Why Tokenized Securities Are the Next Frontier in Crypto Finance

Original Author | MapleLeafCap (@MapleLeafCap)

Compiler | WuBlockchain Aki Chen

Original Source Link:

https://x.com/MapleLeafCap/status/1940596768334664060?t=pvQ3nPd7LKH5VY7B8MSo7A&s=19

Disclaimer: This article is a reposted piece. Readers may refer to the original source for more information. If the original author has any objections to the form of reposting, please contact us and we will make modifications as requested. The repost is intended solely for information sharing and does not constitute any investment advice, nor does it represent the views or positions of Wu Blockchain.

The value of blockchain-based tokens can generally be divided into two broad categories. The first is their monetary or collectible attribute, which drives use cases such as exchange, speculation, and sentiment-based demand. This portion of value is primarily influenced by on-chain circulation and market psychology, with relatively weak linkage to real-world cash flows.

The second category reflects expectations of future cash flow capture, resembling corporate or equity-like value. In this case, tokens function more like securities, particularly when representing ownership or dividend rights — such as in the case of tokenized stocks. These tokens embody financial rights traditionally associated with equities.

In other words, some tokens are not merely speculative instruments, but also represent a proxy for a company’s performance and dividend expectations.

Regulatory and Market Evolution

For a long time, the primary ways to participate in the Web3 boom were limited to purchasing tokens or investing in early-stage venture projects, with few alternatives available. In traditional capital markets, there have been very few tradable securities linked to the growth of the crypto industry — for many years, Coinbase remained one of the only publicly listed companies focused solely on crypto.

Moreover, the U.S. Securities and Exchange Commission (SEC) maintains a strict definition of what constitutes a security, particularly in the context of tokens. This has made it extremely difficult for most projects to issue equity-like tokens in a compliant manner, forcing them to operate in a regulatory gray area.

This blurred ownership structure and limited investor protection became defining characteristics of the early token boom.

Lacking better options, many investors were left to convince themselves that “future value capture rights still hold value” — even if such rights were legally undefined or economically ambiguous.

In recent years, the regulatory landscape has begun to shift. The U.S. SEC’s crypto task force has acknowledged that the previous environment was unfriendly to innovation, and has expressed a commitment to establishing more balanced and constructive rules. At the same time, the new U.S. administration has withdrawn lawsuits previously filed against major crypto companies such as Coinbase, Binance, and Kraken, and has established a dedicated task force to explore digital asset regulation.

This combination of policy easing and regulatory clarity is creating a more favorable environment for legitimate and compliant asset tokenization.

Valuation Drivers from a Wall Street Perspective

In mature financial markets, a company’s market valuation is shaped not only by its operational performance, but also by the following key factors:

1. Capital Allocation Efficiency

This refers to how effectively a company deploys its capital to maximize per-share value. Strategic decisions — such as reinvesting in core business, pursuing mergers and acquisitions, deleveraging, executing share buybacks, or issuing dividends — can directly impact long-term returns.

2. Corporate Governance

This includes whether management prioritizes shareholder interests and whether decisions are made transparently and efficiently. Strong governance ensures that profits ultimately benefit shareholders; poor governance can lead to value leakage through mismanagement or self-serving behavior.

3. Market Expectations

Valuation also depends on how the market perceives the company’s business model, capital allocation strategy, and governance standards. These expectations are ultimately priced into the stock.

In simple terms, even a company with strong earnings and rapid growth can suffer from a persistently low valuation if it misallocates capital or lacks proper governance. It’s like a leaky bucket — no matter how much water (i.e., profit) you pour in, it can’t be retained. Capital is either funneled into low-return projects or eroded by a misaligned or greedy management team.

The Dilemma Facing Token Projects

Many Web3 projects that raise capital through token issuance face a classic dilemma — striking a balance between capital allocation and governance credibility:

1. Prioritizing reinvestment and growth

If a project allocates most of its funding to business expansion and product development — without conducting token buybacks or offering any form of tokenholder yield — its token lacks a clear value capture mechanism.

This raises investor concerns about project governance, especially in a market where “exit scams” and rug pulls are not uncommon. Without tangible returns or rights, tokenholders may view the project as untrustworthy, putting downward pressure on token valuation over the long term.

2. Prioritizing buybacks or distributions

If the team instead chooses to use capital for token buybacks or direct distributions to holders, the project may gain short-term support from investors, but it sacrifices growth capital.

For a company in its high-growth phase, this is arguably the least efficient use of capital — funds that could have fueled exponential expansion are instead used to support short-term token price performance, undermining long-term business value.

3. Communication constraints

Unlike public companies, which can openly state their intent to maximize shareholder returns as a legitimate and regulated objective, token projects cannot easily do the same. Openly promoting tokenholder-oriented financial incentives may trigger regulatory scrutiny, as it can be interpreted as an implicit promise of securities-like returns.

This creates a fundamental gap in trust and valuation between tokenized projects and traditional listed companies.

As a result, many token issuers find themselves trapped:

If they focus solely on growth, they risk alienating tokenholders; if they focus on token incentives, they undercut operational expansion. Once the market forms a consensus that “token projects offer lower quality and weaker investor protections than public equities,” capital may increasingly migrate toward regulated stock markets — even when both types of projects operate in the same domain.

The Potential Advantages of Security Tokens

Compared to purely speculative crypto tokens, security tokens — which legally and compliantly embed equity rights into tokens — offer inherent advantages in capital allocation. They allow projects to raise capital within regulatory frameworks while leveraging established securities market structures to protect investor rights. Under this model, founding teams can openly commit to delivering shareholder returns, making them more likely to gain recognition from traditional financial institutions.

More importantly, asset tokenization itself is widely seen as a driver of efficiency gains. According to industry reports, tokenized stocks can lower transaction costs, accelerate settlement, and enable 24/7 trading. This gives investors the ability to trade anytime and receive dividends directly on-chain, enhancing both liquidity and convenience.

With an increasing number of trading platforms and financial institutions — such as Robinhood, Bybit, and Kraken — now offering tokenized stock services, investor adoption is steadily rising. From an investor perspective, even if a company does not buy back tokens in its early stages, the market may still assign it a higher valuation — because legally compliant tokenized equity aligns closely with traditional shareholder rights, thereby inspiring greater investor confidence.

As compliance costs decrease and access to institutional capital expands, security tokens are likely to become a more attractive option — particularly for founders who are focused on long-term value creation.

Future Trends and Outlook

Multiple market studies indicate that the on-chain tokenization of real-world assets (RWAs) — including equities, bonds, real estate, and more — is experiencing rapid growth. According to a CoinDesk report, the market for tokenized real-world assets has grown by 380% over the past three years, reaching approximately $24 billion. Industry forecasts predict that by 2030 and beyond, the sector could scale into the multi-trillion-dollar range.

Against this backdrop, the following trends are emerging:

1. Corporate Behavior

Companies with strong performance and stable cash flows are more likely to issue tokenized securities. These firms typically focus on long-term growth and can leverage broader capital markets for funding, while enabling token investors to share in their upside. Major brokerages and exchanges are actively entering this space — for example, Robinhood is reportedly building its own blockchain and has launched trading for hundreds of tokenized stocks and ETFs.

The promise of lower costs and more efficient infrastructure is drawing more enterprises toward asset tokenization.

2. Investor Preferences

Investors are expected to increasingly favor compliant and well-governed tokenized equities. As regulatory clarity improves, confidence in security tokens is rising, prompting capital to flow from speculative crypto tokens into regulated, asset-backed products. Conversely, projects that rely solely on token issuance — particularly those with weak governance structures — are likely to lose favor, facing declining valuations and limited fundraising capacity.

3. Market Structure

The broader crypto ecosystem is likely to undergo bifurcation: On one side will be high-quality projects that embrace security tokenization and operate with transparent business models; these will attract institutional and retail capital, and maintain strong valuations. On the other side will be token-centric projects that lack regulatory compliance or intrinsic value; they may survive only in niche, high-risk speculative markets — akin to penny stocks or over-the-counter equities of the past.Platforms such as Coinbase, Binance, and Kraken have either begun offering tokenized stock trading or are actively seeking regulatory approval to do so. This trend is expected to accelerate in the coming years.

As a result, capital is likely to concentrate further around a small number of leading projects and blue-chip tokens, while smaller, unregulated, or niche crypto assets may gradually become marginalized within the broader market.

Conclusion

As the technology and regulatory frameworks around tokenized securities continue to mature, tokenized stocks are emerging as a compelling alternative for both companies and investors.

For serious entrepreneurs, security tokens offer a dual benefit: the ability to capture asset value on-chain, while also enjoying the protections and credibility of traditional financial structures.

In the coming years, we expect that high-quality projects and institutional capital will increasingly structure their crypto asset exposure around this model. By contrast, the traditional “pure token market” may begin to shrink and consolidate, limited to a handful of highly innovative, crypto-native ventures.

References

This analysis draws upon multiple industry sources, including:

News reports on Coinbase and Robinhood’s efforts in tokenized equity products

Market research from CoinDesk on the growth of the real-world asset (RWA) tokenization sector

Broader coverage on asset tokenization trends from institutional and media perspectives.

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