TD Cowen Sees Low Demand for Tokenized Stocks Despite SEC Rules
TD Cowen predicts limited adoption of tokenized stocks, noting that perpetual futures already capture 96% of Nvidia-related trading volume on crypto platforms.
Key points
- TD Cowen expects limited near-term adoption of tokenized stocks because U.S. investors already have efficient access to traditional shares.
- Ninety-nine point nine percent of Figure's trading volume occurred in traditional listed shares rather than its blockchain-native token during a tested period.
- Ninety-six percent of Nvidia-related trading volume on Binance came from perpetual futures, significantly outweighing the four percent from spot products.
TD Cowen projects limited near-term adoption for tokenized stocks despite new SEC regulations. The investment bank argues that existing efficient access to traditional shares reduces the incentive for retail investors to switch to blockchain-based alternatives immediately.
The SEC recently established a five-year framework allowing tokenized securities to trade via automated market makers. This regulatory move occurred just days after the CLARITY Act failed to advance, leaving the broader crypto market structure legislation stalled while specific trading mechanisms open up.
Existing market efficiency limits token appeal
Reid Noch, a vice president at TD Cowen, states that U.S. investors already possess efficient access to underlying shares. Consequently, tokenized venues must offer compelling benefits to offset the additional operational complexity and limited liquidity inherent in new platforms.
The SEC framework requires tokens to represent Nasdaq-listed stocks and preserve all economic rights. Issuers retain a thirty-day window to object to third-party tokenization, a requirement that may make the U.S. model harder to adopt than similar products available overseas.
Issuer interest remains minimal across sectors
TD Cowen reports minimal interest from dozens of issuers in tokenizing their stocks. This lack of enthusiasm persists even among companies with high retail visibility, with only crypto-adjacent firms showing significant engagement in the space.
Figure serves as a clear example of this adoption barrier. During a specific twenty-four-hour period, ninety-nine point nine percent of its notional trading volume occurred through traditional Nasdaq-listed shares rather than its blockchain-native equivalent, as reported by CoinDesk.
Perpetual futures dominate crypto stock trading
Perpetual futures represent a stronger demand story for crypto-based stock exposure than spot tokenized products. TD Cowen data indicates that ninety-six percent of Nvidia-related notional volume on Binance came from these derivative contracts.
Only four percent of that volume came from spot products, highlighting a clear preference for leverage. Platforms are expected to continue expanding these perpetual futures products both internationally and domestically to meet retail investor demand.
