Tokenization Is Growing, But Still Not Grown Up
Janus Henderson has launched JQQQ, a tokenized Nasdaq-100 fund structured as a segregated portfolio in the British Virgin Islands, marking a notable step toward issuer-sponsored tokenized products. While major institutions like BlackRock, JPMorgan, and Franklin Templeton have already established tokenized money market funds, the broader market for tokenized stocks and ETFs remains in its early stages. Data from Dune Analytics indicates that monthly trading volumes for tokenized stocks and ETFs have surged nearly 18 times since January, though total assets under management outside of money market funds remain in the low billions. Industry experts note that current offerings often rely on third-party or derivative models rather than true issuer-sponsored securities. The SEC has begun providing temporary innovation exemptions to support blockchain-based trading platforms, signaling a cautious regulatory shift. Despite this, adoption faces hurdles as financial advisors remain skeptical of the immediate value proposition of instantaneous trading. The market currently sees significant activity on platforms like Hyperliquid, which recorded $201 billion in equity-linked perpetual trading in the third quarter. Ultimately, the industry is moving toward a future where tokenized shares are recognized as the primary security under the Investment Company Act of 1940.