From stablecoins to stock tokenization, the crypto world is trying to bring the "Dollar System" and the "US Stock Market" onto the chain, building a global on-chain capital market with shadow dollars and shadow stocks. In the previous article, we have already dissected the ins and outs of this logic: from the early attempts by FTX and Binance, to the different strategies of Kraken, Bybit, and Robinhood in the new wave, and to the comparison of three typical models (real stock custody, CFD, on-chain synthetic). It can be seen that technology and demand are not the obstacles. The real core lies in the regulatory game and institutional boundaries.

Seven, Global Regulatory Overview

United States: Securities Law as a Hard Constraint

· Core Principle: Stock tokenization ≠ Non-security. As long as stocks are tokenized and sold or services are provided to US users, it automatically triggers the SEC's securities regulatory requirements.

· Compliance Conditions: To issue and sell stock tokens, one needs to hold a Broker-Dealer license, an ATS (Alternative Trading System) license, and have a custody and disclosure architecture compliant with securities laws, usually requiring the engagement of a compliance legal team to review the offering memorandum.

· Regulatory Attitude: The SEC's position has always been clear — "Tokenization doesn't change the nature of the underlying asset."

· Lessons Learned: FTX, Binance, and others launched stock tokenization attempts in 2020–2021 without holding full compliance qualifications, and subsequently came under pressure from the SEC, FINRA, and Germany's BaFin, eventually being forced to delist.

European Union: Dual Application of MiFID II and MiCA

· MiFID II: Any product involving securities sales and targeting retail or institutional investors must strictly adhere to the Markets in Financial Instruments Directive and cannot circumvent existing securities regulatory obligations by naming them "tokens."

· MiCA: Although mainly aimed at crypto assets and stablecoin issuance, if there is real stock backing behind stock tokenization, it will also fall under the MiCA regulatory framework.

· Regional Practice: Robinhood Europe has already piloted in the EU, providing stock tokenization products using an SPV structure; once the actual securities attributes are touched, additional exemptions or full disclosure obligations must be completed according to local requirements.

Asia/Middle East: Grayscale Pilots Relatively Active

· The Monetary Authority of Singapore (MAS), the Swiss Financial Market Supervisory Authority (FINMA), the UAE ADGM/DFSA, and others have established regulatory sandboxes for Real World Asset (RWA) tokenization, allowing small-scale tokenization projects to pilot first, with the condition that they primarily target non-US customers and regional accredited investors.

· Hong Kong maintains a cautious attitude towards security tokenization and currently focuses RWA implementation more on bonds, funds, structured notes, etc., without yet fully unleashing stock tokenization businesses.

Chapter 8: Real User Scenarios | How Global Retail Investors and Institutions Participate

The practical implementation of stock tokenization is not only aimed at retail investors.

From individual retail investors to high-frequency traders, from small to medium-sized CEXs, regional wallets to traditional brokerages, DeFi protocols, all parties can find their entry points and viable paths in this field.

Retail Investors

· The most direct way to use it is to buy xStocks in small amounts, connect with USDT to tokens representing stocks such as those of Apple, Tesla, etc., and track price fluctuations.

· The main demand is to address the pain point of "not having a US stock account but wishing to test the waters with a low threshold."

· Core understanding: It is necessary to clarify that the held tokens do not represent actual shareholder status in the company, and do not include dividends or voting rights.

High-Frequency Traders

· The core appeal of this group regarding stock tokenization is short-term spread and volatility arbitrage.

· CFDs (Contract for Difference) are most suitable: they can use leverage, hedge flexibly, and support T+0 closing.

· Core understanding: It is necessary to understand slippage, leverage risks, counterparty risks, and the margin call or liquidation prevention mechanisms.

Small and Medium-Sized Exchanges / Regional CEX

· If lacking a full brokerage license, a hybrid model of "CFD + Tokenization via Partnership" can be adopted.

· The frontend provides spot/CFD matching, and the backend collaborates with issuers like Backed, Dinari, etc., to introduce real asset-backed tokenization, capturing grayscale traffic while earning fee sharing.

· Core understanding: It is necessary to properly delineate the service area to avoid high-pressure regulatory markets like the US.

Traditional Broker

· Legal and capital-sufficient traditional brokers tend to prefer the "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 benefits.

· Key Understanding: It is necessary to have a mature licensing system, compliant custody, and legal support in multiple countries.

Wallet / Agent

· In emerging markets, some wallet or OTC teams tend to use white-label tokenization products, attaching issuers' notes from platforms such as Kraken and Backed to their own front-end apps or mini-programs, earning traffic entry and matching commissions.

· Particularly suitable for regions with high retail account opening thresholds and strong grayscale demand, such as Pakistan and the Philippines.

· Key Understanding: It is necessary to find a reliable issuer and complete compliance integration to reduce regional regulatory risks.

DeFi Protocol

· Stock tokenized assets can be combined with on-chain bonds and stablecoins to become a key puzzle piece in the combination derivatives of the DeFi ecosystem.

· Typical scenarios include providing bilateral liquidity in LP pools or using them as collateral and leverage on Aave, Compound, and other lending protocols.

· Key Understanding: It is essential to ensure the security of oracle and liquidation mechanisms to avoid the oracle attacks or price failure risks experienced by projects like Mirror Protocol.

How Different User Groups Can Participate in Stock Tokenization

IX. Risks | Truths and Easy Pitfalls

Stock tokenization seems to provide a convenient way for global users to trade US stocks, but the underlying risks and operational thresholds are often underestimated. Here are the five most typical risks worth being aware of:

Risk 1 | Most Tokens Do Not Convey Shareholder Rights

Platforms like Robinhood, Backed, and Kraken have explicitly stated in their official FAQs: "This token does not represent actual shareholder rights." In other words, users hold only an on-chain certificate linked to the stock price and do not have the same rights as traditional shareholders.

· Unable to automatically obtain company annual reports, AGM (Annual General Meeting) participation rights, or shareholder voting rights;

· Dividends are usually not included, unless the issuer actively designs profit sharing, which is extremely rare in practice.

Therefore, the vast majority of users only hold a shadow of the price, rather than a real shareholder position.

Risk 2 | The Real Share Redemption Process Is Much More Complex Than Imagined

Although most tokenized securities theoretically support a 1:1 redemption, the actual process has high barriers:

· There is usually a minimum redemption threshold (such as at least 1 share, with some products even requiring a minimum of 100 shares);

· There is a cooling-off period, which can last up to 30–90 days;

· Users need to complete the KYC process again, submit proof of address, and other documents;

· 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 practicality of redemption is rarely chosen.

Risk 3 | Insufficient Liquidity Easily Leads to "Empty Pools"

Although tokenized stocks are attached to on-chain liquidity pools or centralized exchanges, the actual order book depth is often limited:

· For example, Backed's AAPL and TSLA on Solana's main LP pool usually have a total size of only a few million dollars;

· Daily market-making heavily relies on a few liquidity providers such as Kraken, Bitstamp, etc.;

· Once mainstream market makers exit or trading platforms delist the token, users' held assets may only be traded through OTC or other non-mainstream channels, significantly increasing liquidity risks.

Risk 4 | Oracle Failure Is a Core Risk of On-Chain Synthetic Assets

Pure DeFi synthetic assets rely on oracles such as Chainlink, Pyth, etc., to provide real-time price feeds for stock prices. Once a flash loan attack, API data distortion, or oracle manipulation occurs, the accuracy of synthetic tokens generated by smart contracts is compromised:

· A typical example is the Mirror Protocol in the Terra ecosystem: after UST's pegging failure and LUNA's collapse, oracle failure led to a massive reset of synthetic assets such as mAAPL and mTSLA.

Risk 5 | Cross-border Compliance Risk and Regulatory Blockage Could be Triggered at Any Time

Once a stock tokenization project targets U.S. residents or triggers cross-border securities sales, it may trigger regulations from institutions such as the SEC and FINRA:

· Robinhood Europe launched unauthorized tokenized equities such as OpenAI and SpaceX in the EU, leading to an official statement from OpenAI declaring lack of authorization and triggering a regulatory investigation;

· Precedents set by Binance, FTX, and others serve as a clear warning, with the former being forced to delist assets and the latter eventually going bankrupt due to compliance issues.

Chapter 10: Future Speculation | Possible Evolution Paths

Stock tokenization, as part of Real World Asset (RWA) on-chain efforts, is just the beginning. Over the next three years, it may evolve along the following three main paths:

Scenario A | Broker Chainization, Self-operated Closed Loop

In the future, Robinhood is highly likely to continue its All In approach: building its blockchain, holding regulatory licenses, self-managing real stock custody, issuing tokens on-chain, and integrating internal matching settlement.

If the SEC provides more flexibility in the compliance process, Robinhood could achieve a "Brokerage + Wallet + Chain" all-in-one solution.

If successful, this path could be seen as a "compliant version of the Binance Smart Chain," with the distinction that its underlying assets are real stocks and ETFs rather than purely native crypto assets.

Scenario B | Regional Grey Market, Leading the Way

Regions such as Abu Dhabi, Singapore, and Switzerland have included RWAs in official innovation trials, allowing for early exploration of the landing model for tokenized stocks and other grey assets. In the future, more "regionally restricted models" may emerge:

· The Americas and the EU will be led by their own licensing systems and local brokerages;

· Emerging markets such as the Middle East, Southeast Asia, and Africa are expected to become major global hubs for tokenized stocks.

Platforms like Kraken, Bybit, and Ondo are expected to closely focus on these grey market regions, targeting non-U.S. users and taking advantage of the window of opportunity brought by licensing flexibility.

Scenario C | DeFi Assembly and Composition Pathway

If the DeFi scene continues to heat up in the next cycle, tokenized stocks are likely to evolve into freely combinable "financial Lego" components, becoming a key block in on-chain RWA assembly strategies.

· For example, tokenized bonds (such as Ondo T-bills), stock tokens (such as Backed AAPLx), and stablecoins (such as USDC) can be combined and packaged into on-chain structured notes or index products.

· Tokenized stocks can also be added to liquidity pools (LPs), participate in bilateral market-making, and provide on-chain liquidity depth.

· Users can also collateralize such assets on protocols like Aave, Compound, etc., to leverage higher and create a compound DeFi yield scenario.

· Once this DeFi Lego chain is established, on-chain RWAs will not only be hanging notes or moving in one direction but will form a collateralizable, composable, and deconstructible liquidity loop.

Script D | Non-compliant Perpetual Contracts and Gray Matchmaking

In addition to the mainstream compliant path and on-chain DeFi assembly, there is still a significant gray branch in the market: if regulatory pressure does not form globally consistent constraints in the future, there may still be a batch of platforms focusing on non-compliant stock perpetual contracts in the middle and small exchanges.

· These platforms may operate in the form of centralized exchanges (CEXs) or be mounted on anonymous on-chain derivative protocols, directly connecting to retail fund flows and using USDT to match stock perpetual contracts.

· Perpetual contracts, similar to traditional CFDs, can be designed with higher leverage, automatic rollovers, requiring no holding of actual stocks or custodial assets, only engaging in pure price speculation.

· Some projects may encapsulate the front end on-chain (such as cross-chain DEX or anonymous derivative pools), attracting high-risk users through on-chain liquidity and anonymous accounts, reducing compliance traceability costs.

If the short-term leverage demand for tokenized stocks in the market continues to rise, such non-compliant matchmaking and perpetual contract gameplay are likely to actively fill in the local market in the short term, becoming a gray supplement to bypass regulation and meet high-frequency speculative demand. However, this branch carries high risks: once involving cross-border fund flows or U.S. users, it may trigger regulatory enforcement by the SEC, CFTC, or other legal jurisdictions at any time, and users also face potential losses from sudden liquidity interruptions, platform exits, or extreme slippage.

Eleven, Reverse Convergence: When On-chain Assets Begin to Enter the Stock Market

If "stock tokenization" represents the on-chainization of traditional financial assets, then another recent development may signify the initiation of a reverse convergence trend: on-chain assets are also attempting to enter the traditional financial system in a more compliant, structured manner, seeking credit recognition in the mainstream capital markets.

On July 25, a Nasdaq-listed company formerly known as SRM Entertainment officially rebranded as Tron Inc. and adopted a new stock ticker symbol, TRON. The company announced the divestment of its toy business and restructured its primary assets to focus on building the TRON DAO ecosystem and implementing a TRX Treasury strategy, with the native TRON token, TRX, as its core strategic reserve asset. Currently, it holds over 365 million TRX and engages in staking management and yield generation through on-chain protocols such as JustLend.

On the day of the announcement, Tron Inc.'s stock price surged over 55%, becoming a hot topic in the market. This event not only represented a "high-profile return" of a crypto project through a reverse merger but also signaled that on-chain native assets are exploring a new path towards compliant financial structures.

It is noteworthy that this is not the first time a traditional publicly traded company has disclosed its cryptocurrency holdings. As early as 2020, MicroStrategy became known as a "holdings listed company" for continuously acquiring BTC and including it in its financial reports; companies like Tesla, Block, and Coinbase have also disclosed their holdings of BTC, ETH, or stablecoins in their financial statements. However, what sets Tron Inc. apart from these companies is:

· It is one of the few publicly listed platforms where a public chain token (TRX) is a core asset, and on-chain ecosystem development is integrated into the company's strategy;

· The project team does not directly hold shares but rather exercises "shadow control" through DAO governance and advisory structures, attempting to graft on-chain governance onto traditional equity structures within a regulatory framework;

· Its asset operation relies more on on-chain protocols (such as JustLend), and its revenue mechanism leans towards Web3.

This type of operation is no longer just about capital operations but is instead an active narrative reconstruction: transforming token assets into financial units recognizable, valuated, and compliantly involved in traditional financial structures. Following stablecoins and crypto bonds, this may be the next experimental field for public chain ecosystems to connect with TradFi.

Therefore, we can observe that stock tokenization and on-chain asset securitization are forming a "bi-directional nesting":

· On one hand, real-world assets like US stocks and bonds are being tokenized to enhance the richness and real-world anchoring of on-chain finance;

· On the other hand, native crypto assets are entering mainstream capital markets through compliant channels, gaining incremental liquidity and institutional endorsement.

This trend is no longer confined to the conceptual stage but is gradually taking shape through initiatives like real stock tokenization on platforms like Kraken and Bybit and cases like Tron Inc.'s reverse merger. Together, they outline an emerging "Wall Street on-chain": a bridge between decentralized asset structures and traditional market frameworks.

Whether a complete loop can truly be formed in the future depends on market capability, regulatory flexibility, and the resilience of institutional design. But what can be certain is that the boundary between coin and stock is being rewritten.

12. Conclusion | Pie or Pitfall, Depending on the Closed Loop and Structural Design

From the on-chain real stock initiatives led by Kraken, Bybit, and Robinhood, to the compliance token issuance roles undertaken by Backed, Dinari, and Ondo, to the "on-chain asset reverse entry into the market" attempt represented by Tron Inc., the core competitiveness of this round of asset structure reconstruction has never been just 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 have allowed global retail investors to bypass the traditional banking settlement network; stock tokenization has enabled the tethering of shadow dollars to "shadow stocks"; a combination of the two has formed an on-chain "Gray Street," breaking down the closed capital markets in the physical world into a 24/7 composable and assemblable on-chain market.

However, to truly implement this model, there must be a clear chain of responsibility and stable compliance endorsement: only with real equity support can arbitrage-free rotation be avoided; transparency in custody and issuance is essential to ensure user trust; continuous market-making and liquidity are needed to support on-chain trading depth; regional licenses and cross-border compliance mechanisms are required to hedge against the constraints of the SEC, the EU, or local regulators.

Any loose link may cause the securities in users' hands to lose actual value and become isolated assets without rights or redemption.

For retail investors, stock tokenization may just be a speculative channel to test the gray path, and true shareholder status and long-term returns are still generated in the traditional brokerage system.

For small and medium CEXs, wallets, OTC desks, and DeFi protocols, this may be the fastest way to activate the stablecoin liquidity stored in wallets and quickly connect to the RWA track.

On the flip side, Tron Inc. offers a radical yet realistic possibility: bringing coins into the traditional capital market and shaking hands with stocks institutionally.

Whether it's a pie or a pitfall ultimately depends on who can build a bidirectional, composable, and executable closed-loop structure. Those who can truly pave the way are likely to catch the next wave of asset and liquidity mainstream.

About HTX Ventures

HTX Ventures is the global investment arm of Huobi HTX, integrating investment, incubation, and research to identify the world's best and brightest teams. As an industry pioneer, HTX Ventures has over 12 years of blockchain construction experience, excelling at identifying cutting-edge technology and emerging business models within the field. To drive growth within the blockchain ecosystem, we provide comprehensive support to projects, including financing, resources, and strategic advice.

HTXVentures currently supports over 300 projects covering various blockchain areas, with some high-quality projects already trading on Huobi HTX. Additionally, as one of the most active FOF funds, HTX Ventures has invested in 30 top funds globally and partnered with leading global blockchain funds such as Polychain, Dragonfly, Bankless, Gitcoin, Figment, Nomad, Animoca, and Hack VC to jointly build the blockchain ecosystem.

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

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