Crypto's tokenized-stock boom risks creating a digital version of the "paper crisis" that brought Wall Street's settlement machinery close to breaking point more than half a century ago, according to Joris Delanoue, CEO of onchain securities infrastructure provider Fairmint.

Market Context

The warning comes as the global market for tokenized equities has grown to roughly $2 billion, from less than $500 million at the end of the first quarter, though it remains a rounding error compared with the more than $100 trillion traditional equities market. The sector has accelerated as banks, asset managers and crypto firms experiment with putting stocks, bonds, funds and other traditional assets on blockchain rails, with tokenized equities emerging as a particularly active area fueled by demand for easier, round-the-clock access to U.S. stocks worldwide.

Analysis

Delanoue said the danger is that exchanges, special-purpose vehicles (SPVs), token wrappers and proprietary ledgers could fragment ownership records as tokenized stocks grow. "The main question today is whether we are recreating the paper crisis, but as a digital crisis," Delanoue told CoinDesk in an interview.

In the late 1960s, booming U.S. stock trading overwhelmed a market reliant on clerks processing paper share certificates. Back offices fell behind, securities went missing and settlement failures piled up. The New York Stock Exchange even closed on Wednesdays for part of 1968 to let firms catch up. That crisis helped drive a redesign of U.S. post-trade infrastructure, including centralized securities depositories and the formation of the Depository Trust Company.

A token that tracks a stock is not necessarily the stock, Delanoue emphasized. The critical question is whether the issuer-authorized shareholder register recognizes the holder. Some tokenized stock products provide only economic exposure to an underlying share rather than legal ownership, leaving investors dependent on intermediaries and creating uncertainty over voting, dividends and claims to assets if an issuer or SPV fails.

"A token is not equity, but equity can be a token," Delanoue said. "When equity is a token, this token has the same safeguards, guarantees and trust as you had in the previous system."

Demand for tokenized equities is real, particularly from investors outside the U.S. seeking exposure to American equities. "People underestimated the demand across the world to effectively own a piece of a U.S. company, and even more so the Magnificent Seven stocks that anyone in Asia or Europe would love to have in their portfolio," Delanoue said.

Delanoue warned against closed ecosystems where crypto exchanges, traditional exchanges and infrastructure providers each maintain their own standards. Fairmint has made its onchain securities standard open source so trading systems, issuers, broker-dealers and transfer agents can connect to it. "If they don't solve interoperability, fragmentation will kill the small players," Delanoue said.

Key Numbers

- $2 billion: Current global market for tokenized equities

- Less than $500 million: Tokenized equity market size at end of first quarter 2026

- More than $100 trillion: Traditional equities market capitalization

- $1.6 billion: Equity Fairmint has processed natively onchain since 2019

- $4.2 billion: Amount Bullish agreed to pay for transfer agent Equiniti in May

What to Watch

Interoperability standards will be critical as the tokenized equity market expands beyond its current niche status. Whether competing platforms adopt shared protocols or build closed systems could determine whether onchain equities become durable market infrastructure or another source of fragmentation. Delanoue's framing suggests the industry has roughly the same window Wall Street had in the late 1960s to establish common infrastructure before fragmented record-keeping becomes a systemic risk rather than an operational inconvenience.

Fairmint, acting as an SEC-registered transfer agent with the blockchain serving as the authoritative shareholder record, contrasts its approach with SPV-based structures that place layers between investors and underlying companies. The next phase of growth will test whether the sector prioritizes distribution speed over administrative rigor.