On Monday, the New York Stock Exchange (NYSE) announced the development of its tokenized securities platform for trading US stocks using blockchain technology. The new platform is said to allow trading on a 24/7 basis and immediate settlement of assets, among other features, and will serve as a completely separate addition to the traditional NYSE.
The exchange is also currently seeking regulatory approval for a new token trading initiative. Notably, the legal clarification on the trading of shares marked is the main part of the CLARITY Act, which is currently being discussed in Congress and has recently encountered a backlash in the form of the removal of support for the crypto exchange giant Coinbase.
Despite Wall Street’s growing interest in the concept of tokenization it is often considered a win for crypto platforms, CoinDesk has reported that the blockchains used by the NYSE are private and not public platforms like Ethereum or Solana. Unlike the decentralized crypto networks that are often reported in the press, a private blockchain is a permissioned network where access and participation is limited to authorized organizations, often controlled by a single organization or consortium of banks.
The desire to avoid the use of social networks has seen an increase in interest from some central financial institutions in the last year or two. For example, stablecoin issuers Circle and Tether now promote their blockchain offerings with stablecoin-centric features and avoid the costs associated with allocations that may not be needed in decentralized, dollar-denominated assets such as USDC and USDT.
That said, many private blockchain networks are compatible with the Ethereum Virtual Machine (EVM), which is a point often used by Ethereum supporters to show that their technology is still influential, despite these private systems having no connection to the public network of Ethereum or its associated crypto asset ETH.
Of course, there are also a number of financial companies issuing shares in crypto community networks, with the current total value of such tokens estimated at around $850 million by RWA.xyz. Last year, Robinhood also described stock tokenization as a core value proposition for their Ethereum layer-two network. This is also a major focus area for many crypto-focused fintechs such as Coinbase and Kraken. At this point, it is not clear where the shares of tokens will end up selling, but what is clear is that these types of central institutions built on top of the crypto foundation layers will want to increase income and control, as already seen with stablecoin issuers.
The increasing centralization between real-world asset tokens (ie stablecoins) has been a key area of concern and controversy over the past year, as tech giants and banks have come into the space to issue stablecoins rather than simply being another place on a network like Bitcoin. Indeed, the NYSE announcement from Monday morning also points to the use of stablecoins as a means of financing.
As crypto has continued to rely on stablecoins and other centralized power structures in search of mass adoption, the sector is moving away from the original design of Bitcoin creator Satoshi Nakamoto, which ironically focused on separating those same types of financial and technological institutions.
The Bitcoin network’s focus on its native assets (rather than centralized tokens) has somewhat restrained itself from this trend toward centralization. However, growing institutional support as a long-term storage asset, whether through the Harvard University endowment or the US government, has led to growing concerns about the central storage of bitcoin a. And of course, it can be used as a safe haven in times of economic crisis as well, as recently seen in Iran.
