Bullish on tokenized emerging markets

For emerging markets, 2025 was an inflection point, as the MSCI Emerging Markets Index gained 33.6%, outperforming the S&P 500’s 17.9% gain.

Using data from the MSCI Index, which tracks equity market performance across emerging markets, the outperformance is striking: Colombia gained 112%, South Korea 100%, Poland 75%, Nigeria 57%, Egypt 59%, Mexico 56% and Brazil 49%.

Based on research from Lourdes Casanova and Anne Miroux in Cornell’s 2025 Emerging Markets Institute annual report, foreign direct investment in the E20+1 — the top 20 emerging economies plus China — has more than quadrupled since 2000.

This capital flows almost entirely through institutional channels, sovereign funds and greenfield projects. Retail investors are largely locked out.

There are over 20,000 publicly listed companies across emerging markets. U.S. investors can access less than 2% of them through domestic exchanges. U.S. households hold over $61 trillion in equities, almost all concentrated in U.S. markets.

Emerging markets produced the highest equity returns in 2025, yet the vast majority of the world’s investors had no way to buy them directly.

The access gap for retail investors

Capital is not meant to be behind gated walls. Some of the best-performing stocks in the world are not listed on any major U.S. exchange. SK Hynix, a South Korean semiconductor company, gained 229% in 2025. Samsung Electronics, one of the world’s largest chipmakers, gained 115%. Reliance Industries, India’s most valuable company at over $200 billion in market capitalization, faces the same problem. India’s stock market is the fifth-largest in the world, with a total market capitalization of over $5 trillion, yet almost none of its nearly 6,000 publicly listed companies are accessible to U.S. retail investors.

These stocks are technically available to trade over the counter (OTC), but OTC markets are designed for institutional investors and are unavailable on retail platforms like Robinhood. Most retail investors don’t even know they exist. The only practical alternative is a country-specific exchange-traded fund (ETF) that bundles these stocks with dozens of others, diluting the very bet an investor wants to make.

The access gap isn’t just a U.S. problem. Emerging markets represent 27% of global equity market capitalization, roughly $40 trillion (Goldman Sachs), yet for retail investors, the cross-border infrastructure between emerging markets simply doesn’t exist. A retail investor in India has no practical way to buy a Colombian stock. A Brazilian has no practical way to buy a Korean stock. A Nigerian has no practical way to invest in the Indian market. When capital can’t move freely, everyone loses: Companies miss out on investment; investors miss out on returns; and economies miss out on growth.

Tokenized equities gaining steam

Tokenized equities have generated over $20 billion in cumulative trading volume, and investors hold over $1 billion in tokenized stocks globally. All of the most popular tokenized stocks by total value are U.S. equities: Alphabet ($72 million), Tesla ($65 million) and Nvidia ($49 million).

The vast majority of tokenized stocks are not available to U.S. investors. Ondo Global Markets and Kraken’s xStocks, which together represent roughly 80% of the market, operate under Regulation S, a U.S. securities exemption that excludes American investors entirely. Their users span Latin America, Africa, Europe and Asia.

The irony is that while the demand for tokenized equities is being driven by emerging market investors, the flow is entirely one-directional. Every tokenized stock on the market today is a U.S. equity. Nobody is tokenizing emerging market stocks.

A new capital channel for emerging market companies

For emerging market companies, tokenized equities offer something that has historically been out of reach: access to a global investor base without the cost and complexity of a foreign exchange listing. Tokenization doesn’t require companies to abandon traditional capital markets. It extends them. An emerging market company going public on its domestic exchange could simultaneously offer a tokenized tranche settled in stablecoins, opening a second distribution channel to global investors without altering the underlying offering structure.

Benefits of tokenized equities to emerging market companies

• Global distribution: Tokenization gives emerging market companies access to a global buyer set, letting capital flow directly from individual investors to issuers and skipping the institutional gatekeepers that control cross-border investment today. More buyers from more geographies means more demand and a stronger opening price.
• Lower issuance costs: A traditional cross-listing or a program using American Depositary Receipts (ADRs) comes with significant legal, underwriting and exchange fees. Tokenization offers global distribution at a fraction of the cost, making it viable for smaller emerging market companies that could never justify a foreign exchange listing.
• Frictionless investor access: Tokenized equities require no foreign brokerage account and no minimum investment threshold. An investor needs only a smartphone and a wallet.
• Additive infrastructure: The tokenized tranche sits alongside the traditional listing; it has the same “roadshow”-style educational methods, the same book-building, the same allocation process. It’s a second distribution channel, not a replacement.
• Real-time shareholder visibility: Tokenized equities provide instant, transparent insight into who holds shares post-listing — a nearly impossible feat with traditional cross-border brokerages.

Regulatory considerations

Local securities laws and custody requirements vary significantly across emerging markets and shape how quickly tokenized equities can scale — but the legal infrastructure is actively being built on both sides.

In the U.S., the GENIUS Act of 2025 established a regulatory framework for stablecoins, the settlement currency for tokenized equities. The CLARITY Act passed the House in 2025 and is under consideration in the Senate to define how digital assets are regulated.

In January, the Securities and Exchange Commission (SEC) issued its first comprehensive guidance on tokenized securities, confirming that tokenized stocks are regulated the same as traditional stocks regardless of whether they live on a blockchain or in a traditional brokerage account.

And on March 18, the SEC approved Nasdaq’s proposal to trade tokenized securities alongside traditional shares, with settlement through the Depository Trust Company, the clearest signal yet that tokenized equities are entering mainstream market infrastructure.

The Regulation S framework that Ondo and Kraken xStocks used to tokenize U.S. stocks for global investors could serve as a template for tokenizing emerging market equities.

South Korea passed legislation in January recognizing blockchain-based securities under its existing Capital Markets Act and Electronic Securities Act, joining Hong Kong, Singapore and Japan in establishing regulated tokenized securities frameworks.

Looking ahead

The demand for tokenized equities exists. The legal frameworks are being built. The technology has been proven. But every single tokenized stock on the market today is a U.S.-listed security. Not a single emerging market equity has been tokenized for the rest of the world. Tokenization will change how global capital flows. Emerging markets should be next.

About the author

Pranav Sehgal is a finance and technology professional with experience across cryptocurrency, investment management, software and emerging technologies. He has worked for Fortune 500 companies, venture capital-backed startups and buy-side public equity funds. He began his career at Oracle, then moved into equity research at a global value fund, covering automotive and aerospace companies for institutional investors. He has since focused on tokenized real-world assets and cryptocurrency payments, blending financial analysis with go-to-market leadership. He holds a bachelor’s in industrial and labor relations from Cornell University, is an EMC² Fellow and is enrolled in Cornell’s EMBA Metro NYC program in the Samuel Curtis Johnson Graduate School of Management.

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.