Tokenized stocks have a demand problem, and it is not regulatory. Days after the SEC opened its five-year Innovation Exemption, TD Cowen has published the least flattering reading of the new market: American investors already have efficient access to listed shares, and the venues selling blockchain versions of them have not yet offered a benefit that outweighs thin liquidity and added operational work. Reid Noch, TD Cowen's vice president of U.S. equity market structure, wrote in a Friday paper that both retail and institutional demand will likely remain limited in the market's early stage. For an industry that spent last week celebrating the SEC's order as a breakthrough, the note is the cold shower worth reading in full.
Why tokenized stocks face a cold U.S. reception
The core argument is comparative advantage. U.S. exchanges already offer deep liquidity, low-cost brokerage and fast electronic execution between 9:30 a.m. and 4 p.m. Eastern, and several brokers provide premarket and after-hours access, which shrinks the value of a blockchain venue's signature feature, round-the-clock trading. Noch's warning about 24/7 access is the sharpest part of the analysis: continuous availability does not guarantee favorable execution, because an AMM with limited assets may produce worse prices precisely when fewer traders are active outside the main session. The technical openness of a venue matters less than the economics of trading on it, a point Bitnxt made when examining the pricing gaps that appear when underlying markets close. TD Cowen's Figure data point makes the case empirically: the company trades Nasdaq-listed FIGR alongside blockchain-native FGRS shares carrying identical economic exposure and voting rights, and during the 24-hour period studied, conventional FIGR shares accounted for 99.9% of notional trading. Equal rights were not enough to move even the most crypto-friendly issuer's volume off the Nasdaq.
Issuer appetite is just as thin. Under the SEC framework, a venue must notify a company before listing a third party's tokenized shares, and the issuer has 30 days to object, a governance gate Bitnxt flagged when the order landed. Noch wrote that TD Cowen's conversations with dozens of issuers revealed minimal interest outside crypto-adjacent businesses, including several companies with large retail bases that might have been natural fits. The venues' operational constraints compound the problem: Tier 1 limits of 75 symbols and 0.25% of each stock's prior-month average daily volume, mandatory trading halts whenever the primary exchange halts, and the transfer-agent rulemaking the SEC proposed in early September all keep the experiment deliberately small.
Perpetuals are where the demand actually is
The most actionable finding concerns what crypto traders actually want from equity exposure. A snapshot of Nvidia-related trading on Binance showed perpetual futures generating 96% of notional volume against 4% for spot tokenized products, and Noch wrote plainly: "As we continue to outline, we see perpetual futures as the stronger demand story." Perpetuals track a stock's price without transferring ownership, have no expiration, use funding payments to stay aligned with the underlying, and offer leverage, which is what retail demand keeps demonstrating. Coinbase's Sept. 18 filings for 50-plus stock perpetuals tied to Nvidia, Microsoft and Tesla fit the thesis, as does Ondo's request that the SEC and CFTC apply existing security-futures rules to the category, backed by $8 billion in cumulative volume from its offshore affiliate in about six weeks. The demand signal is loud, and it points at leveraged price exposure, not shareholder rights.
None of this means tokenized stocks are dead on arrival. The honest read is that the SEC built a rights-preserving framework for a product whose natural buyers, institutions needing after-hours settlement and issuers wanting onchain rails, have not shown up yet, while the demand that has shown up is for the synthetic, leveraged products the framework deliberately excludes. The same dynamic was visible in Coinbase's parallel push for U.S. perpetuals, and in Goldman's and Citizens' winner-picking, which had to concede that Robinhood's rights-free tokens fail the SEC's test.
What would change the call
Three developments would force TD Cowen to revise. First, a major issuer choosing tokenized shares over indifference, since the Figure experiment shows equal rights alone do nothing without an issuer actively pulling volume onchain. Second, AMM liquidity deepening enough that after-hours execution stops being a penalty, because the 24/7 feature only converts when the pricing is real. Third, a rights-bearing tokenized product finding a use case the conventional share cannot serve, such as collateral in DeFi markets, which is where the Morpho stock-token lending markets are already experimenting. Until one of those arrives, the base case stands: the SEC opened the door, and the U.S. market, issuer by issuer and dollar by dollar, is currently declining to walk through it. The bull case for tokenized equities was never about permission. It was about demand, and demand is still on the other side of the room, trading perpetuals.
