The U.S. Securities and Exchange Commission’s (SEC) recent innovation exemption allowing tokenized stock listings on third‑party platforms could fragment trading liquidity and disrupt traditional market structure, according to a detailed analysis from Tiger Research. Ryan Yoon, head of Tiger Research, warned in a report cited by Cointelegraph that capital could shift from centralized exchanges like the New York Stock Exchange (NYSE) and Nasdaq to multiple blockchain venues, leading to scattered order flow.
Yoon explained that if the same listed stock is tokenized across different blockchain networks and decentralized platforms, trading volume would become dispersed. This fragmentation could cause price discrepancies between platforms, increase slippage on large orders, and erode overall market efficiency. The report adds an economic argument: consolidated liquidity is crucial for stable markets, and its loss is a structural risk that could offset the benefits of tokenization, such as faster settlement and fractional ownership.
Revenue fragmentation is another concern. Trading fees may move offshore as tokenized stocks appear on competing platforms, reducing domestic fee income for traditional exchanges and reshaping competitive dynamics. Meanwhile, on‑chain demand for tokenized real‑world assets is growing, with Hyperliquid reporting $2.6 billion in open interest and RWA.xyz data showing $1.53 billion in tokenized stock value and 272,000 holders. In response, NYSE and Nasdaq are developing their own tokenized infrastructure to retain trading flow, potentially through digital transfer agents and standardized settlements. The SEC’s approval marks a pivotal moment, but regulators and market participants must balance innovation with the threat of liquidity and revenue fragmentation.
