HTX Ventures Latest Research Report | Is Stock Tokenization a Pie in the Sky or a Trap? Understand it in One Article

Stock tokenization is becoming the latest focus 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 tokenization (RWA).

The core logic is that stablecoins have built a global shadow dollar system, and stock tokenization is a natural extension of this, allowing non-U.S. users to access "shadow U.S. stocks" directly via USDT, bypassing the challenges of 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, sending a signal 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 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 breakdown, player landscape, regulatory situation, typical risks, and future evolution to help you determine whether stock tokenization is a golden entry point for RWA or a grayscale trap in the capital market.

1. Why is the crypto world focused on stocks?

Since the birth of blockchain technology, almost all assets that can be tokenized have either been or are being 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 the real-world financial system 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 markets, 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 emerged 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, as one of the earliest exchanges to attempt stock tokenization, chose to partner 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 performed well, 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. Unable to meet these compliance requirements, FTX 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 pressure from multiple regulatory authorities.

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 has stock tokenization become a focus again?

Despite facing strong regulatory resistance, stock tokenization has been brought back to 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, making more traditional institutions willing to explore.

• Maturity of technological conditions: Unlike in 2020, the rapid development of blockchain technologies such as 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 investors in regions like Southeast Asia, South Asia, and the Middle East still have a strong demand for U.S. stocks. Users in these regions hold a large amount of USDT but find it difficult to enter the traditional U.S. stock market, and stock tokenization directly fills this market gap.

4. Why is stock tokenization closely 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, changing RWA from "static custody" to "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 a global "gray channel" of the shadow dollar system

• Dollar-pegged stablecoins (USDT, USDC) are no longer merely "payment tools in the crypto world," but rather "dollar copies" that bypass traditional cross-border settlement 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 can access "dollars" through stablecoins.
• Therefore, from the perspective of retail investors: "Having USDT ≈ dollar deposits," but more flexible, allowing for entry and exit to trade or to directly exchange for stock tokens.
• When stock tokenization appears, it naturally becomes 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)

• USDT's circulation reached over $115 billion in 2024, making it the world's largest "dollar substitute product," with a circulation speed far exceeding that of traditional dollar wire transfers.
• With highly liquid stablecoins, on-chain RWA (bonds, funds, real estate, stocks) naturally requires new "reservoirs," otherwise USDT can only remain in centralized exchanges for contracts and cannot connect to real assets.
• Tokenized stocks are one of the easiest to understand and most mature in global liquidity among RWAs, 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 + 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 engage in "shadow U.S. stocks" 24/7.
• This combination bypasses the U.S. brokerage system, the 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 merely the tokenization play.

This logical line 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 RWA also has backing from giants (BlackRock, Franklin Templeton).
• Kraken and others see this shadow dollar system as an opportunity to bring retail investors from gray areas into the market.
• Robinhood's trial of stock tokens in the EU also reflects its optimism about the USDT traffic from non-U.S. markets, using on-chain tickets to capture 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 path.

Currently, the mainstream practices in the market can be summarized into three models based on whether there is real stock custody, on-chain issuance, and trading methods:

1. Real stock custody + on-chain token issuance
2. Contract for difference (CFD) model
3. Pure DeFi synthetic assets

Each of the three models has its pros and cons, and there are significant differences in the regulatory pressures, liquidity designs, 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

• A licensed issuer or broker (such as Backed Finance or Dinari) purchases real stocks (like Apple or Tesla) in the traditional secondary market.
• The stock assets are held by a compliant custody institution (such as BitGo or Anchorage) to ensure that the holdings are 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 or Base.
• Users can purchase these tokens 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 in practice:

• Although 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 redeem the tokens for real stocks, they usually need to complete strict KYC processes and follow the custody redemption procedures, which may also incur additional fees. Some issuers do not even support retail investors redeeming fractional shares.
• Therefore, the vast majority of users purchase such tokens primarily to capture stock price fluctuations, with a very low proportion actually exercising their rights as shareholders.

Why are Kraken and Bybit still actively involved?

• Compliance buffer: Supported by real stocks and transparent custody, if regulatory pressure arises, most of the responsibility can be shifted to the issuer (like Backed).
• DeFi composability: Tokens possess on-chain transfer attributes and can be used for cross-chain combinations, such as Kraken's AAPLx being transferable to a Solana wallet for users to provide liquidity on Jupiter or engage in liquidity mining on Kamino.
• More appealing to retail investors: Compared to pure CFDs or synthetic assets, the "realness" backed by real stocks can lower the psychological barrier for users, making market education and user acquisition easier.

Special Case | Robinhood's "All-in-One Chain Integration" Approach

Robinhood's path is more aggressive, leveraging its own U.S. brokerage license, which already allows for real stock trading and custody.

Currently, Robinhood is developing 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 2 | 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 and PrimeXBT adopt similar structures.
• 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 liquidity providers (LPs) engage in a bet with users, without needing to actually hold the underlying stocks or perform physical custody.
• The spread, slippage, and leverage parameters are set by the platform, and the essence of user trading is price speculation between the platform or LP, with no stock delivery or shareholder registration involved.

Why is the CFD model prevalent?

• Fast deployment: It only requires connecting to mature LPs and introducing real-time stock market data to start trading.
• Relatively low compliance pressure: Most jurisdictions classify CFDs as derivative transactions, and as long as there is no physical stock delivery, they do not fall under the strictest regulatory frameworks of traditional securities law.
• High user acceptance: Crypto users are generally familiar with BTC and ETH contracts, and transitioning to U.S. stock contracts poses no learning barriers, 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 (like AAPLx, TSLAx) targeting users who prefer "real stock backing," directly competing with Kraken and Robinhood.
• On the other hand, it retains its traditional CFD product line to meet the speculative users' demand for high leverage and around-the-clock arbitrage.

This dual-track hybrid model allows Bybit to cover both conservative users who require psychological backing from real stocks 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, dividend rights, nor is there any linkage to a shareholder registry.
• 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 liquidation mechanisms, leading to potential losses from liquidation or slippage.
• Essentially a "betting market" under regulatory constraints: Therefore, CFDs are more suitable for short-term volatility operations, and long-term holding does not possess the same value attributes as stocks.

Model 3 | Pure DeFi Synthetic Assets on Chain

Compared to the previous two models, pure DeFi synthetic assets on-chain represent the most "orthodox" decentralized solution. Representative projects include the early Mirror Protocol and the still-operating Synthetix.

Operational Mechanism

• Users collateralize stablecoins (like 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.
• The smart contract automatically mints corresponding synthetic stock tokens, like "mAAPL" or "sTSLA," based on oracle data; these tokens only track stock prices and do not represent ownership of real stocks.
• Users can trade these tokens on decentralized exchanges (DEXs) like Terraswap, Uniswap, or Curve, participate in liquidity provision (LP), or combine them into indices or leverage.

Advantages and Characteristics

• Fully on-chain: It does not rely on centralized matching or custody; all issuance, circulation, and destruction are executed automatically by smart contracts.
• Flexible combinations: Can be assembled with other modules in the DeFi ecosystem, leading to various plays such as collateralized lending, options, and structured products.

Limitations and Risks

• Lack of real stock backing: Synthetic assets rely entirely on oracle price feeds, with no real equity backing.
• 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 exhaustion risk: Compared to centralized market-making, on-chain LP's market-making depth relies on participants continuously placing orders and distributing yields. Without sustained incentives, liquidity can rapidly diminish.

The failure of Mirror Protocol is a typical case: after the collapse of the Terra ecosystem, UST lost its peg, and the on-chain synthetic stocks mAAPL and mTSLA all became worthless.

Although Synthetix is still operational, the user scale and TVL have significantly shrunk compared to peak periods, and the popularity of pure DeFi stock tokenization is far below that of stablecoins and ETH leverage scenarios.

Comparison of the Three Stock Tokenization Models

6. Player Breakdown: Who is Practicing on This Chain

Behind this wave of stock tokenization, a relatively clear supply chain of upstream issuance - custody - platform liquidity - terminal distribution has formed.

Backed Finance: The Core Issuer Behind the Scenes

• Based 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 "compliant and ready for listing," quickly listed on CEX for retail investors.
• The key logic is that 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 standardized cross-chain, custody, and liquidity solutions.
• Securitize is an early typical player in the digital securities space, primarily providing equity tokenization and qualified investor matching services for traditional companies, focusing on the B2B market rather than directly targeting retail investors.

Dinari: Attempting to Face Compliance Directly in the U.S.

• Dinari is a team based in the U.S. that is trying to respond to U.S. securities regulation by applying for compliance licenses such as Reg D, Reg CF, and ATS (Alternative Trading System), aiming to create truly compliant stock tokenization products called "dShares."
• Unlike Backed, Dinari hopes to provide users with some optional shareholder rights (like 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 Compliant 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 collaborates 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 time zone 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 (like 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 offer xStocks (like AAPLx, TSLAx), catering to users who prefer "real stock backing," allowing both customer groups to convert on the platform.

Robinhood: Integrated Brokerage Chain

• Robinhood possesses a U.S. Broker-Dealer license, which already allows for real stock buying and selling as well as custody.
• It is building Robinhood Chain to link stock accounts to the chain, with its own wallet and trading matching system, initially trialing in the EU (Robinhood Europe), packaging over 200 stocks and ETFs into token products for EU users to trade, avoiding U.S. regulation.
• Bitstamp provides a liquidity bridge, allowing users to later use tokens in DeFi scenarios for collateral or structured products.
• This "in-house brokerage chain" solution allows Robinhood to integrate issuance, custody, matching, and liquidity, greatly enhancing retention and data control, but requires strong compliance backing and capital investment, making it difficult for smaller players to replicate in the short term.

Republic: Focusing on Non-Public Rare Equity

• Unlike other projects focusing on public stocks, Republic emphasizes tokenization of rare equity in non-public companies (like SpaceX, OpenAI), typically using SPV (Special Purpose Vehicle) note models to allow retail investors to indirectly invest in previously inaccessible equity targets.
• The risk here is that some private equity tokens may face authorization issues, as OpenAI has already stated that Robinhood Europe's launch of related products was unauthorized, and the SEC has initiated an investigation.

7. Global Regulatory Overview

United States: Securities Law is a Hard Constraint

• Core Principle: Stock tokenization ≠ non-securities. 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 hiring a compliance legal team to review the issuance documentation.
• 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 faced pressure from the SEC, FINRA, and BaFin in Germany when they attempted stock tokenization in 2020-2021 without holding complete compliance qualifications, ultimately leading to delisting.

European Union: Dual Applicability 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 targeting crypto assets and stablecoin licensing, if stock tokenization has real stock backing, it will also fall under the MiCA regulatory framework.
• Regional Practices: 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: Gray Area Pilots Relatively Active

• 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 ADGM/DFSA, allowing small-scale tokenization projects to pilot, provided they primarily target non-U.S. customers and regional qualified investors.
• Hong Kong takes a cautious stance on securities tokenization, with current RWA implementations mainly concentrated on bonds, funds, and structured notes, and has not yet broadly released stock tokenization businesses.

8. Real User Scenarios | How Global Retail and Institutions Can Enter

The practical implementation of stock tokenization is not limited to retail investors.

From individual retail investors to high-frequency speculators, from small and medium-sized CEXs, regional wallets to traditional brokerages and DeFi protocols, various parties can find their own entry points and feasible paths in this arena.

1. Ordinary Retail Investors

• The most direct use case is to buy small amounts 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 test the waters with a low threshold."
• Core Understanding: It is essential to clarify that the tokens held do not equate to shareholder status and do not include dividends or voting rights.

1. High-Frequency Speculators

• This group focuses on short-term price differences and volatility arbitrage in stock tokenization.
• CFDs 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 prevent forced liquidation or margin calls.

1. Small and Medium Exchanges / Regional CEXs

• If they do not possess complete brokerage qualifications, they can adopt a hybrid model of "CFD + franchise tokenization."
• The front end provides spot/CFD matching, while the back end collaborates with issuers like Backed and Dinari to introduce real ticket-type tokens, capturing gray 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.

1. Traditional Brokerages

• Traditional brokerages with mature legal and capital conditions are more inclined toward a "self-built chain + self-operated license" model.
• Robinhood and Bitstamp have explored this path in European and American markets: by linking accounts on-chain and internal custody, they capture both matching and custody revenues.
• Core Understanding: They need to be equipped with a mature licensing system, compliant custody, and multi-national legal support.

1. Wallets / Agents

• In emerging markets, some wallets or OTC teams prefer to use white-label tokenization products, linking tickets 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 barriers are high and gray demand is strong.
• Core Understanding: It is essential to find reliable issuers and complete compliance connections to reduce regional regulatory risks.

1. 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 in lending protocols like Aave and Compound.
• Core Understanding: It is crucial to ensure the safety of oracles and liquidation mechanisms to avoid the risks of oracle attacks or price failures encountered by projects like Mirror.

How different user groups can participate in tokenized stocks

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 most notable risks to be cautious 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 exercise voting rights;
• Dividends are usually not included unless the issuer actively designs profit-sharing, which is extremely rare in practice.

Thus, for the vast majority of users, what they hold is merely a price shadow, not a real shareholder seat.

Risk 2 | The process for redeeming real stocks is far more complex than imagined

Although most ticket-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 even 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 and submit address proof and other materials;
• Most also incur fees, commonly ranging from 5% to 2% of the face value.

Therefore, for the vast majority of retail investors, the practical choice to redeem is very rare.

Risk 3 | Insufficient liquidity can easily lead to "empty pools"

Although tokenized stocks are listed on 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 the exchange delists 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 hidden danger for on-chain synthetic assets

Pure DeFi synthetic assets rely on price feeds from oracles like Chainlink and Pyth to synchronize stock prices in real-time. If there are price 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 large-scale 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 activate regulatory oversight from the SEC, FINRA, and other agencies:

• Robinhood Europe has launched unauthorized tokenized equity for OpenAI and SpaceX, which has been publicly 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

As a part of real-world asset tokenization (RWA), 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 Chain Integration, Self-Operated Closed Loop

Robinhood is likely to continue doubling down on an All-In model: building its own blockchain, holding compliance licenses, managing real stock custody, on-chain token issuance, and integrated internal matching and settlement.

Once the SEC releases more flexibility in compliance pathways, Robinhood could achieve a "brokerage + wallet + chain" integration.

If realized, 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 "region-specific models" may emerge:

• The Americas and the EU will be primarily led 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 expected to closely position themselves in these gray areas, focusing on non-U.S. user traffic and the window of opportunity created by licensing flexibility.

Scenario C | DeFi Assembly and Composability Pathways

If DeFi scenarios continue to warm up in the next cycle, tokenized stocks may evolve into freely combinable "financial Lego" components, becoming an important segment 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 (LP) to participate in bilateral market-making, providing depth for on-chain funds.
• Users can also use these assets as collateral in lending protocols like Aave and Compound to leverage higher returns, forming composite DeFi yield scenarios.

Once this DeFi assembly chain is successfully established, on-chain RWA will not merely be about listing tickets or one-way circulation but will form a liquidity closed loop that is collateralizable, composable, and disassemblable.

Scenario D | Non-Compliant Perpetual Contracts and Gray Matching

In addition to mainstream compliant pathways and on-chain DeFi assembly, there remains a notable gray branch in the market:

If regulatory pressures do 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 as centralized exchanges (CEX) or be mounted on anonymous chain derivative protocols, directly connecting retail capital flows and providing stock perpetual contracts using USDT.
• Perpetual contracts are similar to traditional CFDs but can be designed with higher leverage and automatic rollover, requiring no real stock or custody assets, purely engaging in price speculation.
• 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 in tokenized stocks continues to rise, such non-compliant matching and perpetual plays may become active supplements in localized markets, circumventing regulations to meet high-frequency speculative needs.

However, this branch also carries significant risks:

Once cross-border capital flows or U.S. users are involved, 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 failures, 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 that 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., adopting 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's TRX treasury strategy, using the native TRON token TRX as its core strategic reserve asset. Currently, it 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 world to public markets but also signifies that native on-chain 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 incorporating it into 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 to integrate on-chain governance with traditional equity structures through DAO governance and advisory structures;
• Its asset operation method relies more on on-chain protocols (like JustLend), with a yield mechanism leaning towards Web3.

Such operations are no longer merely capital maneuvers but a proactive narrative reconstruction: transforming token assets into financial units that are recognizable, valuably estimable, and compliant in traditional financial structures. Following stablecoins and crypto bonds, this may be the next experimental field for public chain ecosystems to connect with TradFi.

Thus, we can see that stock tokenization and the tokenization of on-chain assets are forming a "dual nesting":

• On one side, real assets like U.S. stocks and bonds are being brought onto the chain, enhancing the richness and real-world 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 backing.

This trend is no longer merely conceptual but is gradually taking shape in cases like Kraken and Bybit pushing for real stocks on-chain, as well as Tron Inc.'s reverse listing. Together, they depict an embryonic "on-chain Wall Street": a bridge connecting decentralized asset structures with traditional market frameworks.

Whether a true closed loop can be formed will depend on market-making capabilities, regulatory flexibility, and the resilience of institutional designs. But it is certain that the boundaries between coins and stocks are being rewritten.

12. Conclusion | Whether it is a pie or a 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 Tron Inc. representing the "reverse entry of on-chain assets into the market," the core competitiveness of this round of asset structure reconstruction has never been merely about smart contracts or product forms, but whether a complete on-chain financial closed loop can be sustained.

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 forms an on-chain "gray Wall Street," breaking down the closed capital markets of the real world into a 24/7 combinable and assembleable on-chain market.

However, for this model to truly land, there must be a clear chain of responsibility and stable compliance backing:

Real equity support is necessary to avoid empty arbitrage; transparency in custody and issuance is essential to ensure user trust; continuous market-making and liquidity are required to support on-chain trading depth; regional licenses and cross-border compliance mechanisms are needed to hedge against the constraints of the SEC, the EU, or local regulatory agencies.

Any weak link could cause the tokens in users' hands to lose actual value, becoming rights-less, non-redeemable island assets.

For retail investors, stock tokenization may just be a speculative channel to test gray pathways, while true shareholder status and long-term returns still originate within traditional brokerage systems.

For small and medium CEXs, wallets, OTCs, and DeFi protocols, this may be the fastest shortcut to activate the liquidity of stablecoins sitting in wallets and quickly 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 on an institutional level.

Whether it is a pie or a trap ultimately depends on who can build a two-way, combinable, and actionable closed-loop structure. Those who can successfully navigate this path are likely to 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 construction experience and excels at 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.