Tokenized stocks: financial giants and crypto networks prepare for the final showdown

Asset tokenization is moving from the realm of crypto startups to the desks of Wall Street giants. With HSBC quietly expanding its Tokenized Deposit Service beyond traditional borders, structured finance is undergoing a transformation that promises to revolutionize global markets. While innovators celebrate, American regulators are tightening their scrutiny, and the stakes are beginning to be laid out. The game has now reached a critical juncture.

When traditional finance meets open source code

Tokenized securities are no longer an academic theory: they represent the fusion of the corporate world and blockchain infrastructure. For those unaware, these tools transfer titles on a blockchain, enabling instant transfers and continuous liquidity, 24/7. Traditional finance experts see in these decentralized systems a worrying echo of official markets, to the point that many blockchain networks operate with mechanics identical to centralized stock exchanges.

The confrontation intensified at the SEC Investor Advisory Committee, where two radically opposing views clashed head-on.

On one side, Citadel Securities presented a 13-page memorandum stating that DeFi platforms meet the legal definition of “exchange” under U.S. regulations. According to the market-making giant, granting exemptions to these platforms would open the door to regulatory chaos, jeopardizing investor safety and the integrity of the financial system. Their position: if it functions like an exchange, it must be regulated as one.

On the other side, Scott Bauguess of Coinbase took a completely different stance. His thesis? Decentralized protocols inhabit a parallel ecosystem, where open-source code and automation replace centralized gatekeepers. From this perspective, applying traditional rules to native digital infrastructures would be akin to stifling innovation with outdated constraints. Bauguess called for new guidelines recognizing the decentralized nature of these systems rather than trying to force them into past regulatory categories.

The fragile balance between innovation and protection

Paul Atkins, head of the SEC, adopted a pragmatic position. In his view, tokenization is a natural evolution of the U.S. financial markets, an unstoppable modernization process. However, he emphasized that regulatory compliance is non-negotiable, regardless of how innovative the underlying system is.

Caroline Crenshaw, Atkins’ colleague, issued a more direct warning. Behind the allure of tokenization lie tangible risks: custody issues, vulnerabilities in market integrity, and the perennial concern of investor protection, especially when value is distributed across blockchains not controlled by responsible entities.

HSBC scales globally, but the future remains uncertain

Meanwhile, HSBC is not waiting for the final verdict. The bank has begun expanding its Tokenized Deposit Service, a platform that allows companies to transfer cross-border capital with unprecedented speed. Currently operational in the UK, Singapore, Hong Kong, and Luxembourg, the service aims to expand to the US and the United Arab Emirates in the first months of next year.

HSBC analysts, however, do not expect permissive regulation. They foresee the SEC adopting a cautious approach, likely based on a regulatory “sandbox” strategy. This model would enable controlled testing of tokenized markets within a defined perimeter, keeping regulators in control and allowing on-chain systems to coexist with current regulations, at least in experimental environments.

The most likely scenario painted by experts envisions an evolution toward fully authorized and regulated blockchains, where “walled gardens” maintain centralized oversight, monitoring who operates, what happens, and how investors are protected from the inherent risks of open, decentralized networks.

The train has already left the station

Regardless of upcoming SEC decisions, consensus among analysts is unanimous: the tokenization process is now irreversible. It is no longer a question of “if,” but of “how” and “when.” All major sector players, from traditional banks to decentralized protocols, are strategically positioning themselves to ride this wave. The real battle will not be whether tokenization will arrive, but which rules and architectures will dominate the future of digital finance.

The SEC’s decision will not mark the end or the beginning of tokenization; it will only set the coordinates within which this new world will develop in the coming years.