From stablecoins to stock tokenization, the cryptocurrency sector is attempting to bring the "US dollar system" and "US stock market" onto the blockchain, constructing a global on-chain capital market with shadow dollars and shadow US stocks. In the previous article, we dissected the logic behind this: from the early attempts of FTX and Binance to the different strategies of Kraken, Bybit, and Robinhood in the new wave, and the comparison of three typical models (real stock custody, CFD, on-chain synthetic). It is evident that technology and demand are not the issues; the real core lies in regulatory games and institutional boundaries.
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 US 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 law, typically requiring a compliance lawyer team to review the issuance statement.
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 launched stock tokenization attempts in 2020-2021, they faced pressure from the SEC, FINRA, and Germany's BaFin due to lacking complete compliance qualifications, 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 naming them "tokens."
MiCA: Although primarily aimed at crypto assets and stablecoin issuance, 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, additional exemption applications or full information disclosures must be fulfilled 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), Swiss Financial Market Supervisory Authority (FINMA), and UAE ADGM/DFSA, allowing small-scale tokenization projects to pilot, provided they primarily target non-US customers and regional qualified investors.
Hong Kong maintains a cautious stance on securities tokenization, with RWA implementations mainly focused on bonds, funds, and structured notes, and has not yet widely released stock tokenization services.
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-sized CEXs, regional wallets to traditional brokerages and DeFi protocols, all parties can find their own entry points and feasible paths in this arena.
Ordinary Retail Investors
The most direct usage is to make small purchases of xStocks, connecting USDT to stock tokens like Apple and Tesla to track price fluctuations.
The main demand is to address the pain point of "not having a US stock account but wanting to try with a low threshold."
Core Understanding: It must be clear that the tokens held do not represent actual shareholder status and do not include dividends or voting rights.
High-Frequency Speculators
The core demand of this group regarding stock tokenization is short-term price differences and volatility arbitrage.
CFD (Contract for Difference) is the most suitable: it allows for leverage, flexible hedging, and supports T+0 closing.
Core Understanding: It is essential to understand slippage, leverage risks, and counterparty betting mechanisms to prevent forced liquidation or margin calls.
Small and Medium Exchanges / Regional CEXs
If lacking complete brokerage qualifications, a "CFD + franchise tokenization" hybrid model can be adopted.
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 US.
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: through on-chain accounts and internal custody, they capture both matching and custody revenues.
Core Understanding: A mature licensing system, compliant custody, and multi-national legal support are required.
Wallets / Agents
In emerging markets, some wallets or OTC teams prefer to use white-label tokenization products, linking notes from issuers like Kraken and Backed to 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 necessary to find reliable issuers and complete compliance connections to reduce regional regulatory risks.
DeFi Protocols
Stock tokenized assets can be combined with on-chain bonds and stablecoins, becoming important building blocks of derivative products in the DeFi ecosystem.
Typical scenarios include providing bilateral liquidity in LP pools or using them as collateral in lending protocols like Aave and Compound.
Core Understanding: It is crucial to ensure the safety of oracles and liquidation mechanisms to avoid the oracle attacks or price failure risks encountered by projects like Mirror.
How different user groups participate in tokenized stocks
9. Risk Points | Truth and Traps to Avoid
Stock tokenization seems to provide a convenient channel for global users to trade US stocks, but the hidden risk points and operational thresholds are often underestimated. Here are the five major risks to be wary of:
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 have 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 price shadows, not real shareholder seats.
Risk 2 | The Process for Redeeming Real Stocks is Far More Complex Than Expected
Although most note-type tokens theoretically support 1:1 redemption, the actual operational threshold is high:
There is usually a minimum redemption threshold (e.g., at least 1 share, with some products even requiring 100 shares to redeem);
There is a cooling-off period, which can last 30-90 days;
Users must complete the full 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 pool sizes for Backed's AAPL and TSLA on Solana are usually only a few million dollars;
Daily market making relies more on a few liquidity providers like Kraken and Bitstamp;
Once 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 risks.
Risk 4 | Oracle Failures are a Core Hazard of On-Chain Synthetic Assets
Pure DeFi synthetic assets rely on oracles like Chainlink and Pyth to provide real-time price synchronization. If there are price attack incidents, API data distortion, or oracle manipulation, the synthetic tokens generated by smart contracts will lose accuracy:
- A typical case is the Mirror Protocol in the Terra ecosystem: after UST depegged and LUNA collapsed, oracle failures led to a massive zeroing 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 US residents or trigger cross-border securities sales, they may activate 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 declared unauthorized by OpenAI and 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 real asset tokenization (RWA), stock tokenization is currently just the starting point, and over the next three years, it may gradually evolve along the following three main paths:
Scenario A | Brokerage On-Chain, Self-Operated Closed Loop
Robinhood is likely to continue to double down on an All In model: building its own blockchain, holding compliant licenses, self-managing real stock custody, issuing tokens on-chain, and integrating matching and settlement.
Once the SEC releases more flexibility in compliance pathways, Robinhood is expected to achieve a "brokerage + wallet + chain" integration.
If successful, this route could be seen as a "compliant 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 Breakthroughs
Regions like Abu Dhabi, Singapore, and Switzerland have already included RWA in official innovation pilots, allowing for the exploration of tokenized stocks and other gray assets. In the future, more "regionally limited models" may emerge:
The Americas and the EU will be dominated by their own licensing systems and local brokerages;
Emerging markets such as 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-US user traffic and the window of opportunity brought by licensing flexibility.
Scenario C | DeFi Assembly and Combination Path
If the DeFi scene continues to warm up in the new cycle, tokenized stocks are likely to evolve into one of the 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 together into on-chain structured notes or indexed products.
Tokenized stocks can also be placed into liquidity pools (LP) 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, forming a composite DeFi yield scenario.
Once this DeFi assembly chain is operational, on-chain RWA will not only be about hanging notes or one-way circulation but will constitute a liquidity closed loop that is collateralizable, combinable, and disassemblable.
Scenario D | Non-Compliant Perpetual Contracts and Gray Matching
In addition to mainstream compliance paths and on-chain DeFi assembly, there remains a gray branch in the market that cannot be ignored: 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 perpetual contracts for stocks.
These platforms may operate in the form of centralized exchanges (CEX) or be mounted on anonymous chain derivative protocols, directly connecting to retail capital flows, 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, only engaging in pure 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.
Once market demand for short-term leverage on tokenized stocks continues to rise, such non-compliant matching and perpetual play may become active supplements in local markets, circumventing regulations to meet high-frequency speculative demands. However, this branch also carries high risks: once cross-border capital flows or US users are involved, it may trigger compliance enforcement from the SEC, CFTC, or other jurisdictions, 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 event that has occurred in recent months may signify the initiation of a reverse integration trend: 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 TRX treasury strategy around the TRON DAO ecosystem, 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 sector to public listing but also signifies that on-chain native assets are exploring new paths for compliant financial structures.
It is noteworthy 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, trying to bridge 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 revenue mechanism leaning towards Web3.
This type of operation is no longer merely capital manipulation but an active narrative reconstruction: transforming token assets into financial units that are recognizable, estimable, and compliant within traditional financial structures. Following stablecoins and crypto government bonds, this may be the next experiment for public chain ecosystems to connect with TradFi.
Thus, we can see that stock tokenization and on-chain asset stockification are forming a "two-way nesting":
On one side, real assets like US stocks and bonds are being brought on-chain, 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 a true closed loop can be formed 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 the on-chain real stocks promoted by Kraken, Bybit, and Robinhood, to the compliant token issuance roles undertaken by Backed, Dinari, and Ondo, and to the reverse market entry attempts represented by Tron Inc., 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 US 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 endorsement: 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 the constraints of the SEC, EU, or local regulatory agencies.
Any loosening of one link may 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, with true shareholder status and long-term returns still generated within traditional brokerage systems.
For small and medium CEXs, wallets, OTC, 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. provides a radical yet realistic possibility: bringing coins into traditional capital markets and shaking hands with stocks on a regulatory level.
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 influx.
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 experience in blockchain development, 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 jointly build the blockchain ecosystem.
This article is contributed and does not represent the views of BlockBeats.
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