Introduction

Stock tokenization is becoming the latest focus of convergence between the crypto world and traditional finance. With platforms like Kraken and Robinhood entering the space, the market is attempting to bring real-world assets such as US stocks and ETFs onto the blockchain, creating a global 7x24-hour online capital market. As a leading industry trading platform, this trend is not isolated but rather a result driven by the popularity of stablecoins, the shadow banking system, and the logic of Real World Asset (RWA) tokenization.

The core idea is this: stablecoins have built a global shadow US dollar system, and stock tokenization is its natural extension, allowing non-US users to directly access "shadow stocks" through USDT, bypassing account opening, remittances, and cross-border settlements, forming an online version of "Wall Street in grayscale." This model not only brings new liquidity space but also brings regulatory and compliance risks to the forefront.

Meanwhile, another reverse path is also taking shape: online assets are entering traditional markets through compliance restructuring. Recently, a Nasdaq-listed company renamed itself Tron Inc., incorporating the public chain ecosystem and TRX into its core strategy, sending a signal that the integration of crypto assets and mainstream finance is no longer just a concept but is gradually being implemented within institutional frameworks.

Is it a windfall or a pitfall? The answer depends on whether the closed loop can be successfully implemented:

· Can the backing of real stocks and transparent custody be achieved?

· Can liquidity and market-making be maintained in the long term?

· Can regional compliance mechanisms keep pace with the pace of innovation?

This article, written by HTX Ventures, will focus on pattern dissection, player landscape, regulatory trends, typical risks, and future evolution, helping you determine whether stock tokenization is the golden gateway of RWA or a grayscale trap in the capital market.

1. Why Is the Crypto Industry Focusing on Stocks?

Since the inception of blockchain technology, almost any asset that can be tokenized has already been or is gradually being brought onto the blockchain. From the earliest stablecoins to traditional financial assets such as real estate, bonds, and funds, to the increasingly popular stock tokenization (Tokenized Stocks) today, each innovation attempts to use blockchain to eliminate various obstacles and barriers in the real-world financial system.

The core logic of stock tokenization is to convert traditional stock assets in the financial market into digital tokens on the blockchain, enabling global 24/7 trading, fractional ownership, and more efficient cross-border transactions. This model has gained significant attention because it directly addresses pain points faced by global retail investors, especially retail investors in emerging markets, such as account opening barriers, remittance difficulties, and mismatched trading hours.

However, stock tokenization is not a new concept. It briefly emerged as early as 2020, with platforms like FTX and Binance leading the way. However, these attempts ultimately failed under intense regulatory pressure.

II. Lessons Learned from Stock Tokenization: FTX and Binance

In 2020, FTX, as one of the earliest platforms to attempt stock tokenization, partnered with the German securities firm CM-Equity to purchase real stocks for custody. They then issued tokenized stocks in the form of ERC-20 tokens, such as tokens representing Tesla, Apple, and Coinbase, and sold them to global users on their platform.

FTX's initial foray into this space attracted significant attention from emerging market retail investors. However, this model quickly caught the eye 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 operations involved public offering of securities, requiring compliance with securities regulations and obtaining appropriate licenses. FTX could not meet these compliance requirements and was forced to swiftly delist its stock token products.

In 2021, Binance also attempted to launch similar products, trading tokenized stocks of Tesla, Coinbase, and Apple in almost the same manner. However, Binance's efforts also did not last long and quickly halted related services under pressure from regulators in multiple countries.

The failures of FTX and Binance clearly conveyed a key message: the core challenge of stock tokenization business lies in compliance and regulation, rather than technology.

III. Why Stock Tokenization is Back in the Spotlight?

Despite facing strong regulatory resistance, stock tokenization has once again become a focal point in 2024-2025, attracting market attention. The reasons behind this resurgence can be mainly attributed to four factors:

· Policy and Political Factors: In 2024, Trump openly supported the development of cryptocurrency, reigniting market expectations for potentially relaxed regulations. SEC official Hester Peirce also expressed interest in a regulatory sandbox, providing a gray area in terms of policy direction.

· Entry of Traditional Financial Institutions: Traditional giants such as BlackRock and Franklin Templeton have been tokenizing assets such as funds and bonds through blockchain. This has provided a precedent for stock tokenization, encouraging more traditional institutions to explore the space.

· Maturation of Technological Conditions: Unlike 2020, the rapid development of blockchain technologies such as Solana, Base, and Arbitrum has significantly reduced on-chain transaction costs, increased transaction speeds, and made liquidity easier to achieve.

· Strong Retail Demand Still Present: Retail demand for U.S. stocks remains high in regions such as Southeast Asia, South Asia, and the Middle East. Users in these regions hold a significant amount of USDT but find it challenging to access traditional U.S. stock markets. Stock tokenization directly fills this market gap.

4. Why Is Stock Tokenization Closely Related to the Shadow Banking System and Stablecoin Popularity?

Stock tokenization is the "second-layer evolution" of stablecoin on-chain U.S. dollars. It transforms shadow U.S. dollars held by retail investors directly into shadow U.S. stocks, turning RWAs from "static custody" into "composable dynamic assets." The hotter stablecoins become, the more runway this trend has, but regulatory concerns regarding shadow U.S. dollars also strengthen.

Stablecoins Essentially Form a Global "Gray Channel" for the Shadow Banking System

· U.S. dollar-pegged stablecoins (USDT, USDC) are no longer mere "coin circle payment tools" but rather "dollar replicas" that bypass traditional cross-border settlement networks.

· In many emerging markets, stablecoins represent local residents' claim to the U.S. dollar. In countries like the Philippines, Pakistan, Argentina, and Vietnam, users may not hold the local currency but have stablecoins, which are equivalent to "dollars."

· Therefore, from a retail perspective: "Having USDT in hand ≈ U.S. dollar deposit," but with more flexibility to enter and exit positions, as well as directly exchanging for stock tokens.

· With the emergence of stock tokenization, stablecoins naturally become a new destination: USDT/USDC directly become on-chain shadow price references 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 Opportunity for RWAs (Real-World Assets on-chain)

· The circulating supply of USDT surpassed $115 billion in 2024, making it the world's largest "dollar alternative product" with a circulation speed far exceeding that of traditional USD wire transfers.

· With the massive liquidity of stablecoins, on-chain RWAs (bonds, funds, real estate, stocks) naturally require new "reservoirs," or else USDT can only remain in centralized exchanges for contracts and cannot be connected to real-world assets.

· Tokenized stocks are among the most easily understood and globally liquid RWAs. Retail investors are familiar with the underlying asset, and market makers can also rely on real secondary market pricing, making it easier to trade compared to real estate, art, or accounts receivable.

Shadow Dollar System + Stock Tokenization, Transforming "US Stocks" into Layer 2 On-chain Dollar Assets

· From a regulatory perspective, the combination of stock tokenization and stablecoins essentially forms a "shadow dollar capital market":

· Stablecoins provide a shadow substitute for the US dollar;

· Stock tokenization shadows the equity returns of US companies;

· By combining the two, non-US residents can hold "shadow dollars" and engage in "shadow stock trading" 24/7.

· This combination bypasses the US stock brokerage system, the SWIFT settlement system, and the US direct tax reporting system (in theory).

· It is precisely because of this that regulators maintain high sensitivity towards it, focusing on the "overflow of dollar influence" rather than just the tokenization play.

This logical chain explains why Kraken, Bybit, Robinhood, and Backed dare to make a comeback in 2024-2025.

· Stablecoins have already been validated by global users (fast transactions, convenient cross-border payments), and on-chain RWAs also have endorsements from giants like BlackRock and Franklin Templeton.

· Kraken and others are eyeing the opportunity provided by this shadow dollar system to bring retail investors into the grayscale.

· Robinhood is first testing stock tokenization in the EU, also optimistic about the USDT flow in non-US markets, using on-chain bills to reach a user base that was previously unreachable.

Five, Three Main Models of Stock Tokenization

Although the concept of "stock tokenization" is only a few words, it is not a single path in actual implementation.

Based on the differences in whether there is real stock custody, on-chain issuance, and trading methods, the current mainstream practices in the market can be summarized into three types: first, real stock custody + on-chain token issuance; second, Contract for Difference (CFD) model; third, pure DeFi synthetic assets. Each of the three models has its own advantages and disadvantages, with significant differences in regulatory pressure, liquidity design, and user adaptation scenarios. Understanding their differences is the foundation for understanding the entire stock tokenization track.

Pattern One | Stock Custody + On-Chain Issuance

This is the mainstream approach currently adopted by Kraken and Bybit, and is also considered the relatively most prudent practice from a compliance perspective.

Operation Mechanism

· A licensed issuer or broker (such as Backed Finance, Dinari) purchases real stocks (such as Apple, Tesla) on the traditional secondary market.

· The stock assets are entrusted to a compliant custody institution (such as BitGo, Anchorage) for safekeeping to ensure quantity authenticity and traceability.

· Based on the custody shares, the issuer issues tokens on-chain at a 1:1 ratio, 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 exchanges like Kraken, indirectly obtaining on-chain assets linked to real stocks.

Key Points of the Pattern

Although this system seems ideal, it has the following limitations in practice:

· Despite being linked to real stocks, most tokens do not automatically come with voting rights or dividend rights. Platforms like Robinhood and Kraken explicitly state on their websites: "This is not shareholder rights."

· If users wish to convert the tokens into real stocks, they typically need to complete stringent KYC, follow custody redemption procedures, and may also need to pay additional fees. Some issuers may not even support retail fractional share redemptions.

· Therefore, the vast majority of users purchasing such tokens do so mainly to capture stock price fluctuations, with the actual exercise of shareholder rights being extremely low.

Why Are Kraken and Bybit Still Actively Pursuing This Strategy?

· Compliance Buffer: Backed by real stocks, with transparent custody, in the event of regulatory pressure, most of the responsibility can be shifted to the issuer (such as Backed).

· DeFi Composability: The tokens have on-chain transferability and can be used for cross-chain compositions. For example, Kraken's AAPLx can be transferred to a Solana wallet for users to provide liquidity on Jupiter or participate in liquidity mining on Kamino.

· More Attractive to Retail Investors: Compared to pure CFDs or synthetic assets, the "realness" of stock-backed assets can lower the user's psychological barrier, making it easier for market education and user acquisition.

Special Case | Robinhood's "Full-Stack Integration" Approach

Robinhood's approach is more aggressive, relying on its own US brokerage license, which already has the ability for stock trading and custody. Currently, Robinhood is developing Robinhood Chain, which will directly link stock accounts to achieve integrated self-custody, on-chain issuance, matching, and connect to Bitstamp to provide global liquidity.

This model is equivalent to a "Brokerage Version of Binance Chain," where Robinhood independently controls the entire process from asset issuance, market-making to data circulation, keeping the revenue share, users, and traffic within its own system.

However, it should be noted that such a highly closed-loop compliance architecture and technical barriers are not easily replicable by general trading platforms or wallet service providers in the short term. Small players would find it difficult to bear the cost of building such a self-owned ecosystem.

Model Two | Contract for Difference (CFD): Simple Shell, Classic Gameplay

Compared to stock custody, CFDs (Contract for Difference) appear to be the simplest but are currently one of the most widely adopted methods by trading platforms.

Operating Mechanism

· Typical players such as Bybit CFD, PrimeXBT, etc., all use a similar structure.

· Users through MT5, MT4, or Bybit's built-in CFD page, select assets like "Apple CFD," open positions to bet on price movements.

· The platform itself or external LP (liquidity provider) engages with users in a bet, without the need to actually hold the underlying stocks or physical custody.

· Spread, slippage, leverage parameters are set by the platform itself. The essence of user trading is a price game with the platform or LP, with no stock delivery or shareholder registration involved.

Why is the CFD Model Popular?

· Fast Deployment: Only need to integrate with mature LP and introduce real-time stock prices to start trading.

· Relatively Lower Compliance Pressure: Most jurisdictions classify CFDs as derivative trading, as long as there is no physical stock delivery, they do not fall under the strictest jurisdiction of traditional securities laws.

· High User Acceptance: Cryptocurrency users are generally familiar with BTC and ETH contracts, so migrating to US stock contracts has a low learning curve, with consistent operation logic.

Bybit's Dual-track Strategy

Bybit's recent strategy is particularly noteworthy:

· On one hand, it has partnered with Backed to introduce xStocks (such as AAPLx, TSLAx), targeting users who prefer "stock-backed" assets, directly competing with platforms like Kraken and Robinhood.

· On the other hand, it has retained its traditional CFD product line to meet the needs of speculative traders for high leverage and round-the-clock arbitrage.

This dual-track hybrid model allows Bybit to simultaneously cover conservative users who psychologically endorse real stocks and high-frequency speculative traders seeking leverage volatility under one trading system, maximizing liquidity sources and user base.

Risk Points: Common Issues Users Need to Be Cautious Of

Although the CFD model is simple and user-friendly, the underlying risks should not be underestimated:

· No Shareholder Rights: CFDs do not confer any voting rights, dividend rights, or linkage to a shareholder registry.

· Counterparty Risk as Platform or LP: User profits come at the platform's loss. If trades are too precise, some platforms may mitigate risks through slippage or liquidation mechanisms, leading to possibilities of liquidation breaches and slippage expansion.

· Essentially a Regulated "Betting Market": Therefore, CFDs are more suitable for short-term volatility trading, as long-term holding does not inherently possess the same value attributes as stocks.

Pattern Three | On-chain Pure DeFi Synthetic Assets

Compared to the first two patterns, on-chain pure DeFi synthetic assets represent the most "orthodox" decentralized solution. Representative projects include the early Mirror Protocol and the ongoing Synthetix.

Operation Mechanism

· Users collateralize stablecoins (such as UST, sUSD, etc.) and stake them in smart contracts as collateral to generate synthetic assets.

· The protocol uses an oracle to fetch real-time asset prices, such as Apple's current price of $180.

· Smart contracts automatically mint corresponding synthetic stock tokens, such as "mAAPL" and "sTSLA," based on oracle data. These tokens only track stock prices and do not represent actual stock ownership.

· Users can provide liquidity on on-chain DEX platforms (such as Terraswap, Uniswap, Curve), freely trade the tokens, or use them in index funds, or for leverage.

Key Features

· Fully On-Chain: Relying on decentralized matching or custody, all issuance, circulation, and burning are automatically executed by smart contracts.

· Flexible Composition: Can be combined with other modules within the DeFi ecosystem to create various use cases such as derivative collateral lending, options, structured products, and more.

Limitations and Risks

· Lack of Equity Backing: Synthetic assets rely entirely on oracle price feeds and do not have real equity endorsement.

· Higher Systemic Risk: Once an oracle is attacked or malfunctions, price anchoring fails, and the contract itself may lose its solvency.

· Liquidity Depletion Risk: Compared to centralized market-making, on-chain LP depends on participants placing continuous orders and receiving rewards. Without sustained incentives, liquidity can rapidly decrease.

The failure of the Mirror Protocol is a typical example: after the Terra ecosystem collapsed, UST fell below its peg, causing all Mirror on-chain synthetic stocks like mAAPL and mTSLA to become worthless.

Although Synthetix is still operational, some sAAPL and sTSLA assets are still staked in the Optimism and Synthetix core protocols for collateral or to build a synthetic debt pool. However, the user base and TVL have significantly shrunk compared to their peak, and the popularity of purely DeFi-native stock tokens is much lower than stablecoins and ETH leverage scenarios.

Comparison of Three Stock Tokenization Models

VI. Player Breakdown · Who Is Operating on This Chain

Behind this wave of stock tokenization has emerged a relatively clear upstream supply chain of issuance, custody, platform liquidity, and end-user distribution.

Backed Finance: Behind-the-Scenes Core Issuer

· Based in Switzerland, it is one of the most prominent stock token issuers in the industry, responsible for purchasing real stocks at traditional brokerages and leveraging Chainlink's Proof of Reserve (PoR) to transparently disclose custody details on-chain in real time.

· Key customers include Kraken, Bybit, Ondo, among others. Backed's stock tokens are seen as "compliant shelf-ready spot assets" for rapid listing by centralized exchanges (CEX) serving retail traders.

· The key logic is: the issuer takes on the roles of securities compliance and custodian, while CEXs only need to handle front-end KYC/AML, aiming to mitigate direct responsibility for engaging with the issuer of the securities.

Ondo & Securitize: Alliance Builder and Traditional Digital Securities Provider

· Ondo leads the "Global Market Alliance," collaborating with Solana Foundation, BitGo, Fireblocks, Jupiter, and others to establish cross-chain, custody, and liquidity standardization solutions.

· Securitize is an early typical player in the digital securities space, primarily offering share tokenization and accredited investor onboarding services to traditional enterprises. It targets the B2B market and does not directly serve retail customers.

Dinari: Attempting to Face Compliance Head-On in the U.S.

· Dinari is a U.S.-based team striving to tackle U.S. securities regulation head-on by applying for compliance licenses such as Reg D, Reg CF, and ATS (Alternative Trading System) qualifications. Their goal is to create truly compliant stock tokenization product "dShares."

· Unlike Backed, Dinari envisions offering users some optional shareholder rights in the future, such as dividends. However, 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 is primarily pursuing a B2B strategy, partnering with wallets or trading platforms to white-label stock token products.

Kraken: Pioneer of a Traditional Compliance-Oriented CEX

· Kraken has always positioned itself in the market as a compliant CEX, focusing on the trust of European and American users in licenses and compliance.

· Its xStocks module integrates with Backed: Equities are custody-held by Backed, while Kraken provides matching, listing, wallet, and API integration services. The Proof of Reserves (PoR) is publicly verifiable, on-chain transferable to networks like Solana, and can be combined with LP/DEX for secondary liquidity.

· Kraken places particular emphasis on compliance boundaries. For U.S. users, it implements IP blocking, timezone-based KYC restrictions, and other measures to avoid crossing the SEC's red lines as much as possible.

Bybit: Dual-Track Hybrid, Balancing Spot and Derivatives

· The biggest difference from Kraken is that Bybit simultaneously operates both an equities tokenization and CFD (Contract for Difference) product line.

· CFDs on Bybit are achieved through integration with external liquidity providers (such as IS Prime, Finalto) and the MT5 system, catering to the demand of high-frequency speculative traders to earn spreads and fees.

· The equities path involves collaboration with Backed to list xStocks (e.g., AAPLx, TSLAx), serving users preferring "equity-backed" assets, with both customer groups able to convert on the platform simultaneously.

Robinhood: Self-Owned Brokerage Chain Integration

· Robinhood holds a U.S. Broker-Dealer license, originally enabling it to offer real stock trading and custody services.

· By building the Robinhood Chain, it has put stock accounts on the blockchain, complemented by a proprietary wallet and trading matching system. It is first being tested in the EU region (Robinhood Europe), where over 200 stocks and ETFs are packaged as tokenized products for EU users to trade, bypassing U.S. regulations.

· Bitstamp provides a liquidity bridge, allowing users to use the tokens as collateral in DeFi scenarios or structured products.

· This "brokerage on-chain" solution has enabled Robinhood to have an all-encompassing ecosystem from issuance and custody to matching and liquidity, significantly enhancing retention and data control. However, it requires robust regulatory endorsement and substantial investment, making it difficult for small to mid-size players to replicate in the short term.

Republic: Focused on Unlisted Rare Equity

· In contrast to other projects focusing on public stocks, Republic places its tokenization emphasis on rare equity of unlisted companies (such as SpaceX, OpenAI), typically utilizing the Special Purpose Vehicle (SPV) note model to allow retail investors to indirectly invest in originally hard-to-reach equity targets.

· The risk lies in the fact that some private equity tokens may have authorization issues, such as OpenAI issuing a statement that the product launched on Robinhood Europe was unauthorized, and the SEC has also launched an investigation.

This article is contributed content and does not represent the views of BlockBeats.

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