By Christo de Wit, Country Manager for Luno South Africa
Global investment platforms including Robinhood (HOOD), Kraken and Coinbase Global (COIN) have all raced to launch tokenised stocks in recent months.
In South Africa, Luno has led the way by introducing more than 60 tokenised stocks and ETFs.
These stocks are available outside US trading hours and they’re easily-accessible to anyone over 18 with a phone and internet connection.
But is the hype warranted? And will it last?
Demand for investing in stocks globally has been on the rise in recent years, driven by increased accessibility brought about by mobile technology and increased connectivity.
The emergence of platforms in the US like Robinhood and Webull cater to an emerging kind of retail investor, one that’s often younger and digitally-native.
Research from the JPMorgan Chase Institute shows that the monthly share of individuals under the age of 40 transferring funds to investment accounts more than tripled over the last decade.
Tokenised stocks are the logical next step in this evolution – more accessible, more transparent, more liquid and easier to use.
In short, they meet the expectations of the modern consumer and have rapidly become seen as one of cryptocurrency’s primary use cases.
For the uninitiated, tokenised stocks are blockchain-based tokens that represent ownership in traditional company shares, such as Apple or Tesla.
Each token is backed by actual shares held in custody, and its price tracks the real-time value of the underlying stock.
This gives investors the same market exposure as buying the actual shares, but with the added benefits of blockchain technology: global accessibility and trading outside traditional market operating hours.
Traditionally, if you were not in the US and Europe, you’ll likely have faced numerous obstacles to investing in global stocks, such as foreign exchange controls and a lack of brokerage access, among others.
This is a new frontier for South African investors, who have long faced barriers such as minimum investments, currency controls, and settlement delays.
Tokenised stocks remove these barriers. You can buy fractional shares worth R20 and settle transactions in seconds rather than days.
A 2024 World Economic Forum report noted that tokenisation could unlock trillions in previously illiquid assets and bring financial inclusion to millions who are currently underbanked.
About 9% of the population, or 3.9 million South Africans, are still unbanked and underbanked as a result of supply and demand constraints.
The country has a lot to gain in terms of financial inclusivity.
When you purchase shares through a broker, you become a beneficial owner while the broker holds legal title in a nominee account.
Your ownership is recorded by central depositories, and you receive corporate communications, voting rights, and dividend payments directly.
Tokenised shares, however, don’t provide direct ownership.
When you buy tokenised stocks, you own tokens that mirror the share’s economic value but you don’t have the same rights as a traditional shareholder.
For example, token ownership typically excludes voting rights since you don’t hold direct legal title to the underlying shares – if you prioritise full shareholder privileges, they may not be right for you.
Financial opportunity should be a universal right, not a privilege decided by geography.
Tokenised stocks are a fundamental shift in how we think about access to investing.
It provides everyone, everywhere, the opportunity to invest and take part in the global economy.
While still in the early stages, the tokenised stocks trend is growing fast, particularly among younger, mobile-first investors and underserved markets.
There are numerous possibilities for companies moving forward.
Could a company launch an entirely-tokenised IPO in the not-too distant future, for example?
Given the way things are going, it’s not too far-fetched.
