A new report from Tiger Research argues that tokenized stocks threaten to splinter the liquidity and revenue streams that traditional finance relies on. The firm’s director, Ryan Yoon, described the breakup of previously consolidated, centralized liquidity as a 'serious structural threat' to TradFi markets.
How Tokenization Splits the Market
Tokenized stocks — digital representations of traditional equities on a blockchain — let investors trade around the clock and across borders without a central exchange. But that very feature creates a problem, according to Tiger Research. Instead of one deep order book, liquidity gets scattered across dozens of separate tokenized platforms. Each platform operates its own pool of buyers and sellers, and those pools rarely connect.
Revenue follows the same path. Fees that once went to a single exchange or clearinghouse now get divided among multiple token issuers, settlement networks, and liquidity providers. The research sees that fragmentation as a direct hit to the business models of incumbent market infrastructure.
Why Traditional Finance Is Worried
Yoon’s use of the phrase 'serious structural threat' signals that the issue goes beyond temporary market disruption. For decades, centralized exchanges, clearinghouses, and custodian banks have profited from being the single point of liquidity for a given stock. Tokenized stocks challenge that monopoly by design.
TradFi players are not opposed to blockchain technology itself — many are experimenting with tokenized bonds and funds. But the fragmentation of liquidity is a different matter. It makes price discovery harder and increases the cost of executing large trades, because a trader may need to check multiple venues to find the best price. That complexity hurts both institutional and retail participants.
What’s at Stake for Market Structure
The Tiger Research report did not propose a fix, but it outlined the scope of the challenge. If tokenized stocks continue to proliferate without a standard way to link liquidity pools, the market could end up with dozens of isolated trading venues. That scenario would undo decades of consolidation that brought tighter spreads and lower fees.
Regulators have taken notice, but no major jurisdiction has yet issued rules specifically addressing cross-platform liquidity for tokenized equities. The U.S. Securities and Exchange Commission, for example, has focused on custody and disclosure requirements for digital assets, not on how multiple tokenized versions of the same stock interact.
Market participants are left with an open question: will the industry build interoperability standards on its own, or will regulators eventually step in to mandate them? Tiger Research’s warning suggests that doing nothing carries its own risk — a slow bleed of liquidity and revenue that could reshape the financial landscape in ways TradFi may not like.
