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(Bloomberg) -- Billionaire Michael Novogratz said Galaxy Digital Holdings Ltd. is talking with the US Securities and Exchange Commission about tokenizing its own stock as well as other equities using its digital-asset platform.
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The company met with the SEC’s crypto task force in March to discuss registering Galaxy’s own stock on a blockchain. The company, which managed about $7 billion in assets as of the end of March, begins trading on Nasdaq Friday, after being previously listed only in Canada.
The idea is to turn Galaxy’s shares into tokens that could be used in decentralized-finance applications, such as lending and trading. The company is hoping to eventually use the process and the technology to tokenize everything from other stocks to fixed income to exchange-traded funds to make them available to US buyers of traditional equities. Last year, Galaxy tokenized a 316-year Stradivarius violin once owned by Russian Empress Catherine the Great to back a loan.
Tokenization “hasn’t started in earnest yet, and I am not sure when it will, I have a feeling it’s really close,” Novogratz said in an interview. “We are working with the SEC to tokenize stocks. They believe in crypto, they believe in the power of tokenized networks and this technology. I think you’ve got to change your horizon for what’s possible.”
When assets are tokenized, they can potentially be authenticated easier, can settle quickly, and be traded 24 hours seven days a week. They can also be more easily used in lending and borrowing.
The SEC’s crypto task force recently hosted a tokenization roundtable, where Chairman Paul Atkins likened the transition to tokenized securities to the move “from analog vinyl records to cassette tapes to digital software decades ago.”
Money-market funds like BlackRock’s BUIDL are already being tokenized. But the total amount of real-world assets on public blockchains is still tiny compared to assets listed elsewhere — only about $22.5 billion, according to tracker rwa.xyz. Crypto exchange Coinbase Global Inc. and rival Kraken have talked about wanting to tokenize equities. But regulators have to sign off on a process to make such tokenized securities compliant with existing rules.
Galaxy is listing on Nasdaq as competition among public crypto companies intensifies, with many more outfits lining up to go public. eToro Group Ltd., which has crypto-related business, began trading on the Nasdaq this week, with its shares up in the double digits in its debut. Stablecoin issuer Circle, and crypto exchanges Kraken and Gemini are looking to go public as well. The crypto market is rallying once again, after softening earlier in the year.