The "double-edged sword" of NYSE's tokenized securities platform: its true meaning and impact on the market

In early 2025, the New York Stock Exchange (NYSE) officially announced the development of a trading and settlement platform for tokenized securities utilizing blockchain technology. This decision signifies more than just a technical upgrade; it represents a fundamental restructuring of the rules that traditional finance has cultivated over more than 200 years. As the boundary between cryptocurrencies and traditional finance begins to dissolve, NYSE’s entry is poised to have a “double-edged sword” impact on the entire industry.

What does this seemingly innovative platform truly mean? It not only presents opportunities for market participants but also indicates a complex, multi-layered transformation that could threaten entrenched interests.

24/7 Trading and Instant Settlement: The Capital Efficiency Revolution Enabled by Hybrid Technology

The hybrid architecture adopted by NYSE combines the existing “Pillar Matching Engine” with blockchain-based settlement functions. The Pillar engine, NYSE’s core technology capable of processing millions of orders per second, serves as the foundation. By integrating on-chain clearing and settlement processes, it completely eliminates the delays associated with traditional T+1 and T+2 settlement cycles.

As a result, atomic settlement (instant exchange) of funds and assets can occur simultaneously with trading. This means the credit risk associated with conventional securities transactions disappears, allowing capital to be continuously and effectively utilized.

Another noteworthy feature is the “fractional share trading” function. Investors can now purchase high-priced stocks, which typically cost thousands of dollars per share, with small amounts in dollars, opening the door for individual investors worldwide to access high-value assets previously dominated by institutional investors. This democratizes investment opportunities while also dispersing price-setting power within existing market structures.

In terms of fund settlement, NYSE has closely collaborated with Citibank and Bank of New York Mellon to introduce “tokenized deposits.” Unlike traditional securities settlement, which depended on bank operating hours, tokenized deposits enable real-time fund transfers even on weekends and at night. This significantly improves the ability to meet capital demands across multiple time zones and reduces idle cash holdings.

Intensified Global Exchange Competition: Battles with Nasdaq, London, and Singapore Exchanges

NYSE is not operating in isolation. Major exchanges worldwide are already intensifying their entry into the tokenized securities market. This competition is so fierce it can be called a “digital arms race,” with each exchange adopting different approaches to vie for market dominance.

Nasdaq has submitted an application to the SEC in fall 2025 for trading tokenized stocks, adopting a “hybrid model.” This approach allows traders to choose between traditional settlement methods and tokenized settlement within the same order book. It’s a gradual evolution strategy, akin to opening new windows in an old house, balancing consideration for existing investors and welcoming new entrants.

In contrast, NYSE’s strategy is more aggressive. By building an independent platform for tokenized securities, it aims to directly create standardized templates for next-generation financial markets. While Nasdaq’s approach is to “offer more options,” NYSE’s is to “set new standards.”

Across the Atlantic, similar intense movements are underway. The London Stock Exchange is implementing 24/7 cross-border instant settlement through DisH (Digital Clearing House), aiming to resolve foreign exchange friction and credit risks. Germany’s Deutsche Börse, under its “Horizon 2026” strategy, is focusing on the D7 digital securities issuance platform and the DBDX crypto asset trading platform, already reaching over €10 billion in digital securities issuance. The Singapore Exchange is collaborating with the Monetary Authority of Singapore (MAS) on projects like Project Guardian and the BLOOM initiative to test CBDC-based settlement of government bonds and bills.

Industry Reshuffling: The Double-Edged Impact on Tokenization Projects, Crypto Exchanges, and Liquidity Providers

The deployment of NYSE’s platform has complex implications, acting as a “double-edged sword” for the entire crypto asset market. For different market participants, this move creates a landscape where opportunities and threats are intertwined.

Position of Tokenization Projects: Transition from Issuers to Distributors

Existing tokenization projects like OndonFinance and Securitize face a double-edged situation with NYSE’s entry.

On the positive side, regulatory uncertainty is significantly reduced. These projects have long faced SEC regulatory scrutiny, but the involvement of mainstream financial institutions like NYSE could transform blockchain-based securities holdings from peripheral innovation into mainstream consensus. Opportunities for collaboration with institutional investors are also expected to expand considerably.

However, challenges exist. NYSE controls the liquidity sources, and competition for existing projects will reach unprecedented levels. Currently, these projects maintain the role of “asset issuers,” but if NYSE begins directly offering tokenized securities, they may be forced to shift roles to “asset distributors” or “strategic providers.” In other words, they risk losing their issuance rights.

Position of Crypto Exchanges: Bidirectional Liquidity Absorption

NYSAE supporting 24/7 securities trading means crypto markets will face a formidable new competitor.

A large volume of stablecoin funds on-chain could flow into more stable dividend-yielding US equity assets. High-quality tokenized stocks, with clear revenue models and regulatory protections, could exert a strong “capital absorption effect” on altcoins that rely solely on narratives and lack practical utility, potentially leading to liquidity shortages in the latter.

Moreover, there is a risk that small-scale individual investors will directly enter NYSE’s tokenized platform. Previously, such investors gained exposure to US stocks through crypto exchanges, but in the future, they may prefer the safer, regulated NYSE platform.

Position of Liquidity Providers: Comprehensive Innovation in Algorithmic Strategies

The emergence of a 24/7 securities market necessitates that market makers and liquidity providers develop real-time hedging capabilities across the entire market.

Traditional NYSE market makers will need to integrate with DeFi AMM (Automated Market Maker) logic, while DeFi protocols will need to incorporate high-frequency matching technologies characteristic of traditional finance’s Pillar style. This technological fusion could give rise to top-tier liquidity providers capable of mastering both systems.

However, the 24/7 model also raises concerns about extreme fragmentation of liquidity during late-night hours and weekends, as trading across time zones becomes easier. This could lead to wider bid-ask spreads and increased volatility.

“Adapt or Be Left Behind”: The Irreversible Transformation Signaled by Financial Digitalization

NYSE’s development of a tokenized securities platform signifies a fundamental reengineering of the underlying logic of traditional financial markets at the “code level.” It not only extends trading hours infinitely but also dramatically improves capital efficiency, lowers market entry barriers, and reconfigures existing power structures.

For the crypto asset market, this movement marks a shift from “virtual narratives” to “physically supported” assets. For traditional finance, it represents a “second industrial revolution” after absorbing the advanced productivity of DeFi.

NYSE’s decision to enter clearly signals that the digitalization of the financial system is irreversible. The choice for market participants is no longer “to participate or not,” but rather “how to adapt.” Those who succeed in adaptation will become leaders of the next-generation capital markets, while those who fail risk marginalization.

The “double-edged sword” effect of tokenized securities will, as the name suggests, have entirely different implications depending on the position and capabilities of market participants.