EU Regulation Supports Tokenized Stock Boom, Euro Stablecoins Could Be Next

Key Takeaways

Tokenized stocks are gaining traction, with Kraken, Bitget and Robinhood all launching trading support in recent weeks.
So far, major exchanges have focused their attention on non-U.S. markets, particularly the EU.
As the EU embraces tokenized stocks, calls have grown for institutions to back euro-pegged stablecoins.

In recent weeks, Robinhood, Bitget, and Kraken have introduced support for tokenized stock trading on their platforms, while a similar offering from Coinbase is also in the works.

However, the nascent tokenized stock boom has yet to reach American shores, and exchanges have mostly focused their attention on the EU market due to its more favorable regulatory environment.

Tokenized Stocks Take off, Just not in the U.S.

With the global rollout of tokenized stock trading underway, the EU has emerged as a frontrunner.

Among exchanges that have launched or plan to launch tokenized stock trading, Kraken has started rolling the service out to non-U.S. users, Robinhood recently launched the feature for EU users only, and Bitget has introduced support in select non-U.S. markets globally, including the EU.

The reason for the EU focus is largely regulatory.

Under the EU’s Second Markets in Financial Instruments Directive (MiFID II), stock tokens are treated as derivatives rather than securities.

Exchanges, including Kraken, Robinhood, OKX, and Gemini, have registered MIFID II-compliant entities in the EU, giving them a key regulatory advantage in tokenized stock trading. (Bitget’s offering exists in more of a legal gray area.)

In contrast, to offer tokenized stocks in the U.S., exchanges would need approval from the Securities and Exchange Commission (SEC). So far, only Coinbase has approached the regulator to seek permission, which is far from guaranteed.

While EU exchanges have moved ahead under the assumption that their tokenized stock platforms are MIFID-II compliant, some uncertainty remains, especially around so-called “private stock tokens.”

Earlier this week, the Bank of Lithuania (BoL), Robinhood’s primary EU regulator, confirmed that it had been in touch with Robinhood for “clarifications regarding the structure of OpenAI and SpaceX stock tokens.”

“Only after receiving and evaluating this information will we be able to assess the legality and compliance of these specific instruments,” a BoL spokesperson said.

Stablecoins and Stock Tokens

Given their background as crypto exchanges, Kraken and Bitget both support stablecoin–stock token swaps.

Stablecoins make a natural bedmate for the new generation of tokenized stocks, especially for Bitget’s trading platform, which executes trades on-chain.

Where crypto meets the traditional stock market, the intersection of stock tokens and stablecoins creates new arbitrage opportunities, opens up real-time trading, and could lead to investment products that generate crypto yields rooted in real-world assets.

However, for now, growth and innovation remain tied to the dollar, with around 99% of all stablecoins denominated in USD.

Stablecoins and Monetary Politics

Under President Donald Trump, the U.S. government has gone all in on stablecoins.

After years of congressional procrastination on stablecoin regulation, the GENIUS Act has now cleared the Senate, and with the president’s support, is teed up for a vote in the House next week.

Backed by the federal government, USD-pegged stablecoins offer a bulwark against rising de-dollarization and a way to cement the greenback’s privileged status as a reserve asset and international trade currency.

This is especially true in the global south, but even within the eurozone, which no longer relies on the dollar for internal trade, stablecoins still power the crypto sector, and by extension, the nascent tokenized equities market.

As tokenized stocks grow in popularity, European traders and investors may default to USD simply because it is the only option available to them.

Stablecoins vs. CBDCs

Officially, EU institutions still favor a central bank-issued digital euro.

For instance, the European Central Bank (ECB) has cited the potential threat to monetary sovereignty posed by dollar-pegged stablecoins as one reason to develop its own digital currency.

However, the EU faces a problem. Central bank digital currencies (CBDCs) are likely years away, yet stablecoin adoption is accelerating at a rapid pace.

Lawmakers aren’t panicking yet. A recent European Parliament policy paper concluded that stablecoin adoption in the EU “is unlikely to be large-scale without state support.”

Rather than endorsing euro stablecoins, the paper mostly reiterated established arguments in favor of CBDCs.

But away from the ivory towers of Brussels, advocates of EU sovereignty are sounding the alarm.

Calls Grow for Euro Stablecoins

In a recent article, Société Générale Chairman and former central banker Lorenzo Bini Smaghi was critical of the notion that CBDCs could effectively compete with stablecoins.

Ultimately, tokenization in capital markets is already happening on public blockchains and private chains operated by commercial banks.

Given that future CBDCs are expected to be deployed on an entirely new infrastructure, by the time the ECB issues the first digital euros, private digital dollars may already be entrenched in critical economic systems.

“Unless euro stablecoins are issued and widely used in Europe, euro-area deposits will migrate to foreign platforms, disintermediating European payment systems,” Bini Smaghi warned.