a guest making their first appearance—Robert Mitchnick, BlackRock’s Head of Digital Assets. Welcome to the show.

Robert Mitchnick: Thank you for having me.

Pet Berisha: Wow, applause—you see, Rob didn’t get that just now. I don’t know why. And last but not least, equally important, over there wearing a jacket and trying to imitate Cuy Sheffield’s style is Noah Levine, a Partner at Andreessen Horowitz, and also part of the so-called “Visa crypto gang.” How are you?

Noah Levine: Very good, excited to be here.

Pet Berisha: Second time on the show. Next, I’m going to do a segment that everyone will skip—I need to remind everyone: all the viewpoints expressed by our guests today are their own and don’t necessarily represent their respective companies’ positions. Anything we say should not be taken as tax, financial, investment, or legal advice—please do your own research. And we also want to thank today’s sponsors, Visa and Mesh, and thank Mentox Global for helping us organize this event. This episode is sponsored by Visa. Visa is a leader in digital payments. Visa’s tokenization asset platform VTAP uses smart contracts and cryptography to help banks bring fiat onto the chain. Whether issuing stablecoins, deposit tokens, or other forms, VTAP enables financial institutions to issue fiat-backed tokens, improve financial efficiency, and enable programmable finance.

Pet Berisha: This episode is also sponsored by Stripe. Stablecoins are becoming the foundational building block for borderless financial services, letting money flow around the world like data. With Stripe, you can use stablecoins and crypto technology to reach new user groups, reduce cross-border fees, and shorten settlement times from days to minutes. Most importantly, it works the same way as other Stripe products—through the API, directly within the Stripe console—meaning you don’t need to worry about which blockchain or which wallet is being used. From Shopify to other global enterprises, companies are using Stripe’s complete crypto solutions to expand into new markets and reach more users.

Pet Berisha: This episode is also sponsored by M0. Stablecoins are becoming global financial infrastructure, and this infrastructure also needs to mature. If you’re a brand, you should have your own stablecoin, and it should match how funds flow through your products. If you’re an issuer, you want to be the stablecoin partner for the most valuable brands. M0 is currently the only platform that allows issuers and brands to jointly build digital currency products.

Pet Berisha: Moving on to the first topic. A piece of news coming from everywhere: Larry Fink said that tokenization can make investing as easy as paying with a phone. In his annual letter, he said: Half the world’s population uses digital wallets on their phones. Imagine if that digital wallet could also let you invest in a basket of companies as easily as sending a payment. Tokenization can accelerate this future by upgrading the underlying infrastructure of the financial system—making it easier to issue, trade, and access investments. Robert, I’ll ask you first. People’s reactions to this have been quite interesting. Can you elaborate?

Robert Mitchnick: Sure. I think this is actually consistent with some of his views from the past few months, or even years, and it’s also similar to his article in The Economist last November. The core idea is: we’ve always treated tokenization as an efficiency-improvement story, but in many ways it may be more of an “access” story. Now there’s a group of investors who are crypto-native—or at least more accustomed to using digital wallets, interacting within digital assets and DeFi ecosystems—but their allocation in traditional investments is seriously insufficient, even at 0%. So the question is: how do we give them access to a wider range of investment opportunities, not just the current roughly $30 trillion crypto asset market, but the entire $400–500 trillion global asset pool? I believe this is a huge financial inclusion opportunity that can help people build more complete, diversified investment portfolios.

Pet Berisha: Rob, would you like to expand a bit more from the “access” perspective? Why does tokenization not only expand portfolios for crypto-native users, but also improve access for ordinary investors and institutions?

Rob Hadick: Sure. I might have a slightly different perspective than Robbie. From our angle, what we’re seeing right now is stablecoins rapidly becoming popular worldwide, and a lot of the time it’s because people want exposure to USD. For example, in their countries there’s 30%, 40% inflation per year; they just want to get out of their local currency and enter the USD system. But stablecoins have actually already turned into a kind of “digital oil,” moving liquidity between different tokenized assets. When these assets all exist in forms similar to stablecoins, swapping between them becomes much easier.

Now the issue is this: if I’m in an emerging market and I want some kind of stock exposure, the regulatory permissions, infrastructure, and structures required are extremely complex, and the costs are high. So we see many people use “workarounds,” such as so-called tokenized stocks like Robinhood’s. In essence, it’s a derivative: a US broker buys the stock during normal trading hours, then issues a corresponding token, which sometimes cannot be minted or redeemed during certain periods. So many of these solutions are just transitional—some form of regulatory arbitrage—not true assets in the same way being put on-chain. Once these assets all become a unified form, you can break down both technical boundaries and access boundaries, leaving only the regulatory issues. And as a venture capitalist, I typically tell my companies that we can worry about that later.

Pet Berisha: Noah, I was planning to ask you about the next topic, but since Rob mentioned these derivative structures, can you help everyone understand the different structures of tokenized stocks in today’s market?

Noah Levine: Yes. I might not be as good as Rob and Robbie, but I’ll do my best. Broadly speaking, there are three categories. The first is the SPV (special purpose vehicle) structure. You’ll see people set up an SPV to buy some stock asset, then tokenize that SPV and distribute it to a group of investors. Its value is that if what you want is just price-direction exposure, it’s a decent tool. But the problem is, as Rob mentioned earlier, if this is a 7-day trading window while the underlying market is only open at certain times, you get price mismatches. Also, as an investor, you’re buying the SPV, not the underlying asset itself, which introduces risk.

The second category is “rights tokens,” similar to what DTCC or Securitize is doing. The asset itself is issued off-chain first, then tokenized, allowing wallet users to hold it and gain exposure. The advantages are that 7×24 trading can be enabled, and there’s also a degree of DeFi composability, improving asset liquidity efficiency. Of course, there’s still room for improvement in this area.

The third category is stocks that are fully issued on-chain, like what Superstate and Figure are doing. In this case, brand-new securities are issued on-chain. When you hold this asset, you truly hold the underlying stock. Advantages include cross-collateralization, participating in governance voting, and so on. So it’s not just moving existing assets on-chain—it’s native on-chain issuance in the future, and that’s a very exciting direction.

Noah Levine: I want to ask Robbie the question in reverse. You’ve done many tokenization attempts, such as tokenized money market funds, and you also tried models like Securitize’s (through SPV and KYC, then mapped onto the chain but not freely transferable). So how do you see the future—will more freely transferable assets, even native on-chain issuance like Superstate, become part of your offering?

Robert Mitchnick: To clarify, our product is not an SPV, and it’s not a feeder fund either. It’s a native new fund, and the shares are issued directly in token form. But transfers are still restricted—such as needing to transfer only between whitelisted addresses. This is due to private fund rules and anti-money laundering requirements. This is a very big issue: as long as whitelists exist, it creates major friction, affecting liquidity and DeFi usability. So the whole industry is thinking about how to solve this, not just by doing simple regulatory arbitrage and then later “asking for forgiveness.”

Pet Berisha: I want to follow up on this question. Noah, what’s your view on how we get to a more open state, closer to permissionless?

Noah Levine: That’s a great question. I think there are two aspects. First is regulatory clarity, which is extremely important—and we’re only just starting now. For example, in the past month there have been quite a few developments regarding US securities regulation. Second is infrastructure. For instance, Superstate and Figure still need to provide liquidity and trading via an ATS (Alternative Trading System). That’s workable in the short term, but to move toward a more institutionalized scale, further development is needed. So the core is ongoing regulatory clarity plus improved liquidity infrastructure.

Pet Berisha: We move on to the second topic. An exclusive from The Wall Street Journal: The New York Stock Exchange is working with Securitize to develop a 7×24-hour tokenized securities platform. Securitize will become the first digital transfer agent capable of issuing blockchain-native securities for enterprises or ETFs. Rob, can you break down what this means for everyone?

Rob Hadick: I’ll start with this, and then talk about a larger trend. Right now, everyone believes in tokenization, and one important reason is that we want to enable weekend and nighttime trading. In the market today, market makers do try to hedge at night, but that hedging is actually imprecise. Especially on weekends, it’s almost impossible to hedge risk effectively. If you want to manage collateral and leverage on weekends, you need on-chain infrastructure. So everyone is trying out different solutions.

For example, the New York Stock Exchange might use a standalone order book—like a new exchange. Nasdaq might be more inclined to trade tokenized assets alongside traditional assets in the same market. There are also people experimenting with bringing tokenized assets into dark pools. In any case, everyone is exploring different paths. This is good for the entire industry because it brings more innovation. My personal view is that ultimately all assets will be tokenized.

Pet Berisha: Robbie, do you agree?

Robert Mitchnick: I think it’s something that has a quite high probability of happening, but not a certainty. Even if the probability isn’t 100%, as long as it’s high enough, it’s sufficient for us to invest substantial resources in laying the groundwork. Because once it happens, it will have a huge impact on the entire financial system, value chain, and market structure—including changing the roles of intermediaries.

Pet Berisha: Noah, now many people say 2025 is the year of stablecoins, and 2026 will be the year of capital markets. What’s your take?

Noah Levine: I largely agree. I remember Cuy’s phrasing last year: “Every bank needs a stablecoin strategy.” Now stablecoins have moved from being a question of “whether to do it” to a question of “must do it.” And the next real question is: if users’ money is in stablecoin wallets, they don’t just want to see balances or make payments—they also want to do more things, like investing. I think that’s the real growth driver for tokenized assets, not just 7×24 trading itself.

Robert Mitchnick: And I also think stablecoin use cases are only just beginning. They already have some penetration in crypto exchanges and DeFi, but in scenarios like cross-border remittances, corporate treasury management, and capital markets, they’re still far from being truly expanded. So there’s still a long runway for growth.

Pet Berisha: We move on to the third topic. In last week’s show, we also mentioned that US regional banks are building a tokenized deposit network called Kari Network through ZK Sync. Participants include Huntington, First Horizon, M&T Bank, KeyCorp, and Old National Bank. It’s planned to launch in 2026 and run on ZK Sync’s permissioned chain. Rob, what do you think about this?

Rob Hadick: I think the discussion about “stablecoins versus tokenized deposits” is actually a bit off the mark. Essentially, we have cash equivalents, and we also have non-cash equivalents. Regulators are already discussing this—for example, Basel rules and capital requirements may be redefined. And the US government has also recently said that stablecoins could be treated like cash equivalents, which helps with capital management. So I think these different forms of assets ultimately will serve different purposes.

For example, so-called payment stablecoins might be one kind of tool for moving value; tokenized deposits might be another; tokenized money market funds yet another. They may increasingly resemble today’s financial products, but they will be more digital-native, easier to exchange with one another, and more liquid—while reducing the complexity of back-office reconciliation. From my perspective, the “who replaces whom” question isn’t that important.

Pet Berisha: What about a bank alliance model? Especially for mid-sized banks—what do you think?

Rob Hadick: Historically, there have been quite a few successful bank alliances, such as Visa and Mastercard, and Early Warning (which later produced Zelle), and even cases like Synchrony. So I do believe some core infrastructure is more suitable to be built through alliances. Because if you’re a startup, meeting the needs of so many banks at the same time is actually very difficult. You have to do many things well—not just one specific point. So I think bank alliances will play an important role in future capital market innovation, even if they may need to exist.

Robert Mitchnick: I think your framing is a bit too broad in terms of “success stories.” Because in blockchain and digital assets, the history of alliances has been pretty poor—let’s be honest. That’s to say it gently. This isn’t to claim alliances can’t work, but we need to recognize that in this space, creating something with truly economic value is extremely difficult.

Pet Berisha: So what’s your recommendation?

Robert Mitchnick: This is a question left for others to solve. I’m currently inside the banking system.

Pet Berisha: Noah, you were at Visa before—so you’ve probably talked with a lot of banks. Why would they choose to do tokenized deposits?

Noah Levine: That’s a good question. I think there’s a common misconception that people think banks are conservative and don’t want to do innovation—that’s not right. They’re aware there’s a big opportunity here, and they can use these infrastructures to build more competitive products. The main sticking point is regulatory uncertainty. As we said earlier, although there have been some policy developments, many key questions still aren’t clear—like how to do compliance, how to do AML, and so on. That’s why banks will be very cautious.

Of course, there are also some more aggressive players. For example, JPMorgan Chase did JPM Coin very early and is also trying new things; Citi and others are involved too. There are some alliance projects as well. While the probability of success isn’t high, banks still want to participate because they don’t want to miss out on the opportunity.

Robert Mitchnick: I think there’s another important point: it must be very clear what problem tokenized deposits solve, or what unique value they offer compared with stablecoins. This question has not yet been answered well.

Rob Hadick: From a bank’s perspective, they might say tokenized deposits allow them to continue controlling the deposit base while also continuing to do some reserve-banking-type activities. Meanwhile, asset managers would want to continue managing money market funds. It’s a tug-of-war among different stakeholders.

Pet Berisha: Noah, if it’s a mid-sized bank alliance, what do you think the probability of success looks like?

Noah Levine: I think any specific project is hard to succeed. But fundamentally, stablecoins and tokenized deposits are completely different things. They serve different users. Stablecoins’ product-market fit is mostly in crypto capital markets—capital flows between exchanges, DeFi, and as a USD value storage tool outside the US. Meanwhile, these banks mostly serve local clients—for example, M&T Bank wouldn’t be targeting users in Argentina. Their use cases are more wholesale: fund flows, back-office settlement, and internal efficiency optimization. In those scenarios, it’s possible for these projects to succeed, but it won’t become a mass-market product.

Pet Berisha: Robert, I want to ask my final question. Why is the industry paying more attention to “privacy”—especially ZK technology—now? Why has this issue only become prominent recently?

Rob Hadick: Actually, people have been working on this already, all along. It’s just that previously the demand wasn’t as strong, or the only demand was mainly coming from some not-so-legitimate use cases. For example, in stablecoin payments, if you do wage payments or make payments, you of course don’t want everyone to see how much everyone else has received. So in reality, how do we solve it? We use “netting”—aggregating daily transactions, and then recording only a single final net settlement transaction on-chain. That alone provides a degree of privacy.

But in capital markets scenarios—like weekend trading or collateral management—things are totally different. You can’t use netting to solve it, because you need to process risk in real time. That’s why privacy becomes more critical. ZK technology can solve part of the problem, but not all of it. If you’re operating on a public chain, the technical difficulty is very high.

Pet Berisha: We’ll move on to audience questions.

Audience: Everyone is discussing US dollar stablecoins. Is there demand for non-USD stablecoins?

Rob Hadick: There’s no obvious demand for now, but there definitely will be in the future. If all capital markets move on-chain, you’ll need stablecoins in multiple currencies; otherwise, you’ll face exchange-rate risk. For example, a UK hedge fund with assets denominated in GBP wouldn’t want to constantly bear USD risk. So multi-currency stablecoins will emerge. Also, from a more macro perspective, we might be entering an era of “currency cold war,” and whether we need so many different currencies is also a question worth discussing.

Audience: Stablecoins are already very useful in the financial system, but ordinary consumers still have biases against “crypto.” How long until this is resolved?

Noah Levine: Actually, many users are already using stablecoins—they just don’t know it. For example, some new banking products are built on top of stablecoins, but users only see a regular account. The key is to hide the crypto behind the product, rather than making users perceive it.

Robert Mitchnick: Another point is that stablecoins aren’t very attractive in domestic US payment scenarios, but they’re extremely valuable in cross-border scenarios, where there is more friction and getting USD is more difficult.

Audience (Bloomberg): If in 5–7 years all assets are on-chain, what would the market structure look like? Who benefits, and who is harmed?

Robert Mitchnick: This is a very difficult question. But overall, the value chain will shorten and intermediaries will decrease. Today, a single stock trade involves many roles: investors, prime brokers, exchanges, clearing houses, custodians, transfer agents, fund managers, and so on. Many of these layers can be compressed and automated.

This is good for investors because of improved efficiency; it’s also an opportunity for asset managers because they can reach more users. And for crypto exchanges, which currently cover only a small portion of global assets, there’s a chance to expand significantly.

Pet Berisha: Alright, that’s all for today. Thanks to everyone listening in both the room and online. Thank you to all our guests.

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