Securitize Just Went Public — Are We Still Tokenizing the World?

Securitize completed a SPAC merger with Cantor Equity Partners on July 1st, raising 400 million dollars at a 1.25 billion dollar pre-money valuation, and began trading on the New York Stock Exchange under the ticker SECZ on July 2nd. The company registered as an SEC-regulated transfer agent in 2019 and uses a public blockchain as the underlying ledger instead of a traditional one, which is the core of what tokenization means in this context. It has since added a broker-dealer operation to enable trading of tokenized securities and acquired a fund administration business to reconcile 24-7 on-chain activity with underlying assets that do not trade around the clock.

Total tokenized assets on chain sit at roughly 30 to 35 billion dollars against a total addressable market described as in the hundreds of billions, with industry projections ranging from 2 trillion to 30 trillion dollars. The bottleneck is on the demand side, not supply, because current buyers are mostly a crypto audience. The major step change will come when tokenized assets can be consumed by traditional investors who do not need to know something is on chain. Funds are two to three years into their adoption cycle, with BlackRock, Apollo, BNY, Franklin Templeton, and WisdomTree already having tokenized funds, while equity tokenization is much earlier stage. The BlackRock tokenized treasury fund, which Securitize issued, offers peer-to-peer transfers, daily dividend payouts via new token issuance, and 24-7 on-chain liquidity, and is the only fund in the entire BlackRock portfolio that does daily dividend reinvestment.

A meaningful distinction exists between native tokenized securities and third-party synthetic representations. Platforms like Ondo and Robinhood create tokenized stocks without going to the underlying equity companies for consent, meaning holders do not appear on the books and records of any transfer agent. Securitize-issued tokens are the actual shares issued through the transfer agent, so holders appear on official records, but they require KYC, making them permissioned assets despite using permissionless blockchains. Robinhood's offshore tokenized stock positions include approximately 1.3 million dollars of Alphabet, 1 million dollars of Vanguard, and 700,000 dollars of Micron, and are described as legally issued derivatives compliant in the jurisdictions where they operate.

Third-party synthetic tokenized stocks introduce structural problems. Multiple competing synthetic versions of the same stock cannot be netted against each other, fragmenting liquidity with no epicenter of trading activity. One tokenized stock failed to reflect a stock split on chain, causing the token to trade at five times the correct price. Permissionless synthetic instruments can also allow sanctioned wallets to hold derivatives of US securities with no buyer restrictions. Tom Farley, CEO of Bullish, stated that the day before earnings announcements he could legally buy one of these synthetic tokenized stocks because there are no controls over them. The prediction offered is that compliant regulated tokenization will eventually push out offshore and gray-area tokenization because liquidity will migrate to assets without counterparty or regulatory risk, though a potential return to a less friendly SEC within two years could accelerate enforcement against non-compliant actors.

At its own listing, approximately 200,000 shares of Securitize opted into tokenized form, making its tokenized equity the largest tokenized asset including non-native ones at approximately 250 million dollars, compared to Figure at around 200 million dollars. On-chain trading of tokenized Securitize equity is conducted on Solana in partnership with Jump, and every trade must be reported to FINRA. This process requires fetching the National Best Bid and Offer price from Securities Information Processors and feeding it on chain, which introduces front-running risk and block timing issues. SEC Chair Atkins has proposed eliminating Reg NMS rules 611 and 610, which would simplify on-chain trading by removing the requirement to follow off-chain price feeds, though that change is predicted to take approximately a year or longer.

Securitize launched its tokenized equity on both Avalanche and Solana simultaneously. Avalanche was chosen partly because it offers deterministic settlement relevant to SEC reporting requirements and because the company holds European regulatory approval for its broker-dealer on that chain. Solana was selected because Jump's market-making technology for continuous price updates was already available there and its fast block times suit compliant equity trading. The company plans to expand to Avalanche next and then other chains, but doing so requires proper market-making technology to be built on each chain first. Securitize has issued a public request for parties building this infrastructure on Ethereum and other chains to contact them.

Securitize describes the 400 million dollars raised as an insurance policy that removes near-term funding pressure. Rather than acquiring a competitor, the company is focused on adding capabilities that complement tokenized equities and funds, activating partnerships with transfer agents to build a pipeline of equities to bring on chain, and pursuing international licensing after being heavily US-centric. The platform currently hosts 650 digital asset funds. If the market reaches 1 trillion dollars within approximately three years and Securitize holds 10 percent market share, its platform assets under management would reach 100 billion dollars, roughly 20 times its current size.