Securitize: The Tokenization Opportunity Is Clearer Than The Investment Case

Summary Securitize is trying to capitalize on the real-world asset tokenization opportunity with its regulated, vertically integrated platform. There could be significant upside if tokenization accelerates, but competitive and regulatory uncertainties create multiple layers of risk. SECZ's recent financial performance has also been disappointing, adding to doubts about the strength of the business.

Given the uncertainty involved, I believe that Securitize's valuation is difficult to justify, meaning the probability of poor returns going forward is high. Securitize (SECZ) is a financial market infrastructure company that is trying to bring real-world assets on-chain through tokenization. The company provides the technology and regulated infrastructure that enable tokenization while also owning regulated transfer-agent and fund-administration businesses.

There could be significant upside if real-world assets migrate on-chain, but there is also enormous uncertainty. There are a range of potential competitors, including both legacy financial institutions and tokenization disruptors. The key question for investors is therefore not just whether assets will be tokenized, but if Securitize can establish a sustainable competitive advantage as financial infrastructure evolves.

Given the uncertainty involved, I believe that Securitize's valuation is difficult to justify, meaning the probability of poor returns going forward is high. Market Tokenization is the process of turning real-world assets, including treasuries, private credit and equity funds, and real estate, into digital tokens that are generally stored on blockchains. These tokens represent ownership in the underlying asset and can provide a number of advantages, including: Faster settlement Greater transparency Fractional ownership Improved liquidity Broader access to private markets 24/7 trading Improved efficiency Not all of these benefits are guaranteed, though.

For example, access depends on regulations, and liquidity is a function of supply and demand. Tokenization can be either issuer-sponsored or via a third-party. Third-party tokens are derivatives that don't provide direct ownership of the underlying asset and can be based on assets that are held in custody by the third-party or entirely synthetic.

This is a somewhat contentious issue, with a number of high-profile private companies pushing back against attempts to tokenize their stock. It is also likely to become a more important distinction as regulations mature. In the case of equities, functionality that needs to be encompassed by tokenization includes issuance, distribution, trading, clearing, and settlement.

It is important to recognize that the benefits of tokenization vary across these functions and that tokenization is unlikely to replace all existing infrastructure. While smart contracts could help automate issuance, cap-table management, compliance, and corporate actions, investment banks are likely to remain important. Regulated distribution and custody are also likely to remain necessary.

Tokenization has the potential to reduce some post-trade processing and settlement risk, but many CCP functions (netting, margining, default management, etc. ) are likely to remain necessary. Tokenization could disintermediate a number of incumbents, like DTCC, brokers, and custodians.

However, a number of these companies are embracing tokenization to try and avoid disruption. In particular, it seems likely that companies involved in settlement/ownership will either partner with tokenization companies or introduce their own solutions to maintain their existing positions. Figure 1: Traditional Value Chain versus Tokenized Value Chain (source: Securitize) The value of assets expected to be tokenized is enormous, but estimates vary widely (2-30 trillion USD in 2030).

Much of the volume is expected to come from US treasuries, and tokenized equities are also expected to be a growth driver. The market is currently only worth 17 billion USD at the moment, though, meaning adoption is largely speculative at this point. It should also be noted that the market opportunity for companies like Securitize is a tiny fraction of the assets tokenized.

In addition, significant parts of the market, like stablecoins, likely won't be accessible to companies like Securitize. There are also opportunities like regulated DeFi lending and yield-bearing CeFi collateral. For example, using tokenized RWAs as collateral or borrowing stablecoins while retaining asset exposure.

Figure 2: Projected Tokenized Asset Market by Asset Class - trillion USD (source: Securitize) The tokenized treasury market is leading RWA growth, and this is an area where Securitize has some traction. The company has also found success with CLO funds, alternative asset funds, and to a lesser extent equities. Figure 3: Traditional Market TAM and Tokenized Opportunity in 2030 (source: Securitize) Part of the reason for the embryonic state of the tokenization market is that the regulatory landscape is still forming.

The CLARITY Act aims to establish a clear division of regulatory authority between the SEC and CFTC. Digital commodities would be regulated by the CFTC, while tokenized securities would be covered by the SEC. The Senate failed to advance the act in September, although this isn't that important for Securitize.

Regulatory clarity from the passage of the act could help to lower the cost of launching products and encourage institutions to participate, but direct benefits would likely be modest. More importantly, the SEC has announced conditional exemptive relief in tokenized securities trading. This covers qualifying tokenized stocks that preserve the rights associated with the underlying shares, meaning it excludes synthetic exposure products.

The exemption provides conditional relief from exchange registration for qualifying tokenized securities venues and from dealer registration for certain liquidity providers. While there was no blanket prohibition on tokenized stocks, existing securities laws were designed around conventional exchanges. The SEC has also proposed modernizing transfer-agent rules in support of blockchain-based securities issuance and share transfers.

Given that Securitize had already built its business within the existing regulatory framework, I would argue that this change is neutral at best. The SEC is broadly supportive of tokenization as a technology, but it likely won't allow tokenized securities to escape securities regulations. For example, the SEC approved Nasdaq's proposal to allow tokenized securities to trade on its exchange and is considering a similar proposal from NYSE.

The SEC is also making it more practical to integrate blockchain-based records into existing securities infrastructure, which could expand Securitize’s addressable market. This potentially strengthens the case for Securitize's transfer-agent business and could eventually enable the company to become the official recordkeeping layer for securities. Incumbent transfer agents, like Computershare, have the same opportunity, though.

Securitize Securitize provides regulated, blockchain-native infrastructure that enables financial assets to be issued, managed, and traded as digital tokens. The company is initially focused on treasuries, funds, and equities and has found early success with BUIDL (Blackrock treasury fund) and in private credit. Securitize now has a fairly comprehensive platform that works with both the traditional finance and digital asset ecosystems.

Its vertically integrated stack includes: Tokenization Distribution Asset servicing Figure 4: Securitize's Platform (source: Securitize) Securitize has also developed infrastructure solutions that both power its business and can potentially be monetized through partners. For example, the DS Protocol provides issuers with tools for managing tokenized securities throughout the lifecycle and smart contract infrastructure for issuers, investors, and exchanges. This encompasses important areas like dividends, voting rights, and transfer and trading.

Securitize also has the Vault Registrar, which standardizes the compliance layer for agentic finance using tokenized securities. It is a smart contract system that lets investors use tokenized securities in DeFi applications while maintaining the link between the token and its owner's identity. Rather than pooling assets from many investors for use cases like lending, the Vault Registrar uses a dedicated smart contract vault that is associated with an individual investor's identity.

Figure 5: AI Vault Registrar (source: Securitize) Regulatory licenses are also an important part of the business. Securitize is a formally registered Transfer Agent with the SEC, a Broker-Dealer registered with both the SEC and FINRA, and holds an Alternative Trading System license which enables it to issue and trade security tokens. SEC-registered transfer agents are permitted to maintain and update the official ownership records of publicly traded securities.

A broker-dealer can both facilitate securities transactions and buy/sell securities for its own account. Securitize received FINRA approvals for expanded broker-dealer capabilities in the second quarter of 2026. This included approval to custody tokenized securities within its broker-dealer and participate as an underwriter or selling-group member in IPOs and secondary securities offerings.

Securitize also has a digital assets-focused fund administration business, which came through the acquisition of MG Stover's fund administration business in 2025. MG Stover was an experienced administrator of digital asset funds, providing services like fund accounting, investor reporting, subscriptions and redemptions, and operational compliance. At the time of the acquisition, the business was servicing 715 funds with 38 billion USD AUM.

Fund administration provides Securitize with increased vertical integration, a more recurring source of revenue, and cross-selling opportunities. The business can be labor intensive, though, and so I would not assume that it has high margins. Securitize is largely positioning itself as the infrastructure that connects traditional securities markets to blockchain markets.

As a result, partnerships with incumbent financial system players are important to the company's success. Securitize has partnered with the NYSE to help develop its digital trading platform, with Securitize acting as design partner/digital transfer agent and Securitize Markets providing broker-dealer connectivity. Securitize has also partnered with Computershare and Continental Stock Transfer, two major conventional transfer agents, to support issuer-sponsored tokenized shares.

Computershare explicitly says its master securityholder file remains authoritative, while blockchain records form part of the system used to administer the tokenized holdings. A point of concern for Securitize's tokenization infrastructure business is the fact that the company has faced IP issues in recent months. Liquid Rarity Exchange has alleged that Securitize's platform infringes patents covering digital marketplaces for fractional ownership interests and is seeking damages and an injunction.

tZERO has also sent Securitize a cease-and-desist letter alleging that DS Protocol and Vault Registrar infringe on tZERO patents covering self-enforcing compliance controls for tokenized securities. These cases introduce uncertainty around potential damages, injunctions, licensing costs, and product development. However, it has not been established that Securitize has infringed patents or that its products will be prohibited.

Competitive Landscape Securitize faces competition from a range of market participants, including: Incumbent market infrastructure companies Direct tokenization and servicing competitors Crypto-native distribution and DeFi platforms These competitors have different advantages, and the intensity of competition varies considerably across the value chain. Competitors only need to control the customer relationship, regulatory function, or infrastructure layer where economic value accrues, though. Securitize has obtained licenses and approvals so that it can operate within existing regulatory frameworks, which is a time-consuming and difficult process.

The company's vertical integration also makes its business more difficult for competitors to replicate. The nascent state of the business makes it difficult to ascertain whether there is any genuine competitive advantage at the moment. Relative to traditional fund managers, Securitize believes that it is differentiated by its technology.

While Securitize's technology provides differentiation compared to legacy players, these organizations have significant relationships and distribution capabilities. The adoption of tokenized RWAs could undermine advantages related to scale and distribution, though. Despite this, I believe that the ability of legacy players to adopt tokenization technology has been underestimated.

There are a number of tokenization and asset servicing competitors that are yet to really differentiate themselves. tZERO combines securities issuance technology with a broker-dealer, an alternative trading system, digital-asset custody and settlement, and transfer-agent services. It has historically been more focused on regulated secondary-market trading infrastructure, though.

While tZERO's collaboration with ICE provides credibility, data suggests that there is very little activity on the company's ATS. Securitize has broader servicing and issuance capabilities, while tZERO potentially offers stronger secondary-market infrastructure. Superstate is also focused on placing regulated investment funds and company shares on public blockchains.

It competes directly with Securitize in issuer-sponsored tokenization, transfer agency, and fund infrastructure. Superstate has less traction with players in the existing ecosystem, though. In comparison, Securitize is differentiated by its vertical integration, reducing the need for issuers to coordinate multiple service providers.

INX's platform combines primary issuance of regulated security tokens, secondary trading of digital securities, and cryptocurrency trading. The company was recently acquired by Republic, adding to its private-market investment and fundraising business. This enables the Republic to supply the issuer and investor relationships that an isolated ATS often struggles to develop.

Securitize again offers greater vertical integration, but Republic's relationships could make INX competitive, particularly in the private-market segment. There are also asset managers with in-house tokenization capabilities, although I tend to think that these are more of a niche threat. Franklin Templeton began developing its Benji tech stack in 2017 and launched an on-chain money market fund in 2021.

Capabilities also include a digital transfer agency and investor servicing. In addition, Franklin Templeton makes its platform available to other financial institutions. WisdomTree offers similar services under the WisdomTree Onchain Brand and has around 1.

2 billion USD AUM across 15 tokenized funds. JPMorgan has the Kinexys platform, which is already being used for tokenized money-market funds. Kinexys provides the infrastructure connecting the fund's existing service providers to Ethereum.

Citi is building tokenized securities infrastructure and recently launched tokenized depositary receipts for private-company shares, with Citi acting as issuer and custodian. There are also companies offering third-party tokenization, like Backed and Ondo. This avoids most of the issues that Securitize is trying to address but does not provide direct ownership of the underlying asset.

These companies may find success, but I don't really view them as a direct competitor to Securitize. Figure 6: RWA Tokenization Competitive Landscape (source: Securitize) Incumbent financial infrastructure companies at various stages of the industry value chain could also end up competing with Securitize, even though Securitize is collaborating with many of these companies at the moment. For example, DTCC, Computershare, State Street, BNY, Broadridge, exchanges, and custodians could incorporate blockchain into their existing infrastructure.

Blockchains like Ethereum and Solana could also provide increasingly sophisticated tokenization primitives, reducing the value of Securitize's technology layer. The Depository Trust & Clearing Corporation operates the primary clearinghouse and securities depository for US financial markets. Its subsidiary, DTC, wants to extend the existing securities depository model onto blockchain networks.

DTC has a tokenization service where eligible securities can be represented by a token on an approved blockchain, with DTC continuing to maintain the authoritative records linking the token and underlying security. The SEC has authorized a limited tokenization service for 3 years in late 2025, and DTC plans on launching the service in 2026. DTC has already processed actual production trades involving tokenized DTC-held securities.

DTC is well positioned if tokenization is primarily a post-trade infrastructure problem. Computershare is one of the world's largest transfer agents and could also be an important player in the tokenization market. It has so far chosen to partner rather than trying to build the entire tech stack independently but could eventually choose to build or acquire the technology.

Computershare's approach tokenizes the actual issuer-sponsored share, whereas DTC is tokenizing the entitlement to a security held within the existing depository system. The distinction matters, as one involves blockchain-native infrastructure, while the other is just a modernization of existing infrastructure. Nasdaq has a number of tokenization initiatives that aim to enable equity trading, tokenized settlement, issuer services, and collateral management.

The company also has a partnership to modernize post-trade infrastructure. Nasdaq recently received regulatory approval for its tokenized-equity framework. This involved changing its exchange rules to enable the trading of tokenized assets.

Eligible securities would be tokenized at settlement through the DTC's tokenization arrangements. Nasdaq's Equity Tokens initiative aims to enable participating companies to retain control over the representation of their shares by integrating blockchain records with their share registry. This program is expected to launch in the first half of 2027.

Figure 7: Securitize's Ecosystem (source: Securitize) Financial Analysis Much of the current focus on Securitize's success relates to AUM. While AUM is a useful indicator of scale, it doesn’t directly translate to revenue in a simple manner. Securitize generates revenue through a combination of infrastructure fees, distribution fees, transaction fees, and asset servicing.

As a result, transaction volumes and assets under administration are likely to be at least as important as AUM to value creation. Figure 8: Securitize Revenue Model (source: Securitize) Securitize generated 14. 4 million USD revenue in the second quarter, a decline of roughly 6% YoY.

AUM totaled 4. 3 billion USD in Q2, while AUA was 24. 3 billion USD, and aggregate transaction volume was 5.

3 billion USD. There are now 663 active funds on Securitize Fund Services. While growth has been weak in recent quarters, this comes against a challenging macro backdrop.

Crypto markets have been down significantly since the high in the middle of 2025, and in its current nascent state, Securitize's business appears to be dependent on crypto speculation. Securitize is now expecting 70-80 million USD in revenue in 2026, implying in excess of 20% revenue growth at the midpoint. Guidance requires a material growth acceleration in the second half of the year, though, which could be difficult for the...