Author: Cubone Wu on Blockchain
After Trump took office, cryptocurrency regulation in the United States was significantly relaxed, and the tokenization of U.S. stocks became a major hot topic, with almost all major exchanges participating. "Using U.S. Treasury bonds to collateralize dollar stablecoins to trade U.S. stocks, making America great again—Trump must love this idea!"
On June 30, 2025, Bybit and Kraken launched the xStocks product provided by the Swiss compliant asset tokenization platform Backed Finance. The related tokens are backed 1:1 by real stocks, held by regulated custodians, and deployed on the Solana blockchain, enabling 24/7 uninterrupted trading and on-chain settlement. Due to compliance restrictions, this service is currently only available to non-U.S. users.
On the same day, Robinhood announced the launch of stock token trading services based on the Arbitrum network in Europe, with plans to gradually expand to 24/7 trading and tokenize shares of some unlisted companies, including OpenAI and SpaceX. This service is currently not available to U.S. users.
Classification and Comparison of U.S. Stock Trading Solutions on Mainstream Crypto Trading Platforms
1. Third-Party Issuance + Multi-Exchange Access Model (Representative Platforms: Bybit, Kraken, Gemini)
Tokens issued by regulated issuers (such as Backed Finance) that are pegged 1:1 to real stocks and deployed on public blockchains (such as Solana). Crypto exchanges act as access platforms providing matching services, supporting on-chain transfers and DeFi applications, allowing users to trade 24/7 and enjoy corresponding economic rights (such as dividends). The compliance responsibility of this model is mainly borne by the issuer, and most exchanges do not hold securities licenses, typically excluding U.S. users from their service scope.
2. Licensed Broker-Dealer Self-Built Chain + Self-Issuance Model (Representative Platform: Robinhood)
Licensed broker-dealers directly issue stock tokens and custody the underlying assets, achieving full-process integration of issuance, clearing, and settlement on-chain. Robinhood currently provides this service based on Arbitrum and plans to launch its own Layer 2 blockchain, Robinhood Chain, supporting user self-custody and 24/7 trading. Token holders can obtain economic rights to actual stocks (such as dividends). This model has a high level of compliance, suitable for strictly regulated markets, but has high technical and compliance thresholds, with limited platforms for implementation.
3. Contract for Difference (CFD) Model (Representative Platform: Bybit)
Providing CFD trading on U.S. stock prices through systems like MT5, users can use USDT as margin for long and short leveraged operations without holding actual stocks. This model is convenient for trading and suitable for short-term speculation, but users do not enjoy any shareholder rights or dividends. CFDs are financial derivatives and are subject to strict regulation in the U.S. and Europe, with most platforms only available to specific offshore market users without licenses, and European users may face restrictions.
Additionally, Coinbase is seeking approval from the U.S. SEC to launch tokenized stock trading services under a compliant framework. This plan aims to issue digital tokens representing stock ownership through blockchain, supporting on-chain settlement and matching. Coinbase has submitted a pilot application to the SEC, and if it receives a No-Action Letter or exemption, it will become one of the first compliant platforms to launch tokenized U.S. stock services in the U.S.
Review of Previous Period's Tokenized U.S. Stock Experiments: Attempts and Failures of FTX, Binance, and Decentralized Protocols
FTX (in partnership with CM-Equity): The crypto derivatives giant FTX was one of the early explorers of tokenized U.S. stocks. In October 2020, FTX partnered with the German licensed financial institution CM-Equity AG and the Swiss digital asset company Digital Assets AG to launch U.S. stock token trading services. FTX allowed non-U.S. users to trade tokens of a range of U.S. listed companies, including popular stocks like Facebook, Netflix, Tesla, and Amazon. These tokens were backed by actual stocks held by partners and supported fractional trading, allowing users to purchase stock tokens for as little as a few dollars, significantly lowering the investment threshold. FTX's move achieved considerable progress: in the fourth quarter of 2021, its tokenized stock trading volume peaked, with a monthly trading volume of approximately $940 million in October. However, due to the unfriendly regulatory environment at the time (with regulators in various countries cautious about this innovative product), FTX's U.S. stock token business never gained mainstream regulatory recognition. In 2022, FTX faced a crisis due to its own risks and fund misappropriation issues, leading to its bankruptcy in November, and its tokenized stock service came to an abrupt halt. FTX's attempt exposed compliance trust issues: once the issuing platform faced a credit crisis, the tokenized assets held by investors might not be redeemable. Furthermore, due to the lack of clear regulatory guidance, FTX's related business faced questioning and restrictions in multiple regions (for example, Germany's BaFin warned FTX that such products might be illegal). The FTX case illustrates that without a solid compliance framework, exchanges pushing for securities tokenization unilaterally are unlikely to sustain.
Binance (Stock Tokens): Following closely, the world's largest crypto exchange Binance launched U.S. stock token trading services in April 2021, with Tesla (TSLA) as the first stock to go live. Binance also partnered with CM-Equity and Digital Assets AG to issue tokens, allowing users to purchase fractional shares of U.S. stocks using crypto assets. At that time, Binance's move aimed to compete with FTX, Bittrex Global, and others, providing stock trading channels for its vast user base. However, this business lasted only about three months. Due to rapid responses from regulators in various countries (for example, the UK's FCA and Germany's BaFin questioning its compliance), Binance was forced to voluntarily delist all stock tokens in July 2021 and sought a more compliant product direction. Reports indicated that Binance had not obtained the necessary licenses to issue securities tokens, facing significant legal risks, and had to hastily terminate the service. Binance's experience highlights the immense impact of regulatory pressure on centralized platforms attempting securities tokenization: top crypto companies that do not resolve compliance issues in advance will quickly face regulatory pushback when launching such products, making it impossible to sustain operations.
Terra's Mirror Protocol (Synthetic Assets): Unlike the centralized exchange path, the Terra blockchain ecosystem launched the Mirror Protocol at the end of 2020, taking a completely decentralized synthetic asset approach. Mirror allowed users to mint synthetic tokens pegged to U.S. stock prices (called mAssets, such as mTSLA, mAAPL), using algorithms and oracle systems to track real stock prices. Users needed to stake excess collateral (such as UST stablecoin) on Terra to generate mAssets and trade through AMM pools. Mirror was once popular, providing a KYC-free on-chain channel for global users unable to invest directly in U.S. stocks. However, its fate was closely tied to the Terra stablecoin ecosystem: in May 2022, the UST stablecoin on the Terra chain collapsed, directly causing the collateral value of the Mirror protocol to drop to zero, leading to a rapid loss of peg for many mAssets and a liquidity crisis. Worse still, regulators were also closely monitoring the protocol— the U.S. SEC sent a subpoena to Mirror in 2021 and later accused it of involving unregistered securities issuance when suing Terraform Labs in 2023. Ultimately, the Mirror Protocol came to an end due to dual failures in technology and compliance: on one hand, the algorithmic stability mechanism was fragile and could not withstand extreme market shocks; on the other hand, its model of circumventing regulation was ultimately difficult to be accepted by the mainstream financial system. The rise and fall of Mirror reflect that previous attempts at decentralized synthetic securities faced significant obstacles, providing lessons for this round of projects to shift towards tokenization solutions backed by real assets and compliant with regulatory requirements.
Synthetix (On-Chain Synthetic Assets): Synthetix is a veteran decentralized derivatives protocol on Ethereum that launched synthetic U.S. stock assets (Synth) in 2020, such as sTSLA (Tesla synthetic asset), sAAPL, etc. Its model involves minting synthetic tokens pegged to stock prices through over-collateralized crypto assets, allowing investors to gain price exposure on-chain without holding actual stocks. This synthetic asset model does not require custodial entities and has no geographical restrictions, with trading conducted entirely on decentralized exchanges, theoretically achieving permissionless global trading. However, the actual results were not ideal: for example, since its launch, the total on-chain transactions for sTSLA (including minting and redemption) were only 798, with trading volume remaining low for a long time. Due to insufficient user demand, most market makers were unwilling to bear the short-selling risks and capital costs required for minting synthetic assets, leading to gradually dwindling liquidity. Coupled with regulatory concerns (as these synthetic stocks bypass securities regulation), Synthetix gradually delisted U.S. stock Synths after 2021, shifting to other derivatives fields like forex, marking the failure of the synthetic U.S. stock path. This experience indicates that purely decentralized stock token models without real asset backing are difficult to sustain, lacking viable business models and product-market fit (PMF), making it hard to compete with more compliant and transparent models.
Discussion on Future Trends: Can Compliance Be Achieved?
Whether this round of tokenized securities fever can continue to develop and truly achieve compliance depends on the positive interaction between technological innovation and the regulatory environment. From a regulatory perspective, changes in the political landscape in the U.S. have brought significant shifts to this field. After Trump took office, a more open signal for crypto regulation was released: the new SEC chairman and commissioners hold a friendlier attitude, the SEC has withdrawn lawsuits against several crypto companies including Coinbase, Binance, and Kraken, and has established a dedicated digital asset working group to formulate new regulations. For example, the SEC's enforcement department recently changed its stance, clearly stating that certain forms of staking do not constitute securities issuance. At the congressional level, stablecoin legislation has also made breakthrough progress, with the U.S. federal government expected to introduce a stablecoin bill to provide legal anchoring for on-chain dollars, which will become the infrastructure for the development of Real World Assets (RWA). RWA is receiving unprecedented positive evaluations: U.S. political and regulatory leaders are beginning to recognize that bringing traditional assets like government bonds and stocks onto the blockchain through compliant means can help improve market efficiency and strengthen the financial position of the dollar. These positive policy tones have cleared some obstacles for the landing of tokenized securities in core financial markets.
At the same time, regulatory frameworks in regions such as Europe and Asia are becoming increasingly clear, with regulations like MiCA providing foundational guidance for security tokens, and the space for regional regulatory arbitrage is gradually shrinking. Early jurisdictions like Switzerland and Singapore have issued relevant licenses (such as Backed's platform license under Switzerland's DLT Act, Singapore's MAS RMO license, etc.), setting benchmarks for compliant operations. This means that new participants are more inclined to conduct business within regulatory sandboxes and licensing scopes to avoid repeating the mistakes of the previous cycle's gray operations facing crackdowns.
In terms of technology and market, this round of tokenized securities projects has improved in product design and market fit compared to the previous cycle. On one hand, platforms place a high emphasis on asset authenticity and transparency—tokens are 100% backed by real assets, with custody and audit information disclosed regularly, leveraging the verifiability of blockchain to enhance investor confidence. For example, Backed and Swarm release reserve reports monthly, and Chainlink oracles monitor the token/asset correspondence in real-time, striving to avoid the emergence of "shadow assets" or decoupling risks. On the other hand, new solutions pay more attention to user experience: platforms like Robinhood introduce mature mobile platforms to provide convenient interfaces; Bybit integrates stock tokens into existing trading applications, achieving one-stop management of crypto and traditional assets. At the same time, features like 24/7 trading, T+0 settlement, and fractional trading have been effectively implemented, allowing users to enjoy more flexible and efficient trading services than traditional brokerages. These improvements are expected to address the previous cycle's issue of failing to find product-market fit (PMF): the purely synthetic asset model lacked appeal to crypto investors, whereas now, tokenized stocks backed by real value combined with DeFi functionalities (such as staking, lending, and liquidity mining) may create new demand growth points.
Nevertheless, tokenized securities still face numerous challenges in becoming mainstream. The final mile of compliance needs to be bridged. In the U.S., although the regulatory atmosphere is warming, a clear legal framework allowing retail investors to trade on-chain stocks is still needed. Companies like Coinbase are actively seeking SEC No-Action letters, but it remains uncertain whether regulators will provide a "green light" soon. If the U.S. market remains closed for an extended period, large-scale global securities chain reform will still be constrained. However, industry insiders expect that if leading platforms like Coinbase achieve breakthroughs, it will set a benchmark for the entire industry. Research by Odaily indicates that most compliant platforms, due to strict KYC restrictions, offer user experiences that are close to or even more cumbersome than traditional brokerages, making it difficult to attract pure crypto users, while unlicensed platforms raise concerns among users. Additionally, for crypto traders seeking high volatility, the price fluctuations of U.S. stocks are relatively limited and cannot directly replicate the speculative fervor of the crypto market. Therefore, how to balance compliance and convenience, and find differentiated application scenarios, will determine whether tokenized U.S. stocks can experience explosive growth. Industry insiders suggest exploring new on-chain native securities investment experiences through methods such as equity splitting, decentralized autonomous organization (DAO) shareholding, and securities + gamification to stimulate interest in the crypto community.
Furthermore, one of the challenges of tokenized stocks is the lack of liquidity in the secondary market. Unlike stocks traded on traditional exchanges, these are "representative rights certificates" issued on-chain by custodians or platforms themselves. These tokens can typically only be traded on specific platforms (such as xStocks, Bybit, Kraken) and lack direct arbitrage paths with traditional financial markets.
The participation of market makers is crucial to solving liquidity issues, but there are several challenges: 1. Assets cannot be freely arbitraged or hedged: if a market maker is making a market for xAAPL (Apple token) on-chain but cannot hedge risks in the U.S. stock market simultaneously (due to restrictions/costs/regulation), their risk exposure cannot be effectively controlled. 2. Lack of on-chain compliant settlement systems: true tokens representing securities ownership must handle issues like dividends, voting rights, and clearing, which are difficult to standardize on-chain, making it hard for market makers to assess their real value. 3. High platform credit risk: market makers face significant platform credit risks, leading to lower willingness to participate unless compensated with extremely high yields.
To address these challenges, some platforms may collaborate with custodians to provide strong credit backing; introduce stablecoin trading pairs and on-chain incentive programs to attract market makers to provide initial liquidity; and link on-chain AMM or order books with off-chain liquidity pools. However, overall, unless these tokenized stocks achieve a closer bridging mechanism with the real securities market, liquidity issues will remain structurally difficult to resolve.
Additionally, if these tokenized U.S. stock services open purchasing channels to Chinese users, there are significant legal and regulatory risks from both the platform's and Chinese investors' perspectives. China strictly prohibits unlicensed overseas securities services or intermediary activities. Even if the platform is registered overseas, providing U.S. stock trading-related services to Chinese users (especially involving dividends, voting rights, and financial leverage) may be considered "illegal securities business." Chinese individuals are not allowed to freely invest in overseas securities (they must go through channels like QDII). Using crypto to indirectly invest may be classified as illegal foreign exchange or regulatory evasion.
In summary, the new wave of tokenized securities is backed by a more favorable policy environment and more mature technical solutions, providing a more solid foundation than the previous cycle. If regulatory openness and industry self-discipline progress in tandem—supported by the loose policies and legal protections promoted by the Trump administration, along with a strong emphasis on compliance and risk control within the industry—then tokenized U.S. stock products are expected to gradually move towards sustainable development, becoming an organic bridge connecting traditional financial markets and the Web3 world. Of course, this process will be gradual: only when the market truly identifies user demand pain points and provides unique value (such as achieving 24/7 global market connectivity and new liquidity mining opportunities) can tokenized securities shed the "conceptual gimmick" label and usher in large-scale compliance and widespread application.
This article was organized with the participation of GPT, solely for information sharing purposes and does not constitute any investment advice. Readers are advised to strictly comply with the laws and regulations of their location and not to engage in illegal financial activities.
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