Stock Tokenization: The Golden Gateway to RWA or the Grayscale Trap of Capital Markets?
Introduction
Stock tokenization is becoming the latest focal point at the intersection of the cryptocurrency world and traditional finance. With the entry of platforms like Kraken and Robinhood, the market is attempting to bring real assets such as U.S. stocks and ETFs onto the blockchain, creating a global 24/7 on-chain capital market. As an industry-leading exchange, this trend is not isolated but is driven by the popularity of stablecoins, the shadow dollar system, and the logic of real-world asset (RWA) tokenization.
The core logic is that stablecoins have built a global shadow dollar system, and stock tokenization is a natural extension, allowing non-U.S. users to access "shadow U.S. stocks" directly with USDT, bypassing account opening, remittance, and cross-border settlement, forming an on-chain version of "Grayscale Wall Street." This model not only brings new liquidity opportunities but also pushes regulatory and compliance risks to the forefront.
At the same time, another reverse path is taking shape: on-chain assets are entering traditional markets through compliant restructuring. Recently, a Nasdaq-listed company changed its name to Tron Inc., incorporating the public chain ecosystem and TRX into its core strategy, signaling that the integration of crypto assets and mainstream finance is no longer just a conceptual idea but is gradually being implemented within a regulatory framework.
Is it a pie in the sky or a trap? The answer depends on whether a closed loop can be established:
● Can the real stock support and transparent custody be realized?
● Can liquidity and market-making be maintained in the long term?
● Can regional compliance mechanisms keep pace with the speed of innovation?
This article, written by HTX Ventures, will analyze the model, player landscape, regulatory situation, typical risks, and future evolution to help you determine: Is stock tokenization the golden gateway to RWA or the Grayscale trap of capital markets?
1. Why is the Crypto World Focusing on Stocks?
Since the birth of blockchain technology, almost all assets that can be tokenized have been gradually brought onto the chain. From the earliest stablecoins to traditional financial assets like real estate, bonds, and funds, and now to the increasingly popular stock tokenization, each innovation attempts to eliminate various barriers and obstacles in real-world finance through blockchain.
The core logic of stock tokenization is to convert stock assets in traditional financial markets into digital tokens on the blockchain, enabling 24-hour global trading, fractional share purchases, and more efficient cross-border transactions. This model has garnered attention because it directly addresses the pain points faced by global retail investors, especially those in emerging market countries, when trading U.S. stocks, such as difficulties in account opening, remittance, and mismatched trading hours.
However, stock tokenization is not a new concept; it briefly appeared in 2020, with exchanges like FTX and Binance attempting it, but ultimately failed under regulatory pressure.
2. Lessons from Stock Tokenization: FTX and Binance
In 2020, FTX, one of the earliest exchanges to attempt stock tokenization, chose to collaborate with the German securities firm CM-Equity to purchase real stocks for custody and then issue tokenized stocks in the form of ERC-20 tokens, such as Tesla, Apple, and Coinbase stock tokens, selling them to global users on its trading platform.
FTX's initial foray was impressive, attracting a large number of retail investors from emerging markets. However, this model quickly drew the attention of European and U.S. securities regulators. The German Federal Financial Supervisory Authority (BaFin) and the U.S. Securities and Exchange Commission (SEC) issued strong warnings, stating that such businesses involved public sales of securities and must comply with securities regulations and obtain the necessary licenses. FTX was unable to meet these compliance requirements and was forced to quickly delist its stock token products.
In 2021, Binance also attempted to launch similar products, tokenizing stocks like Tesla, Coinbase, and Apple for trading in a nearly identical manner. However, Binance's attempt also did not last long and soon ceased related services under regulatory pressure from multiple countries.
The failures of FTX and Binance clearly conveyed a key message: the core challenge of stock tokenization lies in compliance and regulation, not technology.
3. Why is Stock Tokenization Back in the Spotlight?
Despite facing strong regulatory resistance, stock tokenization has resurfaced on the agenda in 2024-2025, becoming a hot topic in the market. The reasons can be summarized in four points:
● Policy and political factors: In 2024, Trump publicly supported the development of cryptocurrencies, reigniting market expectations for potential regulatory easing. SEC official Hester Peirce also expressed interest in a moderate regulatory sandbox, providing a gray area in policy discourse.
● Entry of traditional financial institutions: Traditional giants like BlackRock and Franklin Templeton have begun tokenizing assets such as funds and bonds through blockchain. This move provides a model for stock tokenization, encouraging more traditional institutions to explore the space.
● Maturity of technological conditions: Unlike in 2020, the rapid development of blockchain technologies like Solana, Base, and Arbitrum has significantly reduced the cost of on-chain trading, increased speed, and made liquidity easier to achieve.
● Strong demand from real retail investors: Retail demand for U.S. stocks remains robust in regions like Southeast Asia, South Asia, and the Middle East. Users in these areas hold a large amount of USDT but find it difficult to access the traditional U.S. stock market, and stock tokenization directly fills this market gap.
4. Why is Stock Tokenization Strongly Related to the Shadow Dollar System and the Popularity of Stablecoins?
Stock tokenization is the "second layer evolution" of stablecoin-based on-chain dollars, transforming the shadow dollars in retail investors' hands directly into shadow U.S. stocks, turning RWA from "static custody" into "composable dynamic assets." The hotter stablecoins become, the more runway this path has, but regulatory concerns about shadow dollars will also intensify.
Stablecoins are essentially the global "gray channel" of the shadow dollar system
● Dollar-pegged stablecoins (USDT, USDC) are no longer just "payment tools in the crypto world," but rather "dollar replicas" that bypass traditional cross-border clearing networks.
● In many emerging markets, stablecoins represent local residents' shadow claims to dollars. In the Philippines, Pakistan, Argentina, and Vietnam, users may not have local currency, but having stablecoins equates to having "dollars."
● Therefore, from the perspective of retail investors: "Having USDT ≈ Dollar deposits," but more flexible, allowing for entry and exit to trade and also to directly exchange for stock tokens.
● When stock tokenization emerged, it naturally became a new destination for stablecoins: USDT/USDC directly transforms into on-chain shadow price targets for Apple/TSLA, rather than first converting to fiat currency and then opening an account with a U.S. brokerage.
The higher the popularity of stablecoins, the more runway there is for RWA (real-world asset tokenization)
● The circulation of USDT exceeded $115 billion in 2024, making it the world's largest "dollar substitute," with a circulation speed far exceeding that of traditional dollar wire transfers.
● With highly liquid stablecoins, on-chain RWAs (bonds, funds, real estate, stocks) naturally require new "reservoirs," otherwise USDT can only remain on centralized exchanges for contracts, unable to connect with real assets.
● Tokenized stocks are one of the easiest to understand and most mature RWAs in terms of global liquidity, as retail investors are familiar with the underlying assets, and market makers can base their quotes on real secondary market prices, making them easier to trade than real estate, art, or receivables.
The shadow dollar system + stock tokenization makes "U.S. stocks" a second-layer dollar asset on-chain
● From a regulatory perspective, the combination of stock tokenization and stablecoins essentially forms a "shadow dollar capital market":
○ Stablecoins provide a shadow alternative to dollar currency;
○ Stock tokenization shadows the equity returns of U.S. companies;
○ The combination allows non-U.S. residents to use "shadow dollars" to trade "shadow U.S. stocks" 24/7.
● This combination bypasses the U.S. brokerage system, SWIFT settlement system, and the direct tax reporting system in the U.S. (theoretically).
● Because of this, regulators remain highly sensitive to it, as they are concerned about the "spillover of dollar influence," rather than just the tokenization play.
This logic explains why Kraken, Bybit, Robinhood, and Backed are willing to make a comeback in 2024-2025
● Stablecoins have been validated by global users (fast transactions, convenient cross-border payments), and on-chain RWAs also have backing from giants (BlackRock, Franklin Templeton).
● Kraken and others see the opportunity to bring retail investors from the gray area into the fold through this shadow dollar system.
● Robinhood's initial foray into stock tokens in the EU also reflects its optimism about the USDT flow from non-U.S. markets, using on-chain tickets to tap into user groups that were previously inaccessible.
5. Three Main Models of Stock Tokenization
Although the concept of "stock tokenization" consists of just a few words, its practical implementation is not a single pathway.
Based on whether there is real stock custody, on-chain issuance, and trading methods, the current mainstream practices in the market can be summarized into three models:
- Real stock custody + on-chain token issuance
- Contract for difference (CFD) model
- Pure DeFi synthetic assets
Each of the three models has its pros and cons, and there are significant differences in regulatory pressure, liquidity design, and user adaptation scenarios behind them. Understanding these differences is fundamental to grasping the entire stock tokenization landscape.
Model 1 | Real Stock Custody + On-Chain Token Issuance
This is the mainstream route currently adopted by Kraken and Bybit, and it is relatively the most prudent approach from a compliance perspective.
Operational Mechanism
● Licensed issuers or brokers (such as Backed Finance, Dinari) purchase real stocks (like Apple, Tesla) in the traditional secondary market.
● The stock assets are held by compliant custodians (such as BitGo, Anchorage) to ensure that the holdings are real and verifiable.
● The issuer issues tokens on-chain at a 1:1 ratio based on the custody shares, such as 1 share of Apple = 1 AAPLx (or bAAPL), which can be deployed on networks like Solana, Base, etc.
● Users can purchase this token with USDT on trading platforms like Kraken, thereby indirectly obtaining on-chain assets linked to real stocks.
Core Points of the Model
This seemingly ideal setup has the following limitations:
● Although linked to real stocks, most tokens do not automatically come with voting rights or dividend rights. Robinhood, Kraken, and others clearly state on their websites: "This is not shareholder rights."
● If users wish to exchange tokens for real stocks, they typically need to complete strict KYC and follow the custody redemption process, which may also involve additional fees. Some issuers may not even support retail investors in redeeming fractional shares.
● Therefore, the vast majority of users purchase such tokens mainly to capture stock price fluctuations, with a very low proportion actually exercising shareholder rights.
Why are Kraken and Bybit Still Actively Engaging?
● Compliance Buffer: Supported by real stocks and transparent custody, if regulatory pressure arises, most of the responsibility can be shifted to the issuer (such as Backed).
● DeFi Composability: Tokens have on-chain transfer attributes and can be used for cross-chain combinations, such as Kraken's AAPLx being transferable to Solana wallets for users to provide liquidity on Jupiter or engage in liquidity mining on Kamino.
● More Attractive to Retail Investors: Compared to pure CFDs or synthetic assets, the "realness" backed by actual stocks can lower the psychological barrier for users, making market education and user acquisition easier.
Special Case | Robinhood's "Full Chain Integration" Approach
Robinhood's approach is more aggressive, relying on its own U.S. brokerage license, which already provides the capability for real stock trading and custody.
Currently, Robinhood is developing its own Robinhood Chain, directly linking stock accounts to the chain, achieving integrated self-custody, on-chain issuance, and matching, while connecting with Bitstamp to provide global liquidity.
This model is akin to a "brokerage version of Binance Chain," where Robinhood independently controls the entire process from ticket issuance, market-making to data flow, keeping profits, users, and traffic within its own system.
However, it should be noted that such a highly closed-loop compliance structure and technical barrier is not something that ordinary exchanges or wallet service providers can replicate in the short term, making it difficult for smaller players to bear the investment costs of building this ecosystem.
Model Two | Contract for Difference (CFD): Simple Shell, Old-School Play
Compared to real stock custody, CFDs (Contracts for Difference) appear to be the simplest but are currently one of the most widely adopted methods by exchanges.
Operational Mechanism
● Typical players like Bybit CFD, PrimeXBT, etc., adopt a similar structure.
● Users select "Apple CFD" through MT5, MT4, or Bybit's built-in CFD page, opening positions to bet on price movements.
● The platform itself or external LPs (liquidity providers) bet against users without needing to hold the underlying stocks or physical custody.
● The spread, slippage, and leverage parameters are set by the platform, and the essence of user trading is a price game between the platform or LP, with no stock delivery or shareholder registration involved.
Why is the CFD Model Popular?
● Fast Deployment: It only requires connecting to mature LPs and introducing real-time stock prices to start trading.
● Relatively Low Compliance Pressure: Most jurisdictions classify CFDs as derivative trading, and as long as there is no physical equity delivery, they do not fall under the strictest regulatory categories of traditional securities law.
● High User Acceptance: Crypto users are generally familiar with BTC and ETH contracts, making the transition to U.S. stock contracts seamless, as the operational logic is consistent.
Bybit's Dual-Track Strategy
Bybit's recent developments are particularly typical:
● On one hand, it collaborates with Backed to introduce xStocks (such as AAPLx, TSLAx) targeting users who prefer "real stock backing," directly competing with Kraken, Robinhood, etc.
● On the other hand, it retains a traditional CFD product line to meet the needs of speculative users seeking high leverage and around-the-clock arbitrage opportunities.
This dual-track hybrid model allows Bybit to cover both conservative users who have a psychological need for real stock backing and high-frequency speculative users seeking leverage volatility, maximizing liquidity sources and user base.
Risk Points: Common Issues Users Should Be Aware Of
Although the CFD model is simple and easy to use, the underlying risks should not be overlooked:
● No Shareholder Rights: CFDs do not grant any voting rights or dividend rights, nor is there any linkage to a shareholder register.
● Counterparty is the Platform or LP: User profits equate to platform losses; if trades are too precise, some platforms may mitigate risks through slippage or forced liquidation mechanisms, leading to the possibility of negative balances or increased slippage.
● Essentially a Regulated "Betting Market": Therefore, CFDs are more suitable for short-term volatility operations, and long-term holding does not possess the same value attributes as stocks.
Model Three | On-Chain Pure DeFi Synthetic Assets
Compared to the previous two models, on-chain pure DeFi synthetic assets represent the most "orthodox" decentralized solution. Representative projects include the early Mirror Protocol and the still-operating Synthetix.
Operational Mechanism
● Users collateralize stablecoins (such as UST, sUSD, etc.) and stake them in smart contracts as collateral for generating synthetic assets.
● The protocol calls oracles to fetch real-time stock prices, such as Apple currently at $180.
● Smart contracts automatically mint corresponding stock synthetic tokens based on oracle data, such as "mAAPL," "sTSLA," which only track stock prices and do not represent ownership of real stocks.
● Users can participate in liquidity provision (LP), trade freely, or combine into indices and leverage on on-chain DEXs (such as Terraswap, Uniswap, Curve).
Advantages
● Fully On-Chain: Does not rely on centralized matching or custody; all issuance, circulation, and destruction are automatically executed by smart contracts.
● Flexible Composability: Can be assembled with other modules within the DeFi ecosystem, deriving various plays such as collateralized lending, options, and structured products.
Limitations and Risks
● Lack of Real Stock Support: Synthetic assets rely entirely on oracle price feeds, with no backing of real equity.
● Higher Systemic Risk: If an oracle is attacked or fails, price anchoring becomes ineffective, and the contract itself may lose its ability to pay.
● Liquidity Drought Risk: Compared to centralized market-making, the market depth of on-chain LPs relies on participants continuously placing orders and distributing profits. Without sustained incentives, liquidity can quickly diminish.
The failure of Mirror Protocol is a typical case: after the collapse of the Terra ecosystem, UST broke its peg, and the on-chain synthetic stocks mAAPL and mTSLA became worthless.
Although Synthetix is still operational, some sAAPL and sTSLA remain in the Optimism and Synthetix main protocol for collateral or building synthetic debt pools, but the user scale and TVL have significantly shrunk compared to peak periods, and the popularity of pure DeFi stock tokenization is far lower than that of stablecoins and ETH leverage scenarios.
Comparison of Three Stock Tokenization Models
6. Player Breakdown: Who is Operating on This Chain
Behind this wave of stock tokenization, a relatively clear upstream issuance—custody—platform liquidity—terminal distribution supply chain has formed.
Backed Finance: The Core Issuer Behind the Scenes
● Headquartered in Switzerland, it is currently one of the most representative stock token issuers in the industry, responsible for purchasing real stocks from traditional brokerages and relying on Chainlink's Proof of Reserve (PoR) to disclose custody details in real-time on-chain.
● Core clients include Kraken, Bybit, Ondo, etc. The stock tokens provided by Backed are regarded as "compliance-ready for listing," quickly listed on CEX for retail investors.
● The key logic is: the issuer assumes the role of securities compliance and custody, while CEX only needs to handle front-end KYC/AML, avoiding direct responsibility for securities issuance.
Ondo & Securitize: The Alliance and Traditional Digital Securities Service Providers
● Ondo leads the "Global Market Alliance," uniting Solana Foundation, BitGo, Fireblocks, Jupiter, etc., to build cross-chain, custody, and liquidity standardization solutions.
● Securitize is an early typical player in the digital securities space, primarily providing share securitization and qualified investor matching services for traditional enterprises, focusing on the B2B market and not directly targeting retail investors.
Dinari: Attempting to Face Compliance Directly in the U.S.
● Dinari is a team based in the U.S. attempting to face U.S. securities regulation head-on by applying for compliance licenses such as Reg D, Reg CF, and ATS (Alternative Trading System), aiming to create a truly compliant stock tokenization product called "dShares."
● Unlike Backed, Dinari hopes to provide users with some optional shareholder rights (such as dividends) in the future, but the challenge lies in the extremely high compliance costs in the U.S., requiring long-term investment in brokerage licenses, custody, and legal advisory teams.
● Currently, Dinari primarily follows a B2B route, collaborating with wallets or exchanges to output stock token products in a white-label format.
Kraken: A Frontline Practitioner of Established Compliance CEX
● Kraken has always positioned itself as a compliant CEX, focusing on the trust of European and American users in licenses and compliance.
● Its xStocks module is linked with Backed: real stock custody is handled by Backed, while Kraken provides matching, listing, wallet, and API integration, with PoR publicly verifiable, transferable on-chain to networks like Solana, and combinable with LP/DEX for secondary liquidity.
● Kraken places particular emphasis on compliance boundaries, implementing measures such as IP blocking and timezone KYC restrictions for U.S. users to avoid crossing SEC red lines.
Bybit: Dual-Track Hybrid, Balancing Spot and Derivatives
● The biggest difference from Kraken is that Bybit operates both real stock tokenization and CFD (Contract for Difference) product lines simultaneously.
● CFDs are implemented by Bybit through connections with external liquidity providers (such as IS Prime, Finalto) and the MT5 system to cover the needs of high-frequency speculative users, earning spreads and fees.
● The real stock path collaborates with Backed to link xStocks (such as AAPLx, TSLAx), serving users who prefer "real stock backing," allowing both customer groups to convert on the platform.
Robinhood: Integrated Chain with Its Own Brokerage
● Robinhood holds a U.S. Broker-Dealer license, which allows it to provide real stock trading and custody.
● It has built the Robinhood Chain, linking stock accounts to the blockchain, equipped with its own wallet and trading matching system. Initially, it is piloting in the EU (Robinhood Europe), packaging over 200 stocks and ETFs into token products for EU users to trade, thereby avoiding U.S. regulations.
● Bitstamp provides a liquidity bridge, allowing users to later use the tokens for collateral or to create structured products in DeFi scenarios.
● This "brokerage internal chain" solution enables Robinhood to create a closed loop from issuance, custody to matching and liquidity, significantly enhancing retention and data control, but it requires strong compliance backing and capital investment, making it difficult for small to medium players to replicate in the short term.
Republic: Focused on Non-Public Scarce Equity
● Unlike other projects that focus on publicly traded stocks, Republic emphasizes tokenization on scarce equity from private companies (such as SpaceX, OpenAI), typically using SPV (Special Purpose Vehicle) note models to allow retail investors to indirectly invest in otherwise hard-to-reach equity targets.
● The risk lies in the fact that some private equity tokens may have authorization issues; for instance, OpenAI has stated that Robinhood Europe launched related products without authorization, and the SEC has already initiated an investigation.
7. Global Regulatory Overview
United States: Securities Law is a Hard Constraint
● Core Principle: Stock tokenization ≠ non-security. As long as stocks are mapped to tokens and sold or provided to U.S. users, it automatically triggers SEC's securities regulatory requirements.
● Compliance Conditions: To issue and sell stock tokens, one must hold a Broker-Dealer license, an ATS (Alternative Trading System) license, and have a custody and information disclosure structure that complies with securities laws, typically requiring a legal team to review the issuance documentation.
● Regulatory Attitude: The SEC's position has been consistently clear — “Tokenization doesn’t change the nature of the underlying asset.”
● Lessons from the Past: When FTX, Binance, and others attempted stock tokenization in 2020-2021 without holding complete compliance qualifications, they faced pressure from the SEC, FINRA, and Germany's BaFin, ultimately being forced to delist.
European Union: Dual Application of MiFID II and MiCA
● MiFID II: Any products involving the sale of securities to retail or institutional investors must strictly adhere to the Markets in Financial Instruments Directive, and cannot evade existing securities regulatory obligations by being labeled as "tokens."
● MiCA: Although primarily aimed at crypto assets and stablecoin licensing, if stock tokenization is backed by real stocks, it will also fall under the MiCA regulatory framework.
● Regional Practice: Robinhood Europe has already piloted in the EU, using an SPV structure to provide stock tokenization products; once actual securities attributes are involved, it must supplement exemption applications or fulfill complete information disclosure according to local requirements.
Asia/Middle East: Active Gray Area Pilots
● Regulatory sandboxes for RWA (Real World Assets) have been established by the Monetary Authority of Singapore (MAS), the Swiss Financial Market Supervisory Authority (FINMA), and the UAE's ADGM/DFSA, allowing small-scale tokenization projects to pilot, provided they primarily target non-U.S. customers and regionally qualified investors.
● Hong Kong takes a cautious stance on securities tokenization, with current RWA implementations mainly focused on bonds, funds, and structured notes, and has not yet widely released stock tokenization businesses.
8. Real User Scenarios | How Global Retail and Institutions Can Enter
The practical implementation of stock tokenization is not solely aimed at retail investors.
From individual retail investors to high-frequency speculators, from small to medium CEXs, regional wallets to traditional brokerages and DeFi protocols, various parties can find their own entry points and feasible paths in this space.
- Ordinary Retail Investors
● The most direct usage is to make small purchases of xStocks, using USDT to connect to stock tokens like Apple and Tesla, tracking price fluctuations.
● The main demand is to address the pain point of "not having a U.S. stock account but wanting to try with a low threshold."
● Core Understanding: It is essential to clarify that the tokens held do not equate to actual shareholder status and do not include dividends or voting rights.
- High-Frequency Speculators
● This group focuses on short-term price differences and volatility arbitrage in stock tokenization.
● CFDs (Contracts for Difference) are the most suitable: they can leverage, hedge flexibly, and support T+0 closing.
● Core Understanding: It is crucial to understand slippage, leverage risks, and the counterparty betting mechanism to guard against forced liquidation or negative balances.
- Small to Medium Exchanges/Regional CEXs
● If they do not possess complete brokerage qualifications, they can adopt a hybrid model of "CFD + tokenization partnership."
● The front end provides spot/CFD matching, while the back end collaborates with issuers like Backed and Dinari to introduce real note-type tokens, capturing gray area traffic while earning fee-sharing.
● Core Understanding: It is necessary to reasonably delineate service areas to avoid high-pressure regulatory markets like the U.S.
- Traditional Brokerages
● Traditional brokerages with mature legal and capital conditions are more inclined towards a "self-built chain + self-operated license" model.
● Robinhood and Bitstamp have explored this path in the European and American markets: by linking accounts on-chain and internal custody, they capture both matching and custody revenue.
● Core Understanding: A mature licensing system, compliant custody, and multi-national legal support are essential.
- Wallets/Agents
● In emerging markets, some wallets or OTC teams prefer to use white-label tokenization products, integrating notes from issuers like Kraken and Backed into their own front-end apps or mini-programs, earning traffic entry and matching commissions.
● This is particularly suitable for regions like Pakistan and the Philippines, where retail account opening thresholds are high and gray area demand is strong.
● Core Understanding: It is crucial to find reliable issuers and complete compliance integration to reduce regional regulatory risks.
- DeFi Protocols
● Stock tokenized assets can be combined with on-chain bonds and stablecoins, becoming important building blocks for derivative products in the DeFi ecosystem.
● Typical scenarios include providing bilateral liquidity in LP pools or using them as collateral for lending protocols like Aave and Compound.
● Core Understanding: It is essential to ensure the safety of oracles and liquidation mechanisms to avoid the risks of oracle attacks or price failure encountered by projects like Mirror.
How different user groups can participate in stock tokenization
9. Risk Points | Truths and Traps to Avoid
Stock tokenization seems to provide a convenient channel for global users to trade U.S. stocks, but the hidden risks and operational thresholds are often underestimated. Here are the five typical risks that warrant caution:
Risk 1 | Most Tokens Do Not Include Shareholder Rights
Platforms like Robinhood, Backed, and Kraken have clearly stated in their official FAQs:
“This token does not represent actual shareholder rights.”
This means that what users hold is merely an on-chain certificate linked to stock prices, not equivalent to traditional shareholder status.
● Users cannot automatically receive company annual reports, participate in AGMs (Annual General Meetings), or exercise shareholder voting rights;
● Dividends are usually not included unless the issuer actively designs profit sharing, which is extremely rare in practice.
Thus, the vast majority of users hold only a price shadow, rather than a real shareholder seat.
Risk 2 | The Process for Redeeming Real Stocks is More Complex Than Expected
Although most note-type tokens theoretically support 1:1 redemption, the actual operational thresholds are high:
● There is usually a minimum redemption threshold (e.g., at least 1 share, with some products requiring a minimum of 100 shares);
● There may be a cooling-off period, lasting up to 30–90 days;
● Users must complete the KYC process again, submitting address proof and other materials;
● Most also require payment of fees, commonly ranging from 0.5% to 2% of the face value.
Therefore, for the vast majority of retail investors, the practical choice to redeem is rarely made.
Risk 3 | Insufficient Liquidity Can Lead to "Empty Pools"
Although tokenized stocks are listed on on-chain liquidity pools or CEXs, the actual order depth is often limited:
● For example, the main LP pools for Backed's AAPL and TSLA on Solana typically only amount to a few million dollars;
● Daily market-making relies more on a few liquidity providers like Kraken and Bitstamp;
● If mainstream market makers withdraw or exchanges delist the token, the assets held by users may only be transferable through OTC or other non-mainstream channels, significantly increasing liquidity risk.
Risk 4 | Oracle Failures are a Core Hazard for On-Chain Synthetic Assets
Pure DeFi synthetic assets rely on oracles like Chainlink and Pyth to provide real-time stock price feeds. If there are price manipulation attacks, API data distortion, or oracle manipulation, the synthetic tokens generated by smart contracts lose their accuracy:
● A typical case is the Mirror Protocol in the Terra ecosystem: after UST lost its peg and LUNA collapsed, oracle failures led to a massive devaluation of synthetic assets like mAAPL and mTSLA.
Risk 5 | Cross-Regional Compliance and Regulatory Blockages May Trigger at Any Time
Once stock tokenization projects target U.S. residents or trigger cross-border securities sales, they may invoke regulatory scrutiny from agencies like the SEC and FINRA:
● Robinhood Europe launched unauthorized tokenized equity for OpenAI and SpaceX in the EU, which has been publicly stated by OpenAI as unauthorized and has triggered regulatory investigations;
● The experiences of Binance and FTX serve as further evidence, with the former being forced to delist and the latter ultimately going bankrupt due to compliance failures.
10. Future Projections | Possible Evolution Paths Ahead
As a part of the on-chain reality asset (RWA) movement, stock tokenization is just the starting point, and over the next three years, it may evolve along the following three main paths:
Scenario A | Brokerage On-Chain, Self-Managed Closed Loop
Robinhood is likely to continue doubling down on the All In model: building its own blockchain, holding compliance licenses, self-managing real stock custody, issuing tokens on-chain, and integrating internal matching and settlement.
Once the SEC releases more flexibility in compliance pathways, Robinhood is expected to achieve a "broker + wallet + chain" integration.
If realized, this route can be seen as a "compliance version of Binance Smart Chain," with the distinction that its underlying assets are real stocks and ETFs, rather than purely crypto-native assets.
Scenario B | Regional Gray Markets, Leading the Breakthrough
Regions such as Abu Dhabi, Singapore, and Switzerland have incorporated RWA into official innovation pilots, allowing for the exploration of tokenized stocks and other gray assets.
In the future, more "region-specific models" may emerge:
● The Americas and the EU will be dominated by their own licensing systems and local brokerages;
● Emerging markets in the Middle East, Southeast Asia, and Africa are expected to become major gray distribution centers for global tokenized stocks.
Platforms like Kraken, Bybit, and Ondo are anticipated to closely position themselves in these gray areas, focusing on non-U.S. user traffic and the window of opportunity provided by licensing flexibility.
Scenario C | DeFi Assembly and Combinatorial Pathways
If the DeFi scene continues to warm up in the next cycle, tokenized stocks are likely to evolve into freely combinable "financial Lego" components, becoming an important part of on-chain RWA assembly strategies.
● For example, tokenized bonds (like Ondo T-bills), stock tokens (like Backed AAPLx), and stablecoins (like USDC) can be packaged into on-chain structured notes or indexed products.
● Tokenized stocks can also be placed into liquidity pools (LPs) to participate in bilateral market-making, providing depth for on-chain funds.
● Users can also collateralize these assets in lending protocols like Aave and Compound to leverage higher returns, creating composite DeFi yield scenarios.
Once this DeFi assembly chain is operational, on-chain RWA will not only be about issuing notes or one-way circulation but will form a liquidity closed loop that is collateralizable, combinable, and disassemblable.
Scenario D | Non-Compliant Perpetual Contracts and Gray Matching
In addition to mainstream compliance pathways and on-chain DeFi assembly, there remains a significant gray branch in the market:
If regulatory pressure does not form a global consensus, there may still emerge a number of small to medium trading platforms focusing on non-compliant stock perpetual contracts.
● These platforms may operate in the form of centralized exchanges (CEX) or be mounted on anonymous chain derivative protocols, directly connecting retail capital flows and providing stock perpetual contract matching with USDT.
● Perpetual contracts are similar to traditional CFDs but can be designed with higher leverage and automatic rollover, requiring no holding of any real stocks or custodial assets, purely engaging in price betting.
● Some projects may encapsulate the front end on-chain (like cross-chain DEX or anonymous derivative pools), attracting high-risk users through on-chain liquidity and anonymous accounts, reducing compliance traceability costs.
If market demand for short-term leverage on tokenized stocks continues to rise, such non-compliant matching and perpetual strategies are likely to become active short-term supplements in local markets, circumventing regulations to meet high-frequency speculative demands.
However, this branch carries significant risks:
Once it involves cross-border capital flows or U.S. users, it may trigger compliance enforcement from the SEC, CFTC, or other jurisdictions at any time, and users face potential losses from sudden liquidity interruptions, platform exits, or extreme slippage.
11. Reverse Integration: When On-Chain Assets Begin to Enter the Stock Market
If "stock tokenization" represents the on-chain transformation of traditional financial assets, then another recent event may signify a reverse integration trend is starting: on-chain assets are also attempting to enter the traditional financial system, seeking mainstream capital market credit recognition in a more compliant and structured manner.
On July 25, a Nasdaq-listed company formerly known as SRM Entertainment officially changed its name to Tron Inc. and adopted the new stock code TRON. The company announced the divestiture of its toy business and adjusted its main asset structure to focus on building the TRON DAO ecosystem TRX treasury strategy, using the native TRON token TRX as its core strategic reserve asset. It currently holds over 365 million TRX and manages staking and yield generation through on-chain protocols like JustLend.
On the day the news was announced, Tron Inc.'s stock price surged over 55%, becoming a hot topic in the market. This not only marks a "high-profile return" of the crypto circle to public listing but also signifies that on-chain native assets are exploring new paths for compliant financial structures.
It is worth noting that this is not the first time a traditional listed company has disclosed its holdings in crypto assets. As early as 2020, MicroStrategy became a representative of "publicly listed companies holding crypto" by continuously purchasing BTC and including it in its financial reports; companies like Tesla, Block, and Coinbase have also listed their BTC, ETH, or stablecoin holdings in their financial reports. However, Tron Inc. differs from these companies in that:
● It is one of the few listed platforms that uses a public chain token (TRX) as its core asset and incorporates on-chain ecosystem development into its corporate strategy;
● The project party does not directly hold shares but attempts "shadow control" through DAO governance and advisory structures, exploring the integration of on-chain governance with traditional equity structures within a compliant framework;
● Its asset operation model relies more on on-chain protocols (like JustLend), with a yield mechanism leaning towards Web3.
This type of operation is no longer merely capital manipulation but a proactive narrative reconstruction: transforming token assets into financial units that are recognizable, valuably estimable, and compliant for participation in traditional financial structures. Following stablecoins and crypto government bonds, this may be the next experimental field for public chain ecosystems to connect with TradFi.
Thus, we can see that stock tokenization and on-chain asset stockification are forming a kind of "dual nesting":
● On one side, real assets like U.S. stocks and bonds are being tokenized, enhancing the richness and real anchoring of on-chain finance;
● On the other side, native crypto assets are entering mainstream capital markets through compliant pathways, gaining incremental liquidity and institutional endorsement.
This trend is no longer just a conceptual phase but is gradually taking shape in cases like Kraken and Bybit promoting real stocks on-chain, as well as Tron Inc.'s reverse listing. Together, they depict an embryonic "on-chain Wall Street": a connecting bridge between decentralized asset structures and traditional market frameworks.
Whether this can truly form a closed loop in the future will depend on market-making capabilities, regulatory flexibility, and the resilience of institutional design. But it is certain that the boundaries between coins and stocks are being rewritten.
12. Conclusion | Pie or Trap, Depends on Closed Loop and Structural Design
From Kraken, Bybit, and Robinhood promoting real stocks on-chain, to Backed, Dinari, and Ondo taking on the role of compliant token issuance, and to Tron Inc. representing the attempt of "on-chain assets entering the market," the core competitiveness of this round of asset structure reconstruction has never been just about smart contracts or product forms, but whether it can support a complete on-chain financial closed loop.
From a macro perspective, this model is a second-layer extension of the stablecoin system:
Stablecoins allow global retail investors to bypass traditional banking settlement networks; stock tokenization connects shadow dollars to "shadow U.S. stocks"; the combination of the two forms an on-chain "gray Wall Street," breaking down the closed capital markets of reality into a 24/7 combinable and assemblable on-chain market.
However, to make this model truly operational, there must be a clear chain of responsibility and stable compliance backing:
Real equity support is needed to avoid empty arbitrage; transparency in custody and issuance is required to ensure user trust; continuous market-making and liquidity are necessary to support on-chain trading depth; regional licenses and cross-border compliance mechanisms are essential to hedge against constraints from the SEC, EU, or local regulatory bodies.
Any loosening of one link could cause the notes in users' hands to lose actual value, turning into rights-less, non-redeemable island assets.
For retail investors, stock tokenization may just be a speculative channel to test gray pathways, while true shareholder identity and long-term returns still arise within traditional brokerage systems.
For small to medium CEXs, wallets, OTCs, and DeFi protocols, this may be the quickest shortcut to activate the liquidity of stablecoins deposited in wallets and rapidly connect to the RWA track.
In the reverse direction, Tron Inc. offers a radical yet realistic possibility: bringing coins into traditional capital markets and shaking hands with stocks institutionally.
Whether it is a pie or a trap ultimately depends on who can build a two-way, combinable, and operational closed-loop structure. Only those who can successfully navigate this path may catch the next wave of asset and liquidity momentum.
About HTX Ventures
HTX Ventures is the global investment arm of Huobi HTX, integrating investment, incubation, and research to identify the best and brightest teams worldwide. As an industry pioneer, HTX Ventures has over 12 years of blockchain building experience, specializing in identifying cutting-edge technologies and emerging business models in the field. To drive growth within the blockchain ecosystem, we provide comprehensive support for projects, including financing, resources, and strategic advice.
HTX Ventures currently supports over 300 projects across multiple blockchain domains, with some high-quality projects already trading on Huobi HTX. Additionally, as one of the most active FOF funds, HTX Ventures invests in 30 top global funds and collaborates with leading blockchain funds such as Polychain, Dragonfly, Bankless, Gitcoin, Figment, Nomad, Animoca, and Hack VC to build the blockchain ecosystem together. Visit us.
For investment and collaboration inquiries, please feel free to contact VC@htx-inc.com.
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