The Tokenization Illusion: 94% of Crypto-Backed Stock Market Relies on a Single Intermediary

The dream of a brokerless financial future is facing a reality check. Recent data shows that 94% of the tokenized equities market relies on Alpaca, which currently custodies over $1.5 billion in shares to back these digital assets. Instead of a decentralized revolution, the market is seeing massive concentration in a single infrastructure provider.

This centralization brings significant regulatory and operational scrutiny. As the DTCC prepares to launch its own tokenization service this October, the SEC has issued warnings regarding the ownership risks and intermediary exposure inherent in third-party stock tokens, highlighting the gap between crypto's promise and its current execution.

Crypto promised to eliminate stockbrokers, but the reality of the tokenized equity market tells a different story. According to recent measurements, Alpaca custodies more than $1.5 billion in shares backing tokenized equities, representing the vast majority of the market. This reveals a profound reliance on centralized infrastructure rather than the peer-to-peer ideal.

The landscape is shifting rapidly. With the DTCC preparing to launch its own tokenization service in October and the SEC warning that third-party stock tokens can expose investors to additional ownership and intermediary risks, the industry is at a crossroads. The question remains whether tokenization is truly democratizing finance or simply creating new, centralized gatekeepers.