Conversation with BlackRock's Digital Asset Head: How does tokenized stock work?

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Author: Payment 201

Speaker: Pet Berisha (Tokenized co-founder)

Guests: Rob Hadick (Dragonfly GP), Robert Mitchnick (Head of Digital Assets, BlackRock), Noah Levine (Partner, Andreessen Horowitz)

Timeline:

00:00 Introduction

02:17 At its core, tokenization is an “access” story—making it possible for more investors to reach asset classes that were previously hard to access.

05:51 Tokenized equities can roughly be divided into three structural types.

08:41 For tokenized assets under a whitelist mechanism, transferability is subject to certain limits.

11:21 The New York Stock Exchange and Securitize partner to explore a 7×24 hour trading model.

15:00 Stablecoins are evolving into the next generation of financial infrastructure.

18:58 U.S. regional banks are building a tokenized deposit network.

24:21 Stablecoins and tokenized deposit services serve different types of user groups.

25:42 Demand for privacy in on-chain capital markets is growing significantly.

31:06 Future market structure will reduce intermediary layers and become flatter.

Takeaways:

Stablecoins are evolving from a “payment tool” into “account-layer infrastructure.” Users are no longer just using it to send transfers—they hold balances directly, which naturally extends to investing, yield management, and asset allocation. For financial products, stablecoin wallets will gradually replace traditional accounts as the entry point.

The biggest value of tokenization is not efficiency gains, but expanding access to investment. It allows users who previously participated only in crypto markets to access a broader range of traditional assets, while also bringing more global investors into a unified market—fundamentally expanding the demand side rather than optimizing the supply side.

Most “tokenized stocks” in today’s market are still transitional forms. In essence, they are wrapped derivatives rather than true assets issued on-chain. Issues such as inconsistent trading times, inability to redeem in real time, and unclear asset ownership indicate that real on-chain capital market infrastructure has not yet matured.

The truly valuable model in the future is “native on-chain issuance,” not mapping off-chain assets onto the chain. Only when assets are generated, traded, and settled directly on-chain will new capabilities such as collateralization, portfolios, and governance be unlocked—this is the starting point for structural change.

Whitelists and compliance restrictions are the core bottlenecks for liquidity of tokenized assets today. As long as assets must be transferred between restricted addresses, true liquidity and DeFi composability can’t be achieved. The industry is looking for solutions that satisfy regulation without sacrificing liquidity.

7×24 hour trading is not the most core need; the real demand comes from “asset utilization efficiency.” After users hold stablecoins, it’s not only that they want to trade anytime—they want these funds to seamlessly participate in scenarios like investing, lending, and earning yield. That is the key driver of tokenization growth.

Stablecoins and tokenized deposits won’t replace each other; they serve different use cases. Stablecoins are more geared toward cross-border, crypto markets, and USD-ization needs; tokenized deposits are more geared toward internal fund flows and efficiency optimization within the banking system. In the future, a structure will emerge where multiple forms of capital coexist.

The core obstacle to bank-driven tokenization isn’t technology, but regulatory uncertainty. Including AML, compliance frameworks, capital requirements, and more, are still not fully defined. This forces banks to proceed cautiously, even if they already recognize that this is a change they must participate in.

Privacy is becoming a key infrastructure requirement for on-chain capital markets. In payment scenarios, it can be addressed through mechanisms like net settlement—but in collateralization, settlement, trading, and other scenarios, it can’t be substituted. That’s why technologies like ZK will be prioritized for capital markets rather than payments.

In the long run, the structure of financial markets will become significantly flatter. Today’s trading involves a lot of intermediaries (brokers, exchanges, clearing entities, custodians, etc.), while tokenization can compress these layers. The result is lower costs for investors, a wider reach for asset managers, and an opportunity for crypto infrastructure to enter the mainstream financial system.

Pet Berisha:

Welcome to Tokenized, a show focused on stablecoins and the institutional adoption of tokenized real-world assets. This time, we’re recording live at the New York Digital Assets Summit. That last segment was pretty good. Hi everyone, I’m Pet Berisha, filling in for Simon this week—although at least the accent is pretty similar. Next to me is a guest who’s always been fantastic and might have already tied the show’s guest appearance record—Rob Hadick from Dragonfly’s GP. How are you?

Rob Hadick:

I’m doing great, and it’s pretty obvious that I’m not as practiced as you are, because last time I didn’t get through the entire opening monologue.

Pet Berisha:

Well, that’s just practice.

Rob Hadick:

Exactly—more practice. Okay, I’ve got to do it a few more times.

Pet Berisha:

And another guest making their debut—Robert Mitchnick, BlackRock’s head of digital assets. Welcome to the show.

Robert Mitchnick:

Thank you for having me.

Pet Berisha:

Wow, and applause—you can see Rob didn’t get that. I don’t know why. And the last guest, equally important, Noah Levine from Andreessen Horowitz—wearing a jacket and working hard to imitate the style of Cuy Sheffield—also part of what’s known as the “Visa crypto mafia.” How are you?

Noah Levine:

Very good, I’m excited to be here.

Pet Berisha:

Second time on the show. Next, I’m going to do a part that everyone will probably skip, but I need to remind everyone: all opinions expressed by today’s guests are their own and don’t necessarily represent the views of their respective companies. Any content we discuss should not be considered tax, financial, investment, or legal advice—please do your own research. Also, a big thank you to our sponsors today: Visa and Mesh, and thanks to Mentox Global for helping us organize this event.

This episode is sponsored by Visa. Visa is a leader in digital payments. Visa’s tokenized asset platform VTAP uses smart contracts and cryptography to help banks move fiat on-chain. Whether issuing stablecoins, deposit tokens, or other forms, VTAP enables financial institutions to issue fiat-backed tokens, improving financial efficiency and enabling programmable finance.

Pet Berisha:

This episode is also sponsored by Stripe. Stablecoins are becoming a building block of borderless financial services—moving like data flows globally. With Stripe, you can use stablecoins and crypto technology to reach new user groups, reduce cross-border fees, and shorten settlement time from days to minutes.

Most importantly, it works just like other Stripe products: through APIs, directly in the Stripe dashboard. That means you don’t need to worry about which blockchain or which wallet you’re using. From Shopify to other global businesses, everyone is using Stripe’s end-to-end crypto solutions to expand markets and reach more users.

Pet Berisha:

This episode is also sponsored by M0. Stablecoins are becoming global financial infrastructure, and this infrastructure needs to mature. If you’re a brand, you should have your own stablecoin, and it should match how funds flow in your products. If you’re an issuer, you want to be the stablecoin partner for the most valuable brands. M0 is currently the only platform where issuers and brands jointly build digital currency products.

Pet Berisha:

Let’s move into the first topic. A piece of news from everywhere: Larry Fink says tokenization can make investing as simple as paying with a phone. In his annual letter, he said: half of the world’s population uses digital wallets on their phones—imagine if that same digital wallet could let you invest in a basket of companies as easily as sending payments.

Tokenization can accelerate this future by upgrading the underlying structure of financial systems—making investing easier to issue, easier to trade, and easier to access. Robert, let me start with you. It’s been interesting to see people’s reactions to what he said. Can you expand on it?

Robert Mitchnick:

Sure. I think this actually aligns with some of the viewpoints he’s had over the past few months, even years, and it’s also similar to his piece in The Economist last November. The core idea is: we’ve been viewing tokenization primarily as an efficiency story, but in many ways, it may be even more of an “access” story.

There’s a category of investors who are crypto-native, or more accustomed to interacting through digital wallets, digital assets, and DeFi ecosystems—but their allocation in traditional investing is severely lacking, even at 0%. So the question is: how do you give them access to a broader range of investment opportunities—not just being limited to today’s roughly $30 trillion crypto asset market, but the entire $400–500 trillion global asset pool. I think this is a huge opportunity for financial inclusion, helping people build more complete, more diversified investment portfolios.

Pet Berisha:

Rob, do you want to expand a bit more from the “access” angle? Why does tokenization not only expand portfolios for crypto-native users, but also improve access for everyday investors and institutions?

Rob Hadick:

Okay. I may have a perspective that’s a bit different from Robbie’s—he may say I’m wrong. From our point of view, what we’re seeing now is stablecoins spreading quickly worldwide, and often it’s because people want to access dollars. For example, in their countries, inflation may be 30% or 40% every year—they just want to escape their local currency and move into the dollar system. But stablecoins have actually become a kind of “digital oil,” used to move capital between different tokenized assets. When all of those assets exist in forms similar to stablecoins, exchanging between assets becomes much easier.

The problem is: if I’m in an emerging market and want exposure to a certain stock, the regulatory permissions, underlying infrastructure, and structures required behind the scenes are all very complex, and the costs are very high. So we see a lot of people using “workarounds,” like so-called tokenized stocks such as Robinhood. In essence, those are derivatives: a U.S. broker buys the stock during normal trading hours, and then issues a corresponding token. In certain time periods, even that token can’t be minted or redeemed.

So many solutions today are just transitional, some form of regulatory arbitrage—not truly assets in the same native form. Once these assets all become a unified form, you can break through the technical boundaries and access boundaries, and what’s left is primarily the regulatory problem. And as a venture capitalist, I usually tell my company this can be addressed later.

Pet Berisha:

Noah, I was going to ask you in the next segment, but since Rob mentioned these derivative structures, can you help everyone map out the different structures of tokenized stocks in today’s market?

Noah Levine:

Sure. I may not explain it as well as Rob and Robbie, but I’ll do my best. Broadly, it can be divided into three categories. The first is SPV (special purpose vehicle) structures. You’ll see people set up an SPV to buy a stock asset, then tokenize that SPV and distribute the tokens to a group of investors.

Its value is that if you only want price-direction exposure, it’s a decent tool. But the problem is, for example, as Rob mentioned earlier: if it’s trading for seven days but the underlying market is only open at certain times, you’ll get a price mismatch. And also, as an investor, you buy the SPV—not the underlying asset itself. That introduces risk.

The second category is “rights-based tokens,” similar to what DTCC or Securitize is doing. The assets themselves are issued off-chain, then tokenized so wallet users can hold and gain exposure. The advantage is that it can enable 7×24 trading and some degree of DeFi composability, improving asset liquidity efficiency. Of course, there’s still room for improvement there.

The third category is fully on-chain-issued stocks—for example, what Superstate and Figure are doing. In this case, you have a brand-new security issued on-chain. If you hold the asset, you really hold the underlying stock. The advantages include cross-collateralization, participating in governance votes, and so on. So it’s not just moving existing assets onto the chain; it’s native issuance directly on-chain in the future, and that’s a very exciting direction.

Noah Levine:

I want to flip the question back to Robbie. You’ve tried many tokenization approaches—tokenized money market funds, and also tried something like the Securitize model (using SPV and KYC, then mapping to the chain but without free transferability). So how do you see the future—for more freely transferable assets, even native on-chain issuance like Superstate? Would that become part of your strategy?

Robert Mitchnick:

Let me clarify one thing first: our product is not SPV, and it’s not a feeder fund. It’s a native new fund, where shares are issued directly in token form. But transfers are still restricted—for example, they must be transferred between whitelisted addresses. That’s constrained by private fund rules and anti-money laundering requirements. This is a major issue: as long as whitelists exist, you get significant friction that affects liquidity and DeFi usability. That’s why the whole industry is thinking about how to solve this problem—while not just doing simple regulatory arbitrage and then, later on, “requesting forgiveness.”

Pet Berisha:

I want to continue probing this question. Noah, what’s your view on how we get to that more open state, closer to permissionless?

Noah Levine:

It’s a great question. I think there are two dimensions. First is regulatory clarity—it’s critical, and we’re only just getting started. For example, in the U.S., over the past month there have been a number of developments in securities regulation. Second is infrastructure. For example, Superstate and Figure still need to provide liquidity and trading through ATS (alternative trading systems). That may be feasible in the short term, but to scale to a more institutionalized size, it still needs further development. So the core is ongoing regulatory clarity plus improvements to the liquidity infrastructure.

Pet Berisha:

Let’s move into the second topic. An exclusive news item from The Wall Street Journal: the New York Stock Exchange is working with Securitize to develop a 7×24 hour tokenized securities platform. Securitize will become the first digital transfer agent that can issue blockchain-native securities for enterprises or ETFs. Rob, break this down for everyone.

Rob Hadick:

I’ll start with what I think, and then I’ll talk about a bigger trend. Now, everyone believes in tokenization, and one important reason is: we want to achieve trading on weekends and at night. In the market, market makers do try to hedge during nighttime, but that hedging isn’t very precise. And especially on weekends, it’s almost impossible to hedge risk well. If you want to manage collateral and leverage on weekends, you need on-chain infrastructure. That’s why everyone is exploring different approaches.

For instance, the NYSE might use an independent order book—like a new exchange. Nasdaq might be more inclined to trade tokenized assets alongside traditional assets in the same market. And some people are trying to bring tokenized assets into dark pools. In short, everyone is exploring different paths. This is good for the whole industry because it will drive more innovation. My personal view is that ultimately, all assets will be tokenized.

Pet Berisha:

Robbie, do you agree?

Robert Mitchnick:

I think this is something with a fairly high probability, but not a certainty. Even if it’s not 100%, if it’s high enough, it’s sufficient for us to invest substantial resources to position for it. Because once it happens, it will have a huge impact on the entire financial system, the value chain, and market structure—including how intermediaries operate will change.

Pet Berisha:

Noah, now a lot of people say 2025 will be the year of stablecoins, and 2026 will be the year of capital markets. What do you think?

Noah Levine:

I pretty much agree. I remember Cuy said last year, “Every bank needs a stablecoin strategy.” Stablecoins have moved from being a question of “should we do it” to being a “must do.” The next real question is: if a user’s money is in a stablecoin wallet, they don’t just want to see their balance or make payments—they want to do more, like invest. I think that’s the real growth driver for tokenized assets, beyond 7×24 trading itself.

Robert Mitchnick:

And I think stablecoin use cases are only just beginning. It already has some penetration in crypto exchanges and DeFi, but it hasn’t really unfolded in areas like cross-border remittances, corporate treasury management, and capital market scenarios—so there’s still a long runway ahead.

Pet Berisha:

We’re entering the third topic. As we mentioned in last week’s episode, U.S. regional banks are building a tokenized deposit network through ZK Sync called Kari Network. Participants include Huntington, First Horizon, M&T Bank, KeyCorp, and Old National Bank. It’s planned to launch in 2026 and run on a permissioned chain on ZK Sync. Rob, what’s your view on this?

Rob Hadick:

I think the current debate about “stablecoin versus tokenized deposits” is a bit off the mark. At a fundamental level, we have cash equivalents and we have non-cash equivalents. Regulators have started discussing things—for example, Basel rules and capital requirements may redefine the landscape. And the U.S. government has recently also been talking about treating stablecoins as something like cash equivalents, which could be helpful for capital management. So I believe these different forms of assets will ultimately serve different purposes.

For example, so-called payment-oriented stablecoins may be one kind of tool; tokenized deposits may be another kind; and tokenized money market funds are yet another. They may look more and more like today’s financial products, but they’ll be more digital-native, easier to swap with each other, and more liquid, while also reducing the complexity of back-office reconciliations. So from my perspective, the “who replaces whom” question isn’t that important.

Pet Berisha:

Then what about a consortium model like a bank alliance? What do you think, especially for mid-sized banks?

Rob Hadick:

Historically, there have been quite a few successful bank alliances—Visa, Mastercard, and Early Warning (later developed Zelle), and even cases like Synchrony. So I do believe that some core infrastructure is more appropriate to be built through an alliance. If it’s a startup, trying to meet the needs of that many banks is actually extremely hard. You’d have to do lots of things at once, not just do one part well. So I think bank alliances will play an important role in future capital market innovation—perhaps they need to exist.

Robert Mitchnick:

I think your framing is a bit too broad about successful case studies. Because in the blockchain and digital asset space, alliances have actually had pretty poor historical performance—saying that is already being polite. It’s not that alliances can’t work, but we need to recognize that making something with real economic value in this domain is very difficult.

Pet Berisha:

So what’s your advice?

Robert Mitchnick:

That question is still for someone else to solve. I’m currently inside the banking system.

Pet Berisha:

Noah, you were previously at Visa. Have you talked with a lot of banks—why did they choose to do tokenized deposits?

Noah Levine:

It’s a good question. I think a common misunderstanding is that people assume banks are very conservative and don’t want to innovate—that’s not really the case. They all recognize there’s a big opportunity and they can use these infrastructures to build more competitive products. The main issue is unclear regulation. Like we said earlier, although there have been some policy developments, many key questions are still not clear—for instance, how compliance should be done, how AML should be done. So banks will be very cautious.

Of course, there are also more aggressive players—for example, JPMorgan Chase did JPM Coin very early, and they’re trying new things now. And there are also Citi and others. There are indeed some alliance projects as well. Even though the success probability may not be high, banks are still willing to participate because they don’t want to miss the opportunity.

Robert Mitchnick:

I think there’s another very important point: it must be absolutely clear what tokenized deposits actually solve—or what unique value they provide compared with stablecoins. That question hasn’t been answered well yet.

Rob Hadick:

From a bank’s perspective, they’d say that tokenized deposits let them continue to control deposits while still running parts of reserve-based banking operations. But from the other side—for example, asset managers—they’d want to continue managing money market funds. So it’s a game between different stakeholders.

Pet Berisha:

Noah, if it’s a mid-sized bank consortium, what do you think the success probability looks like?

Noah Levine:

I think it’s very hard for any specific project to succeed. But in terms of product fundamentals, stablecoins and tokenized deposits are completely different things serving different users. Stablecoins’ current product-market fit is mainly in crypto capital markets—for example, capital flows between exchanges, DeFi, and as a USD value-storage tool outside the U.S. But these banks mainly serve local customers—for instance, M&T Bank won’t serve users in Argentina. So their use cases are more at the wholesale layer—capital movement, back-office settlement, internal efficiency optimization. In that kind of scenario, these projects may be able to succeed, but they won’t become a mass-market product.

Pet Berisha:

Robert, I want to ask the final question. Now the crypto industry is increasingly discussing “privacy,” like ZK technology. Why is this problem only now being truly treated as a priority?

Rob Hadick:

The reality is that people have been working on this for a while. It’s just that the demand in the past wasn’t as strong, or the main demand came from some less-than-appropriate use cases. For example, for stablecoin payments—if you’re paying salaries or making payments—you of course don’t want everyone to see how much each person received. But in practice, how do we solve that? We use “net settlement.” We aggregate transactions over a day, and then only do one settlement transaction on-chain at the end, which provides a certain degree of privacy.

But in capital market scenarios, like weekend trading and collateral management, it’s completely different. You can’t use net settlement to fix this, because you need to handle risk in real time. That’s why privacy becomes more critical. ZK can solve part of the problem, but not all of it. If you’re doing these things on a public chain, the technical difficulty is extremely high.

Pet Berisha:

We’re moving into the audience Q&A.

Audience:

Right now everyone is discussing U.S. dollar stablecoins—do non-USD stablecoins have demand?

Rob Hadick:

There’s currently no clear demand, but there will be in the future. If all capital markets move on-chain, you’ll need multiple types of stablecoins; otherwise you’ll be exposed to foreign exchange risk. For example, in the UK, if an offset hedge fund’s assets are denominated in pounds, they wouldn’t want to take USD risk every time. So in the long run, multi-currency stablecoins are certain to emerge. And from a more macro perspective, we might be entering an era of “currency cold war.” Whether we need so many different currencies is itself a question worth debating.

Audience:

Stablecoins are already very useful in the financial system, but ordinary consumers still have a bias against “crypto.” How long will that take to resolve?

Noah Levine:

The truth is, many users are already using stablecoins—they just don’t realize it. For example, some newer banking products have stablecoin infrastructure at the base, but users just see a normal account. So the key is to hide the crypto behind the product, rather than making users aware of it.

Robert Mitchnick:

Another point is that stablecoins aren’t very attractive in U.S. domestic payment scenarios, but they’re extremely valuable in cross-border scenarios—where there are more frictions and more difficulty getting dollars.

Audience (Bloomberg):

If in 5–7 years all assets are on-chain, what would the market structure look like? Who benefits, and who is harmed?

Robert Mitchnick:

This is a very hard question. But broadly, the value chain will become shorter and intermediaries will decrease. Today a single stock trade involves many roles: investors, introducing brokers, exchanges, clearing houses, custodians, transfer agents, fund managers, and so on. Many of those intermediary steps can be compressed and automated.

This is good news for investors because efficiency improves. It’s also an opportunity for asset managers because they can reach more users. And it’s an opportunity for crypto exchanges, because currently they only cover a small portion of global assets—moving forward, they can expand dramatically.

Pet Berisha:

Alright, that’s where we’ll stop for today. Thank you to everyone listening in—both in person and online. Thanks to all our guests.