Ep. 738 How 24/7 Markets Are Coming for Wall Street

Heinz Tabosh, who spent nearly 16 years at Flow Traders and transitioned to digital assets four years ago, argues that tokenization is the most consequential structural shift coming to financial markets. Flow Traders currently trades crypto alongside traditional equities and ETFs under the same roof and treats on-chain trading as nearly equivalent in operational ease to trading on Nasdaq or major European and Asian exchanges.

The near-term milestone Tabosh cites is the DTCC tokenizing the first ETFs on July 15th, with a broader rollout expected by end of year that would let any investor choose between holding stocks or ETFs in tokenized or traditional form. The core efficiency argument rests on disintermediation, cost reduction, and replacing T-plus-2 settlement with on-chain settlement. Tokenized stocks would allow retail investors in underbanked regions such as Africa and Southeast Asia to buy fractional shares of companies like Apple, and tokenization could open private credit and private equity to smaller investors at entry points of one thousand to ten thousand dollars. Tabosh acknowledges the addressable retail market in underbanked regions is relatively small compared to Wall Street, so the larger commercial stakes lie elsewhere.

The episode draws a sharp distinction between stablecoins and tokenization, framing stablecoins as banking the unbanked while tokenization brokers the unbroker. The most direct competitive threat tokenization poses to incumbents is through tokenized money market funds. Idle cash in bank and brokerage accounts currently generates yield for those institutions rather than account holders, and tokenized money market funds would redirect that yield. Banks are described as having low appetite for tokenized money market funds precisely because of this threat, but the prediction is that players offering them will gain market share and force traditional institutions to follow, drawing a parallel to the consistent outflow from traditional firms toward more accessible alternatives over the past decade.

In a fully on-chain environment, custody, tokenized money market funds, tokenized stocks, and stablecoins could all sit in a single digital wallet, removing the need for separate clearinghouses and brokerages. Crypto-native players are pursuing a super app model and view tokenization as the path to it. Traditional players face the choice of adopting tokenized products or losing assets to those competitors. The trajectory of Bitcoin adoption at major US financial institutions is cited as a precedent, going from effectively impossible a few years ago to standard or in progress across major institutions.

A significant infrastructure problem for 24/7 tokenized markets involves capital requirements for market makers. In traditional markets, end-of-day settlement and prime brokerage leverage mean traders do not need to post full capital upfront. In a tokenized environment, market makers must hold either the tokenized asset or stablecoins to trade, requiring substantially more capital. Quoting a thousand stocks across five venues on weekends is given as an example of how demanding this becomes. Conversations over the past six months suggest models to address this on-chain capital inefficiency are being developed, but the problem is not yet solved.

Hyper Liquid is identified as a DeFi protocol already generating significant weekend volumes, demonstrating 24/7 trading as a proven concept, though it remains difficult or impossible to access for traditional players such as hedge funds and macro funds. Hyper Liquid and platforms like X Stocks have applied competitive pressure on traditional institutions by offering 24/7 trading across metals, energy, equities, and crypto. Nasdaq and others including Stax Mills have begun extending toward 24/7 trading in response. The prediction is offered that Hyper Liquid may move to capture market share during regular trading hours as a natural extension of its weekend success.

The episode draws a practical distinction between investor types when assessing how much 24/7 access actually matters. For hedge funds and prop shops reacting to continuous price discovery, weekend and after-hours market access is highly consequential. For long-term asset managers, the timing of a conviction trade across a weekend is less critical. That asymmetry suggests the initial pressure on traditional market structure will come from active trading firms rather than institutional asset managers, even as the broader tokenization buildout targets the entire financial industry.