eToro plans to launch tokenized versions of U.S.-listed equities as ERC20 tokens

eToro Group Ltd., a trading and investing platform, has revealed plans to join the growing tokenized equities, ETFs, and futures markets. 

The announcement comes on the back of regulatory developments, including MiCA in Europe and the recently passed Genius Act in the U.S., creating new opportunities for the tokenization of real-world assets.

eToro enters the tokenized stocks sweepstakes

eToro’s plans have caught the attention of many because they extend the trading hours and also introduce tokenized U.S.-listed equities to new markets.

The company’s co-founder and CEO, Yoni Assia, cited regulatory milestones including the MiCA in Europe and the recently passed Genius Act in the U.S., as playing a role in the launch as they “create a new opportunity to create digital assets that are legally backed and regulated.”

“We’ve been long-term believers in a tokenized future. Blockchain technology will facilitate the greatest ever transfer of wealth, as traditional assets are tokenized and moved onto the blockchain,” Assia said in a statement.

eToro’s plan will enable retail investors to trade tokenized versions of popular U.S. equities — like those primarily listed on the New York Stock Exchange and Nasdaq — via ERC-20 tokens on the Ethereum blockchain.

The company has partnered with the CME Group to also offer tokenized futures trading, a move that aligns with its mission to open the global markets.

“Extended hours trading was the first step, 24/5 takes it a step further; however, tokenization brings 24/7 accessibility,” Assia added.

While it is the first time eToro is dabbling in tokenized stocks, it is not its first rodeo with tokenization, as it launched tokenized gold and silver products as far back as 2019.

According to Assia, the company’s ultimate goal is to get every asset on the trading platform tokenized, and stocks are just the starting point. However, the future is uncertain as the way the SEC will treat tokenized equities is still being debated.

SEC Chair Paul Atkins had this to say about the topic: “It’s hard to say exactly where things will go or what will happen, but assets clearly are moving on chain. So if it can be tokenized, it will be tokenized.”

The announcement comes after a successful milestone for the company

Revelation of the eToro Group Ltd’s plans comes after it announced the successful closure of a new three-year $250 million senior unsecured revolving credit facility. This facility will reportedly remain undrawn at closing, which means the company has yet to tap into this credit line and can remain debt-free.

The successful closure, which is expected to enhance the company’s financial flexibility for strategic growth, as well as the announcement of its foray into tokenized equities, has pushed analysts watching its stock to adopt bullish outlooks.

Canaccord Genuity, for example, has reiterated a “Buy” rating with a $78 price target on eToro stock, highlighting its potential for growth and steady performance following its public debut. Deutsche Bank also initiated coverage with a “Buy” rating and a $70 price target, a move made after factoring in eToro’s unique market position due to its social trading and investing platform.

Cantor Fitzgerald set the highest price target with an overweight rating of $84, which is an acknowledgment of eToro’s significant market share in key European countries.

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