Crypto exchange Gemini has entered the tokenized assets market by launching a feature that will allow its European customers to invest in US equities tokenized on the blockchain directly from its app. The initiative began with shares of Michael Saylor’s Bitcoin treasury company, Strategy (MSTR), issued on Arbitrum (ARB), with plans to roll out additional stocks and ETFs in the coming days and expand settlement network options.
Tokenizing stocks involves companies issuing digital tokens on the blockchain that track the price of certain publicly listed companies. The move comes amid growing interest in tokenized US equities from European investors. Unlike the United States, where regulators haven’t approved tokenized securities, the EU is rapidly adopting innovative financial products.
Gemini Customers in Europe Can Now Trade Tokenized MSTR Shares on Arbitrum
In a statement released on Friday, Gemini said that its customers “anywhere in the world with a smartphone and internet connection” can now get access to US stocks on-chain. The company also highlighted the drawbacks of traditional stock markets, such as limited trading hours tied to market time zones, higher fees for international investors, and limited access for investors from certain regions.
Gemini hopes to address these issues with tokenized stocks, which take advantage of the 24/7/365 form factor of crypto markets to give investors greater access with fewer restrictions, offering them a “frictionless” trading experience. Investors could hold crypto and stocks on a single platform, instead of using separate spaces to handle the digital assets.
To do this, Gemini has partnered with Dinari, a transfer agent registered with the US Securities and Exchange Commission (SEC) that provides tokenized US public securities. The crypto exchange will leverage Dinari’s “tokenization-on-demand” model to offer customers greater liquidity and transparency, and the same economic rights as the underlying securities backing the tokens.
The tokens representing MSTR shares will initially be issued on Arbitrum, with plans to expand the offering to additional blockchains shortly. Currently, tokenized stock trading on Gemini is only available to customers based in Austria, Belgium, Croatia, Cyprus, Czech Republic, Denmark, Finland, France, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden.
Gemini is providing fractional stock ownership options, allowing investors to buy fractions of the equities without needing to purchase a full share. They believe this will democratize access to the US capital markets for investors across the world, enabling them to participate in a company’s growth without needing large upfront capital. Furthermore, investors can settle tokenized stock transactions directly on-chain, doing away with the risks of currency fluctuations or high transaction costs.
Coinbase, Kraken, and Robinhood are Exploring the Lucrative Tokenized Securities Market
Gemini isn’t the only crypto firm exploring the creation of crypto tokens that track the price of publicly traded stocks. Coinbase, Kraken, and Robinhood have expressed interest in offering tokenized US stocks to customers.
Earlier this month, Reuters reported that Coinbase is seeking regulatory clarity from the SEC to launch tokenized equities in the US. Paul Grewal, the company’s chief legal officer, described the initiative as a “huge priority” and is seeking a no-action letter from the agency to exempt Coinbase from any regulatory enforcement action if it proceeds with offering digitized representations of real-world securities.
In May, Kraken announced xStocks, a new Solana-based trading platform coming to the crypto exchange that will allow customers across Europe, Asia, Latin America, and Asia to trade tokenized versions of more than 50 US stocks and ETFs. The company’s co-CEO, Arjun Sethi, told reporters that the tokenized equities market has the potential to dwarf the $240 billion stablecoin sector.
That same month, reports emerged that brokerage fintech Robinhood is developing an Arbitrum and Solana-based blockchain platform that will enable retail investors in Europe to trade US securities. The company recently acquired a brokerage license in Lithuania that will allow it to offer investment services throughout the bloc.
While speaking at the TokenizeThis conference in April, Arnab Naskar, CEO of STOKR, a Bitcoin-based asset tokenization platform, predicted that tokenized stocks are on track to exceed a trillion-dollar market capitalization in the coming years. According to data from RWA.xyz, tokenized stocks have a cumulative market cap of around $350 million.
