Tokenized Equities: Bridging emerging economies and U.S. capital markets

A tokenized stock is a digital representation of a traditional equity like Apple or Tesla that is issued as a token on a blockchain. Depending on the tokenization model and issuer, the token may either be backed 1:1 by real shares that include shareholder voting rights and regulatory protections or provide only synthetic exposure to the stock’s price movements.

The total market capitalization of tokenized stocks has grown more than 50 times in 2025, surging from less than $30 million in early 2025 to over $700 million as of December 2025. Although this only represents .0004% of the global stock market’s total value of $147.6 trillion, there is massive growth potential in this sector. According to Citigroup, tokenized securities could reach $4 trillion to $5 trillion by 2030.

According to polling by the Gallup organization in April 2025, approximately 55% to 62% of U.S. adults are invested in the stock market, either directly or through retirement accounts like 401(k)s and IRAs. Participation rates in the stock market in emerging markets are significantly lower, typically ranging from 5% to 15% of the adult population.

Based on data from Morgan Stanley, emerging markets currently account for about 26% of global market capitalization, which translates to roughly $80 trillion to $100 trillion in investable assets of 2025. Emerging markets make up nearly 60% of global GDP and 85% of the world’s population but lag in financial asset accumulation.

In emerging markets, people tend to allocate their assets very differently from those in developed countries. A typical asset allocation breakdown in emerging markets is 50% to 70% in real estate; 20% to 30% in cash; 8% to 15% in gold; and 5% to 15% in equities or mutual funds.

Barriers to global equity ownership

Capital and currency controls: Capital and currency controls are policy tools used by many emerging market governments to regulate the flow of money into and out of their domestic financial systems. In addition to foreign exchange limits, these controls can also take the form of rigorous transaction monitoring, approval processes and documentation. These barriers to international investment reduce world output by 7%, which equates to $8 trillion. Examples of countries and their individual annual foreign exchange limits:

• Brazil: No predefined limit, but regulatory approval needed for large transfers
• Russia: $10,000 to $50,000
• India: $250,000
• China: $50,000

The friction of legacy infrastructure — high costs and “walled gardens”: For investors in emerging markets, the traditional path to global assets is structurally inefficient. Participants are forced through a maze of brokers, banks and correspondent networks that carve the system into “walled gardens” — closed, highly controlled ecosystems. This results in brokerage bottlenecks with a limited menu of available foreign securities to invest in. At the same time, reliance on legacy SWIFT rails — payment systems operated by the Society for Worldwide Interbank Financial Telecommunication — imposes a correspondent banking tax, as each bank in the chain adds fees and delays, leaving trades and transfers stuck in multiday settlement cycles.

In financial and economic terms, a walled garden refers to a closed, highly controlled ecosystem in which a company limits access to data, customers, or transactions to maintain pricing power, reduce competition, and capture more value internally.

Restrictive regulatory frameworks for retail entry: Many emerging markets restrict equity and international securities to “accredited” or “qualified” investors defined by wealth or professional status, rather than allowing any adult with a savings account to participate. This structure deliberately keeps retail investors out of certain markets or requires them to meet high thresholds.

How DTCC’s tokenized equities can channel emerging market capital into U.S. markets

Beginning in 2026, the Depository Trust Co. (DTC) will be permitted to create blockchain-based “digital twins” of securities it already holds, including U.S. equities, exchange-traded funds (ETFs) and Treasury securities, on approved distributed ledger networks. This authorization represents a milestone in embedding compliant tokenization directly within the core plumbing of U.S. capital markets.

Equity tokenization value proposition for emerging markets investors

Fractional ownership: Tokenization democratizes access to financial markets by enabling fractionalization. This lowers the barrier to entry for retail investors by allowing them to purchase smaller portions of shares.

24/7 tokenized markets: In a fully tokenized ecosystem, trading windows no longer revolve around New York or London. Instead, markets become continuously open, so investors in emerging markets can buy or sell U.S. and global securities whenever local demand, news or liquidity conditions make sense for them.

Instant settlement: Using smart contracts that automate clearing and settlement, on-chain tokenized trading can settle in seconds instead of “T+1” — the mandated delay in settling of security transactions the day after their trade — freeing up capital more quickly.

Lower costs: Tokenized stocks let investors trade and transfer ownership directly on a blockchain ledger, so some brokerage, custody and settlement functions are handled by the network and smart contracts instead of separate entities, reducing the number of parties that take a fee.

Integrated collateral and liquidity: Because the Depository Trust and Clearing Corp. (DTCC) model connects traditional and blockchain liquidity pools, emerging markets investors can use tokenized U.S. equities both as investments and as collateral in cross-border repo (repurchases), derivatives and lending workflows, improving capital efficiency.

‘The New Distribution Layer’: Which platforms win in a tokenized securities world?

Platforms are competing to provide access to tokenized equities. Providers such as Robinhood, Kraken’s xStocks, Ondo Global Markets and Coinbase are developing tokens that mirror the prices of U.S. stocks and ETFs, while legal ownership of the underlying securities remains with a broker or special-purpose vehicle. In these synthetic models, investors gain economic exposure but typically do not receive formal shareholder rights like voting.

By contrast, platforms such as Securitize and Superstate issue SEC-registered, on-chain shares where token holders are recorded as shareholders and retain voting, dividend and corporate action rights. Superstate’s Opening Bell platform, for example, lets public companies issue or convert exchange-listed common stock directly onto networks such as Solana and Ethereum and has already surpassed $1 billion in assets under management. Together, these efforts signal the rise of a digitally native distribution layer for equity ownership that complements, rather than replaces, existing market infrastructure.

These efforts are laying the foundations of Internet Capital Markets, a blockchain-native distribution layer where global equity ownership flows through crypto wallets and code rather than traditional banks and exchanges, while remaining anchored in today’s capital markets infrastructure.

About the author

Pranav Sehgal is a finance and technology professional with experience across crypto, investment management, software and cloud technology. He began his career at Oracle, then moved into equity research at a global value fund, covering automotive and aerospace companies for institutional investors. Sehgal has since focused on tokenized real-world assets and crypto payments, blending financial analysis with go-to-market leadership. He holds a bachelor’s degree in industrial and labor relations from Cornell University, is an EMC² Fellow and is pursuing an MBA in the Executive MBA Metro NY program in the Samuel Curtis Johnson Graduate School of Management at Cornell University.

All views expressed in articles published on the Cañizares Center for Emerging Markets webpage are those of the author(s) and should not be taken as reflecting the views of the Cañizares Center for Emerging Markets.