Four key hurdles for tokenized equities

1. Finding a real use case for tokenization

Speakers hosting a recent Sentora webinar were blunt: First-generation tokenization mostly disappointed. Credit and real estate deals were often illiquid, concentrated in a single issuer and never truly embedded in DeFi as collateral. They claim that the real use case is tokenized equities posted into on‑chain money markets to borrow stablecoins and to generate yield on stocks that have appreciated massively, but pay no dividend, such as any of the Mag 7 stocks.

They argued that if a retail investor who put US$10,000 into NVIDIA (NASDAQ:NVDA) and is now sitting on US$100,000 can click to borrow US$20,000 to US$30,000 at 5 percent without selling, that is a qualitatively new product versus today’s roughly 10 percent margin loans from brokers constrained by Basel capital rules.

At scale, they suggested that even a 1 percent penetration of the roughly US$25 trillion in US retail equity holdings would exceed the entire current DeFi market and could lift base DeFi yields by a few hundred basis points.

2. How tokenized equities actually work as collateral

Turning that vision into something robust requires solving liquidation, oracle and market structure problems that don’t exist for purely crypto collateral. Sentora’s view is that it is a mistake to try to rebuild Nasdaq on‑chain with thin automated market makers and retail liquidity providers.

Instead, liquidations should use existing equity liquidity. When a loan backed by tokenized NVIDIA, for example, breaches its thresholds, a liquidator posts stablecoins, borrows the underlying stock from a securities lender, sells it on the Nasdaq and then unwinds the token wrapper once settlement catches up.

Because this process spans multiple days, early implementations will need conservative loan‑to‑value ratios, wider spreads and a tolerance for basis risk between on‑chain prices and off‑chain fills. Issuers like Ondo that can wrap and unwrap within hours help, as do traditional data providers such as Bloomberg and Reuters, which already stream millisecond‑level equities prices and can serve as the backbone for hybrid on/off‑chain oracles.

The complexity is high, but their Bitcoin and Ether carry trade strategies, where smart contracts constantly lever and delever to avoid liquidation, are the blueprint they want to port over to equities.

3. Moving real-world equity ownership on‑chain

Even if the mechanics work, Sentora believes that almost none of the trillions parked in brokerage accounts can currently be used. Today’s tokenized shares are typically newly issued products that investors buy specifically to use on‑chain; they will never unlock the scale they are targeting.

The real unlock is letting investors transfer existing fully paid shares from brokers such as Morgan Stanley (NYSE:MS) or Schwab (NYSE: SCHW) into platforms from Kraken or Robinhood Markets (NASDAQ:HOOD) and convert them into tokens as a tax‑free event, preserving beneficial ownership and avoiding capital gains.

The obstacle is issuer‑by‑issuer approval. Each company has to authorize a portion of its outstanding shares to exist on a distributed ledger. The speakers argued that the pitch to issuers is stronger than many tokenization providers have realized — shares locked as DeFi collateral reduce free float supply and may be price‑supportive, and adding borrow‑against‑your‑stock and synthetic dividend functionality can make a non‑dividend growth stock more attractive.

4. Regulation, stablecoins and the banking system

On the equity side, Sentora’s researchers argued that if users stay within the existing rule, where each share is held in the owner’s name and all rights travel with the token, there is “really no regulatory hurdle.’

In their view, trouble starts with wrappers that mimic economic exposure, but strip votes and dividends.

That distinction matters because US regulators have begun to specifically examine tokenized US equities and DeFi trading venues, with an eye to when these instruments begin to look like swaps or unregistered securities.

On the funding side, everything depends on stablecoins. Neobanks and fintech companies such as PayPal (NASDAQ:PYPL), Revolut, Coinbase Global (NASDAQ:COIN), Kraken, Robinhood and others are racing to offer abstracted DeFi yield to mainstream users through tokenized deposits and on‑chain money markets.

At the same time, the GENIUS Act has pulled stablecoins into a bank‑like regulatory regime, tightening who can issue them and how reserves must be held, while large US banks lobby to slow or shape that evolution to protect deposit franchises. This tension is likely to define the pace at which tokenized equity collateral can scale.

Additional market caveats for 2026

Regime shift and rate risk

The rise of this sector occurred during a period of high cash yields, allowing tokenized treasuries and money market real-world assets (RWAs) to offer high percentage returns with low duration risk. As policy rates fall, tokenized T‑bill products become less compelling, which increases the pressure on tokenized equities to deliver truly differentiated upside in the form of leverage, tax efficiency or synthetic dividends rather than just being a new wrapper on low yields.

Platform and liquidity fragmentation

While DeFi is often thought of as a single venue, liquidity is scattered across Ethereum L2s, BNB Chain, Solana, app‑specific rollups and specialized RWA platforms. Early tokenized equity collateral markets are already experimenting on non‑Ethereum ecosystems, raising the risk that depth, pricing and oracle infrastructure fragment before a critical mass of standards and interoperability is in place.

Commodities and other RWA competition

Tokenized commodities such as gold, as well as short‑duration bond funds and private credit pools, are emerging as rival “default collateral” choices for institutions that want on‑chain yield without single‑name equity risk. Tokenized equities will be competing not only with Bitcoin and Ether, but with a growing number of seemingly safer RWA products with potentially clearer regulatory capital treatment for banks and insurers.

Centralization and concentration risk

Finally, the vision leans on a small number of critical intermediaries: custodians, tokenization agents, oracle providers and centralized exchanges that bridge DeFi and public equity markets.

In 2026, tokenization infrastructure is still concentrated in a handful of large players, and a restriction or policy shift at any of them could ripple through multiple protocols that treat tokenized equities as pristine collateral. Building credible resolution and risk‑sharing frameworks around those chokepoints is an unsolved but essential problem if tokenized equities are going to become the next major disruption rather than the next over‑promised narrative.

Latest tokenized equities developments

On Wednesday (February 11), Sentora introduced Stey, a new yield vault that allows investors to earn extra money from digital shares by placing them in a secure automated system that earns interest.

Stey is designed to work with Ondo’s tokenized offerings, like its tokenized treasuries and over 200 tokenized stocks. Partnering with Ondo, Sentora ensures digital shares in Stey vaults comply with regulations and are backed by physical securities in custody. Additionally, Sentora’s partnership with Chainlink ensures that those shares are priced accurately with real-time data, and Euler runs the lending strategies that generate the extra interest.

Sentora plans to expand beyond just these three, intending to add more types of digital assets from different partners and use different lending platforms to find the best interest rates for users.

The math supports copper demand

The last several years have brought a narrowing gap between copper supply and demand.

The panelists noted that newer industries such as artificial intelligence (AI), electric vehicles (EVs) and the energy transition are driving additional demand in an already tight market.

Rule noted that, regardless of whether demand from new technologies declines, underlying base-level consumption will be driven by urbanization and the growth of the middle class in developing nations.

“It isn’t about Teslas. It’s about the fact that a billion people on Earth have no access to primary electricity,’ he said.

‘It’s about the fact that one of the greatest leaps forward in humankind was raising 500 million Chinese from rural penury to middle-class status,” Rule told the audience at VRIC.

He explained that it’s a matter of simple arithmetic, suggesting that the amount of copper that it will take to get everyone to a better standard of living is going to be massive.

“It’s inescapable, it’s truly inescapable,” Rule said.

Bebek noted that it’s not just the developing world; there are also significant projects underway in the US.

“One of the biggest uses of copper is in development, and if you travel around the US, everywhere there is a lot of modernization. Airports and infrastructure to meet the new requirements, and everyone’s building is cleaner. So that’s going to be steady,” he said. Bebek also noted that tech demand is inevitable even if there is some deceleration.

“Baseline demand is built in. Data center demand may be influenced by copper prices, but I don’t think it matters. I think copper demand grows 2 percent compounded without data centers,” Rule added.

Copper supply facing challenges

Meanwhile, steady copper demand growth is running up against a stressed supply chain.

Experts have been calling for a structural copper supply deficit for years, largely due to the absence of new mining operations, but in 2025, the industry faced significant supply-side disruptions.

In May, underground activities at Ivanhoe Mines’ (TSX:IVN,OTCQX:IVPAF) Kakula mine in the Democratic Republic of the Congo were suspended after water ingress into the mine; the company ultimately reduced its annual guidance by 28 percent. Then, in July, a tunnel collapse that killed six at Codelco’s El Teniente mine in Chile forced the company to temporarily halt operations, causing it to reduce its guidance by 30,000 metric tons.

In September, another water ingress incident at Freeport-McMoRan’s (NYSE:FCX) Grasberg mine in Indonesia killed seven workers, forced the shutdown of operations and deferred significant production through Q4 2025.

These major incidents, along with other minor supply-side disruptions throughout last year, have shortened the timeline for the copper market to enter a supply deficit.

“Really, last year the market was close to equilibrium, but all the charts going forward were this widening supply gap. We’re there now. And last year we had so many major disruptions that it was nowhere near equilibrium,’ said Tiggre.

‘I’m a simple due diligence guy, and I just don’t see the supply,’ he added.

Overall, the panelists agreed that there’s enough copper in the world to meet demand, but the challenge is in getting out of the ground. Discovering deposits will be key to overcoming that issue.

“Copper mines are hidden behind geopolitical boundaries, social issues or undercover. They’re blind, and the easy ones have been found,” Bebek explained to the VRIC crowd.

He cited data showing that since 2015, there haven’t been any copper discoveries of real consequence.

Rule echoed that point, suggesting that it’s largely going to be an issue of investment into exploration. He discussed his history in the industry and noted the underinvestment in copper exploration during that period; however, when funds were spent, copper was uncovered. He also suggested that the easy copper has been found.

“There’s still more to be found, but its going to be found undercover. Let’s just say they’re pretty far off the highway. When we start spending money, we will find copper, but we haven’t started spending money,” he said.

Rule went on to explain that once the industry decides to reinvest in exploration, copper will be revealed, but it will take at least a decade. “There’s no relief in sight in the near term,” he said.

He also highlighted permitting issues and cited the example of the Resolution mine in Arizona, US.

Rule stated that the project has exceptional grades averaging 1.5 percent; however, it’s been stuck in permitting for a massive 28 years. Even with streamlined permitting processes being developed in countries like Canada and the US, companies are still likely to face years-long timelines to bring metal online.

“Even if Trump decides that copper is the most critical mineral, and he’s going to provide subsidies and price floors, and he’s going to guarantee that what could technically be referred to as crappy projects make money, you still have to get them permitted,” Tiggre said. Even with fast-track permitting, he noted that these projects will still require billions in investment, and in the best-case scenario will only save three to five years.

Investor takeaway

The biggest emerging factor is how the industry will respond to the growing copper supply gap.

As Rule pointed out, there doesn’t appear to be a near-term solution.

He also noted that in order for companies to maintain copper production at the current level, the required investment stands at US$250 billion over the next 10 years, which is US$150 billion more than the industry has.

“The problem with that is that maintains current production, a level where copper is in deficit and demand is growing at 2 percent compounded,” Rule explained to the audience.

With copper prices at all-time highs, it may not be time to jump in. But with geopolitical and economic uncertainty still looming over global financial markets, there could be opportunities from volatility.

“All I’m saying is there’s no need to give in to FOMO here. I’m super bullish. Doug Casey taught me to let volatility to be my friend. That’s what I’m thinking this year,” Tiggre said.

Investor Insight

Valeura Energy offers investors exposure to a debt-free, cash-generating Southeast Asia oil producer with growing reserves, visible production growth and multiple near- and medium-term catalysts to unlock value.

Overview

Valeura Energy (TSX:VLE,OTCQX:VLERF) is an oil and gas company focused on the development and operation of shallow-water offshore assets in the Gulf of Thailand. The company is listed on the Toronto Stock Exchange and is headquartered in Singapore, reflecting its strategic focus on the Asia-Pacific region. Valeura currently operates four producing oil fields – Nong Yao, Jasmine, Wassana and Manora – and has established itself as a low-cost, reliable operator in a mature basin with extensive existing infrastructure.

Valeura’s strategy is centred on generating strong free cash flow from its existing production base while extending asset life through continuous drilling, facility upgrades and near-field exploration. This organic growth is complemented by a disciplined acquisition strategy, positioning Valeura as a potential consolidator in a region where competition for assets is limited. The company is led by an internationally experienced management team with deep operational and transactional expertise in Asia, supported by award-winning safety, environmental and operational performance.

Company Highlights

• Second-largest oil producer in Thailand, operating four shallow-water offshore fields in the Gulf of Thailand
• Strong financial position, with US$306 million in cash and no debt as of December 31, 2025
• Growing reserves and extended field lives, with 57.6 mmbbl of 2P reserves and a multi-year history of approximately 200 percent reserves replacement per year
• Highly cash-generative business, generating US$158 million in free cash flow over the last twelve months to September 30, 2025
• Growth-oriented strategy, combining disciplined organic investment with accretive M&A opportunities in the Asia-Pacific region

Key Projects

Core Thailand Producing Portfolio (Operated)

Valeura’s primary focus is its operated portfolio of shallow-water offshore oil fields in the Gulf of Thailand, which form the foundation of its cash flow, reserves growth and near-term value creation. The company currently operates four producing fields – Nong Yao, Jasmine, Wassana and Manora – all located in a mature basin with extensive infrastructure and a long history of reserve replacement through continued development.

Nong Yao (90 percent working interest) is Valeura’s largest and most profitable asset, and the company’s top operational priority. Following an expansion in 2024 which saw the installation of a third production facility and successful drilling thereafter, Nong Yao has become Valeura’s largest producing field, delivering approximately 10.6 mbbls/d in Q3 2025. Ongoing appraisal, seismic interpretation and infrastructure-led exploration support further production and reserves upside.

Jasmine (100 percent working interest) and Manora (70 percent working interest) are mid-life fields that continue to exceed expectations through targeted drilling and operational optimisation. Jasmine has produced many times its originally-forecast ultimate recovery and has seen its economic life extended repeatedly. Manora, while smaller, has similar characteristics – continual extensions of economic life through drilling success and optimisation projects. Together, these assets provide stable production and strong operating margins.

Wassana (100 percent working interest) represents a cornerstone growth project within the Thailand portfolio. Valeura is executing a major field redevelopment that includes a new central processing platform designed to increase production from approximately 3 mbbls/d to around 10 mbbls/d. First oil from the new facility is expected in Q2 2027, with the redevelopment extending field life into the 2040s and creating a hub for future satellite developments.

Gulf of Thailand Growth Platform (Non-operated)

Beyond its existing producing fields, Valeura is expanding its footprint in Thailand through a strategic farm-in with PTT Exploration and Production, Thailand’s national oil company. The transaction significantly increases Valeura’s acreage position in the Gulf of Thailand and introduces exposure to both oil and gas opportunities adjacent to existing infrastructure.

The blocks (G1/65 and G3/65) contain multiple existing discoveries and are already the subject of near-term development planning, with the potential to progress initial development projects toward final investment decisions in 2026. While the farm-in transaction remains subject to government approval, management views its nascent partnership with PTTEP as a key medium-term growth catalyst that complements Valeura’s operated production base.

Türkiye Deep Gas Asset (Non-operated, Legacy Upside)

Valeura also retains an interest in a deep, tight-gas play in Türkiye, which represents a longer-dated upside opportunity. The asset has been farmed out to an experienced regional operator, limiting Valeura’s capital exposure while preserving upside through appraisal and testing activity. Management has positioned Türkiye as a “free option” for shareholders, providing potential upside without detracting from the company’s operational and strategic focus on the Asia-Pacific region.

Management Team

Sean Guest – President & Chief Executive Officer

Sean Guest brings 30+ years of international oil and gas experience, including senior operational and leadership roles with Shell, Woodside and Schlumberger. Prior to joining Valeura, he served as CEO of two private juniors, leading production and exploration teams across Asia and Africa.

Yacine Ben-Meriem – Chief Financial Officer

Yacine Ben-Meriem is a seasoned finance professional with 15+ years in oil and gas investment banking and finance, particularly in Southeast Asia. Before joining Valeura, he co-founded Panthera Resources, a key partner in Valeura’s Gulf of Thailand acquisitions. He has held senior roles at ABN AMRO and Standard Chartered in Singapore.

Grzegorz (Greg) Kulawski – Chief Operating Officer

Grzegorz Kulawski brings 25+ years of upstream experience through leadership roles at Shell, including deputy CEO of Sakhalin Energy, head of global safety, and senior leadership roles overseeing other major producing operations. His background spans brownfield operations and greenfield developments, with expertise in complex project execution and team integration across regions.

Kelvin Tang – Executive Vice-president, Corporate, General Counsel & Corporate Secretary

Kelvin Tang has over 18 years of experience in international oil and gas, with experience as head of business development at Hibiscus Petroleum and as CEO and COO of KrisEnergy, a Singapore-listed predecessor to Valeura’s initial Thailand interests. His background combines legal, commercial and strategic leadership.

Ian Warrilow – Thailand Country Manager

Ian Warrilow has 30+ years of operational and commercial experience in oil and gas across Australia, Europe and Southeast Asia. Before joining Valeura, he served as COO of Energy Development Oman and held senior roles with Mubadala Petroleum, including leadership positions in Indonesia and Thailand. His technical and regional expertise supports Valeura’s on-the-ground operations.

Key benefits of off-exchange collateral

When collateral stays on an exchange, traders are exposed to risks like hacking, insolvency or fraud. With off‑exchange collateral, the assets sit with a regulated custodian, keeping the trader in control and protected, even if the trading venue runs into trouble.

Many institutions are required by regulators or internal policies to limit how much collateral they can leave on any single exchange. Off‑exchange programs let them trade with the same amount of capital while keeping most of the collateral off the exchange, so they stay within those limits.

On many platforms, collateral remains idle and generates no returns while securing trades. In contrast, off-exchange collateral can often be invested in short-term, low-risk instruments, such as government bonds or tokenized money-market funds. This allows the collateral to continue generating returns while still securing the positions.

Institutions also value being able to manage and move collateral themselves, rather than having it locked into a single exchange’s system. Off‑exchange structures let them keep custody and operational control, and in some cases help hide large trades from public order books, protecting their strategies.

Regulators warn of a growing ‘black market’

But as demand accelerates, so too has the gray and black market.

In the US, the Food and Drug Administration (FDA) has warned that some patients are turning to unapproved versions of GLP-1 drugs, including semaglutide and tirzepatide, for weight loss.

These versions may be compounded by pharmacies when approved drugs are unavailable, but compounded drugs are not reviewed by the FDA for safety, effectiveness, or quality before being marketed.

The agency has also raised concerns about improper storage during shipping, particularly for injectable versions that require refrigeration. It has also flagged fraudulent compounded products bearing false labels or the names of pharmacies that did not produce them.

The FDA has established an import alert to help block GLP-1 active pharmaceutical ingredients with potential quality concerns from entering the US supply chain, while emphasizing that compounded drugs should only be used when a patient’s medical needs cannot be met by an FDA-approved alternative.

Researchers found that one in seven users were taking drugs not licensed for weight loss, often purchased privately.

The situation is also similar in the UK. More than 6,500 counterfeit or unlicensed weight-loss injections have been seized over the past three years, according to new data from the Medicines and Healthcare products Regulatory Agency (MHRA) as reported by The Independent.

Seizures rose sharply from 407 in 2023 to 5,851 in 2025, with many discovered through inland investigations rather than at the border, suggesting a growing domestic black market.

Andy Morling, deputy director of enforcement at the MHRA, said the agency removed nearly 20 million illegally traded medicines from circulation last year. “Each and every one of those products was potentially dangerous to the public,” he said.

Online providers have warned that demand is outpacing regulated access. Sokratis Papafloratos, founder of Numan, told a London Assembly committee, “ In terms of illicit access, I think we really underestimate the problem and misunderstand it.”