Executives from Janus Henderson and Openassets discussed the future of stock market tokenization on CNBC's ETF Edge following a Sept. 17 U.S. Securities and Exchange Commission (SEC) order granting temporary relief for blockchain trading venues.
SEC Exemption and Market Plumbing
The SEC order issued on Sept. 17 permits blockchain-based venues to trade tokenized versions of listed U.S. equities without registering as national securities exchanges. Under the five-year conditional relief, each token must retain the identical rights of the underlying traditional share. However, the order restricts trading to approved participants, imposes caps on symbol selection and trading volume, and grants issuers the opportunity to object before external entities list tokenized versions of their stock.
Gabor Gurbacs, founder and CEO of Openassets, stated that buying a stock currently passes through roughly nine intermediaries. He expects tokenization to streamline settlement by removing six or seven of these intermediaries, enabled by updated transfer agent rules. Meanwhile, Nick Cherney, Head of Innovation at Janus Henderson, emphasized that fee reductions alone will not drive adoption because U.S. markets are already highly efficient. Instead, Cherney suggested novel use cases, such as paying rent directly with an S&P 500 fund, calling institutional adoption "an inevitability."
Scale Disparity: $500B Tokenized vs. $24T Global ETFs
Despite growing institutional interest, tokenized markets represent a small fraction of global finance. Janus Henderson's premier tokenized fund, sold offshore to institutions, ranges between $500 million and $1 billion across roughly 200 institutional clients. By comparison, the asset manager's flagship ETF manages approximately $30 billion.
Furthermore, Gurbacs noted that total global ETFs account for $24 trillion, whereas total tokenized assets—including all stablecoins—remain below $500 billion. This shift comes as regulators and institutions expand digital infrastructure, such as when the Fed proposed a two-day stablecoin payout rule while traditional platforms integrate stablecoin payment rails.
Key Takeaways
- Sept. 17 SEC Order: Grants five-year relief allowing unregistered blockchain venues to trade tokenized U.S. stocks under volume and symbol caps.
- Intermediary Reduction: Openassets projects tokenization will cut stock trading intermediaries from nine down to two or three.
- Market Size: Tokenized assets total under $500 billion (including stablecoins), compared to $24 trillion in global ETFs.
- Janus Henderson Footprint: Manages $500M to $1B in its institutional tokenized fund across 200 institutions, compared to its $30B flagship ETF.
Why It Matters
The SEC's five-year exemption marks a crucial regulatory test for modernizing legacy settlement architecture without compromising investor protections. While existing cost efficiencies in U.S. markets may delay rapid retail adoption, real-time settlement and programmable collateral will push traditional stock exchanges toward hybrid blockchain rails over the next decade.
