eToro Plans to Tokenize US Stocks on Ethereum as Crypto Regulation Improves

eToro announced plans to launch tokenized US stocks on the Ethereum blockchain, marking a major step in bringing traditional finance to crypto platforms. The Israel-based trading company revealed its strategy during a webinar on July 29, 2025, joining rivals like Robinhood and Kraken in offering blockchain-based stock trading.

The move builds on eToro’s long history with tokenization. CEO Yoni Assia co-authored the Colored Coins whitepaper, laying groundwork for representing real-world assets on blockchains. Since then, eToro has steadily expanded its tokenization efforts.

“Our goal is to tokenize every asset on eToro – starting with stocks – enabling our users to move tokenized assets onto the blockchain and from there integrate them into the broader DeFi ecosystem,” Assia said during the announcement.

How eToro’s Tokenized Stocks Will Work

The tokenized stocks will be issued as ERC-20 tokens on Ethereum. Each token represents actual shares held by eToro in traditional custody accounts. Users can trade these tokens around the clock and convert them back to regular stock positions when needed.

This system aims to solve several problems with traditional stock trading. Regular stock markets only operate during business hours on weekdays. Tokenized versions can trade 24/7, giving investors more flexibility to respond to global news and events.

Source: @eToro

The tokens will also work with decentralized finance (DeFi) applications. This means users could potentially use their tokenized Apple or Tesla shares as collateral for loans or in other blockchain-based financial products.

eToro expects to launch the service sometime in August, likely starting with European customers first. The company plans to begin with 100 popular US stocks and exchange-traded funds.

Regulatory Changes Drive New Opportunities

Two major regulatory developments have made tokenized stocks more viable. In Europe, the Markets in Crypto-Assets (MiCA) regulation took full effect on December 30, 2024. This law creates uniform rules across the European Union for crypto assets and provides legal clarity for tokenization projects.

In the United States, Congress passed the GENIUS Act in June 2025, which President Trump signed into law in July. While focused on stablecoins, this legislation signals growing regulatory acceptance of blockchain-based financial products.

“New regulations, such as MiCA in Europe and the passing of the Genius Act in the US, makes the tokenization of real world assets a new opportunity to create digital assets that are legally backed and regulated,” Assia explained.

Treasury Secretary Scott Bessent has projected the US stablecoin market could grow to over $2 trillion in coming years, showing government support for digital asset innovation.

Competition Heats Up in Tokenized Stock Market

eToro faces significant competition from other platforms launching similar services. Robinhood introduced tokenized stocks for European users in June 2025, using the Arbitrum blockchain. The company is also building its own layer-2 blockchain optimized for tokenized assets.

Kraken and Bybit have partnered with Backed Finance to offer over 60 tokenized US stocks through the xStocks platform on Solana. Gemini launched tokenized MicroStrategy shares through a partnership with Dinari.

The rapid expansion shows strong industry belief that tokenized stocks represent the future of trading. Research from Ripple and Boston Consulting Group projects the tokenized asset market could reach $18.9 trillion by 2033, up from approximately $600 billion in 2025.

eToro’s Tokenization Experience

eToro isn’t new to tokenization. In 2019, the company acquired Danish blockchain startup Firmo and launched tokenized gold (GOLDX) and silver (SLVX). It also created stablecoins pegged to major currencies like the US dollar (USDEX) and euro (EURX).

These early efforts through its eToroX subsidiary gave the company valuable experience in regulatory compliance and technical implementation. The Gibraltar Financial Services Commission certified eToroX as a regulated Distributed Ledger Technology provider in 2018.

The company’s existing tokenization infrastructure should help it launch stock tokens more smoothly than completely new entrants to the space.

Challenges and Risks Remain

Despite promising projections, tokenized stocks face several challenges. Price discrepancies have already appeared with some competitors’ offerings. In July, Robinhood’s Apple token traded at a 12% premium to the actual stock price, while its Amazon token spiked to four times the real share price.

Market fragmentation is another concern. With multiple companies tokenizing the same stocks on different blockchains, liquidity could spread thin across platforms. This might make trading less efficient than traditional stock markets.

Regulatory uncertainty persists in many jurisdictions. While Europe and the US have made progress, tokenized stocks still operate in gray areas that could face future restrictions.

What This Means for Investors

eToro’s tokenized stock launch reflects broader changes in how people trade and invest. The integration of blockchain technology with traditional assets offers new possibilities but also new risks.

The ability to trade stocks 24/7 and use them in DeFi applications could attract crypto-native investors who previously avoided traditional markets. However, the technology is still evolving, and regulatory frameworks continue developing.