Key Takeaways
- Holders of Galaxy Digital common stock can now tokenize their GLXY shares on solana.
- While the technology remains nascent, tokenized stocks are gaining traction.
- The crypto firm has also tokenized physical assets, including a 300-year-old violin.
With tokenized real-world assets becoming more popular by the day, Galaxy Digital has emerged as a pioneer of the technology.
From a $9 million violin owned by Animoca Brands founder Yat Sui, to its own common stock, Galaxy is exploring the full range of tokenization options.
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Yat Sui’s Stradivarius
In June 2024, Galaxy issued a multi-million-dollar loan to Yat Siu, using a 1708 Stradivarius as collateral.
The crypto firm took custody of both the physical violin and an Ethereum NFT representing its ownership.
On September 2, Animoca announced that it will host a classical concert featuring the violin during Korea Blockchain Week.
For now, the terms of the loan agreement prevent the NFT from being listed on secondary markets. But Yat Siu said he eventually wants to fractionalize the digital asset, letting smaller investors own a piece of the historic instrument, which was once owned by Russian Empress Catherine the Great.
For physical assets like fine art and antiquities, as well as real estate, being able to split ownership between parties is one of the biggest benefits of tokenization.
But without realizing that utility, Galaxy’s NFT violin is more about promoting the company’s tokenization platform, GK8.
On the other hand, the company’s latest tokenization initiative reflects a much more profound change to capital markets.
Galaxy Tokenizing Its Own Stock
On September 3, Galaxy announced that it will allow stockholders to tokenize shares via Superstate’s Opening Bell platform, which will mint GLXY shares issued as tokens on Solana.
The move represents a significant milestone for tokenized assets and goes well beyond the range of “stock tokens” issued by digital exchanges like Robinhood.
“These are not derivatives or representations; they are Galaxy Digital Class A Common Stock, with all the rights that confers” Galaxy emphasized.
Although related, stock tokens are distinct from true tokenized equities, which offer the same rights and obligations as traditional shares in a company.
In contrast, stock tokens are on-chain representations of shares held in custody by the issuer, but don’t reflect any fundamental change to the underlying assets, nor the mechanisms by which they are issued, traded, and redeemed.
Regulating Tokenized Stocks
True tokenized stocks are slowly gaining traction. For example, in the EU, fintech startup Kriptown is vying to become the first regulated tokenized stock exchange for small businesses.
In the U.S., the application of federal securities laws and regulations to tokenized stocks remains untested.
Galaxy said it has engaged with the Securities and Exchange Commission (SEC), and is even exploring how tokenized public equities could trade via Automated Market Makers (AMM) in a regulatory-compliant manner.
However, the technology still faces stiff resistance from politicians like Senator Elizabeth Warren, who recently warned that companies may be able to “put themselves on the blockchain” and “no longer [be] governed by the SEC.”
Ultimately, tokenization “hasn’t started in earnest yet,” Galaxy CEO Mike Novogratz commented recently. “I have a feeling it’s really close,” he added.
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James Morales is CCN’s blockchain and crypto policy reporter. He has been working in the news media since 2020, writing about topics such as payments, banking and financial technology. These days, he likes to explore the latest blockchain innovations and the evolving landscape of global crypto regulation.
With an educational background in social anthropology and media studies, James uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
