
DWF Labs: Investors Shift Capital From Tokens Into Crypto Equities
Capital Rotation: Tokens to Equities — With a Parallel Rise in Custody‑Integrated Tokenization
A market‑maker study from DWF Labs documents a clear reallocation of risk capital away from many newly listed tokens and toward publicly traded crypto companies and infrastructure providers, driven by persistently weak post‑listing token performance. The analysis finds that a large majority of new token offerings trade below their initial exchange listing price within weeks, with typical drawdowns concentrated in the first ~90 days (DWF reports a 50%–70% range and >80% of launches below TGE price).
That early sell‑off dynamic is incentivizing institutions to prefer regulated equity exposures that deliver auditable financials, custody solutions and inclusion in passive products—features that pension funds and many endowments can access far more readily than native tokens. Public‑market activity has risen alongside this rotation: equity‑based fundraising and M&A volumes (DWF cites ~$14.6B in IPO fundraising and ~$42.5B in M&A activity for 2025) are absorbing risk capital that might previously have gone to token launches.
Complementary industry reporting shows a nuanced picture rather than a one‑way exodus from on‑chain instruments. Tokenized equities and custody‑integrated on‑chain products are expanding: independent tallies put on‑chain tokenized equities at roughly $963 million by January 2026, and market pilots from DTCC plus issuer activity such as Robinhood’s near‑2,000 tokenized U.S. stocks (about $17 million on‑chain) outline operational paths for regulated issuance and reconciled ownership records.
Regulatory clarifications this year—most notably U.S. guidance that distinguishes issuer‑originated token models and flags custody and counterparty insolvency risks—have nudged market design toward custody‑integrated approaches. Industry pilots and public raises are supporting this shift: early‑2026 dealflow includes about $1.4 billion of committed capital across venture rounds and listings, with notable transactions such as a $250 million growth round for a payment‑linked stablecoin issuer, a NYSE‑listed custodian’s public raise to scale custody, and an institutional $75 million credit package administered on‑chain (anchored by a $50 million commitment).
The coexistence of capital moving into listed equities and the parallel build‑out of custody‑first tokenization is the report’s central tension. On one hand, listed crypto firms are trading at meaningful valuation premiums (DWF notes public infrastructure firms trading at roughly 7–40x price‑to‑sales versus tokens at ~2–16x), reflecting index inclusion, easier custody and clearer governance. On the other, institutional players are increasingly experimenting with on‑chain wrappers and custody‑integrated yield strategies (examples include large restaking allocations such as SharpLink’s $170 million stack and treasury engineering to treat on‑chain holdings as balance‑sheet tools).
Technical and market‑structure constraints complicate scaling of tokenized markets: throughput, latency, finality and transaction‑ordering risks limit how reliably on‑chain venues can support professional trading desks, encouraging investments in middleware, private sequencing and execution infrastructure that can reintroduce centralized ordering advantages and concentrate fee capture among bridges, custodians and sequencers.
Geography and policy matter. Panels and surveys from industry gatherings (including a CfC St. Moritz poll where 85% of invite‑only senior attendees ranked infrastructure as their top funding priority) and regional pilot programs (EU MiCA sequencing, Singapore and Hong Kong pilots, plus UAE attraction for regulatory clarity) show jurisdictional variation in where institutional pilots and balance‑sheet commitments are concentrating.
The practical implication is a bifurcation of capital: speculative, retail‑driven token launches are facing a tighter funding environment, while regulated securities, custody services and middleware that enable ledgered settlement are drawing institutional allocations. Exchanges and market makers must adapt listing playbooks, custody firms must scale audited services, and token issuers will need clearer monetization and retention metrics to win institutional backing.
If custody, interoperability standards and successful reconciliation/clearing pilots continue to progress, tokenized equities and compliance‑first on‑chain products could unlock faster settlement, fractionalization and new forms of liquidity—potentially creating a complementary pathway for institutional exposure that sits alongside public equity allocations. Absent those advances, tokenization risks concentrating around a few platforms and custodians, reinforcing the valuation gap that favors listed firms.
For corporate strategists and founders, the takeaway is to prioritize audited metrics, custody‑ready legal wrappers and demonstrable on‑chain revenue and retention to access institutional pools. Near term, expect continued flows into public‑market vehicles and infrastructure raises, a filtering of token launches toward productized projects, and heightened attention on custody, clearing and settlement as leading indicators of whether capital rotation produces durable change.
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