Tokenization Is Now: The Impact on Markets and Companies

What You Need to Know:

• The path to equity tokenization has already begun and attention to this system is likely to grow throughout 2026.
• The market is moving fast, so regulators in the U.S. are moving ahead. Congress is likely to accept what the SEC decides.
• Our full report analysis reflects combined U.S. and Canadian policy, strategy and equity views.
• Outcomes depend on how firms respond over the next few quarters.
• Net impact skews toward opportunity, with uneven effects across market participants.
• We answer some frequently asked questions about tokenization, the benefits, the risks and what could be in store for the broader market.

The TD Cowen Insight

Tokenization of equity securities is happening. This report focuses on what that means for markets by tapping the U.S. and Canadian expertise of policy, equity and strategy analysts at TD Cowen and TD Securities. We tackle tokenization from the view of Washington, the Treasury market, asset managers, exchanges and brokers, Canadian exchanges and Bitcoin. Overall, we see opportunity more than risk.

Our Thesis

We believe the tokenization of equity and debt securities will accelerate in 2026. This is not about the future; it is about what is happening in the coming months. The investment controversy is over what instant settlement and 24/7 trading will mean for markets. To us, it offers as many opportunities as risks. This is not about how tokenization is specifically negative for a set of companies. How companies react in the next few quarters will determine if tokenization is a net positive or net negative. Overall, we see more opportunity than risk. We believe the U.S. Securities and Exchange Commission's (SEC) process is critical as Congress is likely to bless what the regulator establishes rather than try to craft a new regime. What happens via exemptive relief is likely to become that final regime.

Our Holistic Analysis

This report takes advantage of our broad expertise in the United States and Canada with contributions from policy, strategy and equity analysts to provide a comprehensive assessment of how tokenization will impact markets.

Financial and Industry Implications

• Washington Policy View: The SEC is not going to wait for Congress to enact legislation.
• Impact on Treasury Market and Fixed Income: Tokenization can reduce frictions in custody, settlement and collateral usage.
• Clearest net benefit to the Asset Managers. More checkered implications for Retail Broker-Dealers and Exchanges.
• Canadian Exchange Implications: TMX expected to announce tokenization initiatives in 2026. Create potential collaborations between traditional finance and decentralized finance.
• Bitcoin Implications: Potentially bullish for Bitcoin, especially if tokenization occurs on public rather than private blockchains.

What To Watch

• What does the SEC permit via exemptive relief?
• How popular are initial tokenized trading options?
• Do traditional financial firms take the lead or lag behind?

Tokenization Primer