Table of Contents
Key Takeaways
- eToro will tokenize 100 top U.S. stocks and ETFs as ERC-20 tokens on Ethereum, enabling 24/5 trading and DeFi integration.
- Users can eventually transfer tokenized U.S. stocks to private wallets or DeFi protocols, a first for a major retail platform.
- The launch builds on eToro’s 2019 tokenized gold/silver offerings and aligns with growing RWA (real-world asset) tokenization trends.
- CEO Yoni Assia hints at a potential eToro blockchain in the future, per recent interviews.
Wall Street Meets Web3
Think about being able to buy Tesla or Apple stock at 2 AM on a Sunday. This is the future eToro is building. The social trading giant with 40 million users worldwide announced plans to tokenize the top 100 U.S. stocks and exchange-traded funds (ETFs), which will guarantee heavyweights like Amazon and Nvidia, as ERC-20 tokens on the Ethereum blockchain.
These tokenized assets will trade 24 hours a day, 5 days a week (24/5), and (eventually) 24/7 via blockchain transfers as traders access digital assets as soon as they arrive on their exchange account.
eToro’s CEO, Yoni Assia (who helped write the first Bitcoin whitepaper in 2012), declared, “Tokenization is about removing boundaries. It is the greatest wealth transfer opportunity in history.“
How It Works: U.S. Stocks on the Blockchain
- On-Platform Trading: Users will be able to buy/sell tokenized U.S. stocks directly on eToro, with each token 1:1 backed by the real stock.
- Take It Offline: Eventually, users will be able to withdraw tokens to MetaMask or decentralized finance (DeFi) protocols, and possibly stake Tesla tokens in Aave.
- Regulated Bridge: Tokens can be redeemed for traditional shares on eToro, bringing TradFi and crypto liquidity at the same time.
This isn’t eToro’s first RWA rodeo. In 2019, it launched tokenized gold (GOLDX) and silver (SLVX), but stocks represent a far bigger market.
eToro is no stranger to the Real World Assets (RWAs) sector, having previously introduced tokenized gold (GOLDX) and silver (SLVX) in 2019. However, the stock market presents a significantly larger opportunity.
Why Ethereum? And What’s Next?
eToro chose Ethereum for its security and DeFi ecosystem, though Assia teased in a Fortune interview that eToro may build its own blockchain long-term. The move mirrors competitors like Robinhood, which launched a tokenized stock L2 on Arbitrum last month.
eToro selected Ethereum due to its robust security and heavy DeFi ecosystem. Nevertheless, Assia mentioned, in a Fortune interview, the possibility of eToro developing its own blockchain in the near future. This strategic decision lines up with similar enterprises by competitors, such as Robinhood, which recently introduced a tokenized stock Layer 2 (L2) solution on Arbitrum.
Significant challenges persist for the tokenized sector
- U.S. Restrictions: Tokenized stocks won’t be available stateside, at least initially, due to Securities and Exchange Commission (SEC) obstacles.
- Volatility Risks: How will after-hours crypto trading impact stock pricing?
- Liquidity Questions: The entire tokenized stock market is just $406M today, tiny versus traditional markets.
Tokenization’s Trillion-Dollar Promise
eToro’s vision to tokenize U.S. stocks reflects a growing trend nowadays. Companies like Backed Finance (tokenizing stocks on the Solana blockchain) and Goldman Sachs (tokenizing money-market funds) are competing to put RWA on-chain. You know, this is a trillion-dollar market in the making.
For Ethereum, it’s another win for RWA adoption, potentially driving more institutional engagement, and for investors, it’s a preview to a future where Wall Street and DeFi are integrated.
A Turning Point Moment
eToro isn’t just engaging with crypto by tokenizing U.S. stocks; it’s transforming finance. Despite ongoing regulatory challenges and more stuff to come in the blockchain space, the inevitability of tokenization is apparent.
Final Thought: Would you trade tokenized stocks in DeFi? Or stick to traditional markets?
For more tokenized stocks-related stories, read: Robinhood Targets EU Tokenized Stocks via Solana or Arbitrum Blockchains
