Regulatory policy promotes the narrative of US stocks RWA: The opportunity summary of tokenized stocks: As Trump's policies are being fulfilled one by one, attracting the return of manufacturing industry through tariffs, actively igniting the stock market bubble to force the Fed to cut interest rates and release water, and then promoting financial innovation and accelerating industrial development through regulatory policies, this combination is truly changing the market. Among them, the RWA track under the favorable regulatory policy is also increasingly attracting attention from the cryptocurrency industry. This article mainly introduces the opportunities and challenges of tokenized stocks.

Overview of the development history of tokenized stocks

In fact, tokenized stocks are not a new concept. Since 2017, attempts at STOs have begun. The so-called STO (Security Token Offering) is a financing method in the cryptocurrency field, which essentially digitizes and puts traditional financial securities' rights on the chain, achieving asset tokenization through blockchain technology. It combines the compliance of traditional securities with the efficiency of blockchain technology. As an important category of securities, tokenized stocks are the most intriguing application scenario in the STO field.

Before the emergence of STO, the mainstream financing method in the blockchain field was ICO (Initial Coin Offering). The rapid rise of ICO mainly relies on the convenience of Ethereum smart contracts, but most tokens issued by projects do not represent real asset ownership and lack regulation, leading to frequent fraud and exit scams.

In 2017, the U.S. SEC (Securities and Exchange Commission) issued a statement regarding the DAO incident, pointing out that certain tokens may be classified as securities and should be regulated by the Securities Act of 1933. This marked the official start of the concept of tokenization. In 2018, STO, as a concept of 'compliant ICO,' gradually gained popularity and attracted industry attention. However, due to the lack of unified standards, poor liquidity in the secondary market, high compliance costs, the market development has been slow.

With the advent of the 2020 DeFi Summer, some projects began to experiment with decentralized solutions, creating derivatives linked to stock prices through smart contracts, allowing on-chain investors to directly invest in traditional stock markets without the need for complex KYC processes. This paradigm is commonly referred to as the synthetic asset model, where investors do not directly hold US stocks and trades do not require trust in centralized institutions, thereby bypassing costly regulatory and legal costs. Representative projects include Synthetix and Mirror Protocol in the Terra ecosystem.

In these projects, market makers can mint synthetic US stocks on-chain by providing over-collateralized cryptocurrencies, providing market liquidity, and traders can directly trade these assets in the secondary market in DEX to gain exposure to the anchored stock prices. I remember that at that time, the most popular stock in the US stock market was Tesla, not the previous cycle's Nvidia. Therefore, most projects' slogans highlighted the selling point of directly trading TSLA on-chain.

However, from the perspective of the final market development, the trading volume of synthetic US stocks on the chain has always been unsatisfactory. Taking sTSLA on Synthetix as an example, including the minting and redemption on the primary market, the total cumulative on-chain transactions are only 798 times. Subsequently, most projects claimed externally that due to regulatory considerations, they have delisted synthetic assets of US stocks and turned to other business scenarios. However, the fundamental reason is likely that they have not found PMF and cannot establish a sustainable business model, because the premise of the synthetic asset business logic is the need for a significant on-chain transaction demand to attract market makers to mint assets on the primary market and make profits by providing liquidity on the secondary market. Without such demand, market makers not only cannot obtain returns through synthetic assets, but also have to bear the risk exposure of shorting anchored US stocks brought by synthetic assets, thus further shrinking liquidity.

In addition to the synthetic asset model, some well-known CEXs are also trying to bring the ability to trade US stocks to crypto traders through a centralized custody model. In this model, actual stocks are held by third-party financial institutions or exchanges and directly created as tradable assets on CEXs. FTX and Binance are typical examples. FTX launched tokenized stock trading services on October 29, 2020, in collaboration with German financial company CM-Equity AG and Swiss Digital Assets AG, allowing users from non-U.S. and restricted regions to trade tokens linked to U.S. listed company stocks such as Facebook, Netflix, Tesla, Amazon, etc. In April 2021, Binance also started offering tokenized stock trading services, with Tesla (TSLA) being the first stock to be listed.

However, at that time, the regulatory environment was not particularly friendly, and the core initiator was a CEX, which meant direct competition with traditional stock trading platforms such as Nasdaq, naturally facing significant pressure. FTX's tokenized stock trading volume reached its historical peak in the fourth quarter of 2021. The trading volume in October 2021 was $94 million, but after bankruptcy in November 2022, its tokenized stock trading service was suspended. Binance, on the other hand, announced the suspension of its tokenized stock trading service in July 2021 due to regulatory pressure, just three months after launching the business.

Subsequently, as the market entered a bear market phase, the development of this track also once fell into a state of stagnation. It was not until Trump's election that his deregulatory financial policies brought about a change in the regulatory environment, reigniting market interest in tokenized stocks. However, at this point, it has a new name, RWA. This paradigm emphasizes the introduction of compliant issuers to issue tokens on-chain that are backed 1:1 by real-world assets, with strict adherence to regulatory requirements in token creation, trading, redemption, and asset collateral management through compliant architectural design.

The current market situation of stock RWA

So next, let's introduce the current market situation of the stock RWA. Generally speaking, the market is still in its early stages, and is still mainly dominated by the US stock market. According to RWA.xyz's data, the total issuance of the stock RWA market has reached $445.40M, but it is worth noting that $429.84M of the issuance is attributed to a target EXOD, which is the on-chain stock issued by Exodus Movement, Inc., a software company focused on developing self-hosted cryptocurrency wallets. The company was founded in 2015 and is headquartered in Nebraska, USA. The company's stock is listed and traded on the New York Stock Exchange (NYSE America), and allows users to migrate its common Class A shares to the Algorand blockchain for management. Users can directly view the price of these on-chain assets in the Exodus Wallet, and the company's current total market value is $1.5B.

The company has also become the only company in the United States to tokenize its common stock on the blockchain. However, it is worth noting that the on-chain EXOD is just a digital representation of its stock on the chain, without including voting, governance, economic, or other rights. At the same time, this Token cannot be traded or circulated directly on the chain.

The event is of certain significance, marking a clear shift in the SEC's attitude towards on-chain stock assets. In fact, Exodus' attempt to issue on-chain stocks was not smooth sailing. In May 2024, Exodus first submitted an application for tokenizing common stocks, but due to the SEC's regulatory policy at the time, the on-chain plan was initially rejected. However, in December 2024, after continuous improvement in technical solutions, compliance measures, and disclosure of information, Exodus finally obtained approval from the SEC and successfully completed the tokenization of common stocks on-chain. This event also led to the company's stocks being sought after in the market, reaching historical highs in price.

In addition, the remaining approximately $16M market share is mainly attributed to a project called Backed Finance. This is a Swiss company that operates through a compliant framework, allowing users who meet KYC requirements to purchase USDC minted on-chain stock tokens through its official primary market. After receiving the encrypted assets, Backed exchanges them for dollars and purchases COIN stocks in the secondary market (with some possible delays due to stock market opening hours). Once the purchase is successful, the stocks are managed by a Swiss custodian bank, and 1:1 mint bSTOCK tokens are sent to the users. The redemption process is the reverse. The security of reserve assets is guaranteed by an audit firm called Network Firm, which regularly issues reserve proofs. On-chain investors can directly purchase such on-chain stock assets through DEX like Balancer. In addition, Backed does not provide holders of stock tokens with ownership of underlying assets or any other additional rights, including voting rights. Only users who have completed KYC can redeem USDC through the primary market.

In terms of circulation, Backed's adoption mainly focuses on CSPX and COIN, with the former having a circulation of about $10M and the latter around $3M. In terms of on-chain liquidity, it mainly concentrates on the Gnosis and Base chains, with liquidity of approximately $6M for bCSPX and $1M for wbCOIN. However, the trading volume is not very high. Taking the largest liquidity pool of bCSPX as an example, since its deployment on February 21, 2025, the total trading volume is about $3.8M, with around 400 transactions.

Another trend worth paying attention to is the progress of Ondo Finance. With Ondo's announcement of its Ondo chain and Ondo Global Markets overall strategy on February 6, 2025, tokenized stocks are the core trading targets in Ondo Global Markets. Perhaps Ondo, with broader TradFi resources and a better technical background, can accelerate the development of this track, but it still needs to be observed.

Opportunities and Challenges of Stock RWA

Next, let's discuss the opportunities and challenges of stock RWA. In general, the market believes that stock RWA has the following three advantages:

• 24-hour trading platform: Due to the technical characteristics of blockchain, it has the capability to operate around the clock. This allows tokenized stock trading to break free from the time constraints of traditional exchanges and fully tap into potential trading demand. Taking Nasdaq as an example, although it has already extended its trading hours to provide 24-hour trading capability through pre-market and after-hours trading, regular trading hours are still limited to weekdays. However, by directly developing a trading platform on the blockchain, 24-hour trading can be achieved at a lower cost.
• Low-cost access to US assets for non-US users: With the widespread adoption of payment-type stablecoins, non-US users can directly trade US assets using stablecoins without incurring the costs and time associated with cross-border fund transfers. For example, a Chinese investor investing in US stocks through Tiger Brokers, without considering the cost of currency exchange, the cross-border remittance fee is about 0.1%. In addition, cross-border remittance settlement usually takes 1-3 working days. However, trading through on-chain channels can avoid these two costs.
• The financial innovation potential brought by composability: With its programmable features, tokenized stocks will embrace the DeFi ecosystem, giving it stronger on-chain financial innovation potential. For example, scenarios such as on-chain lending.

However, the author believes that tokenized stocks still face two uncertainties:

• Regulatory policy advancement speed: According to the cases of EXOD and Backed, we can understand that the current regulatory policies are not yet able to effectively solve the issue of 'equal rights for stocks and coins,' that is, the legal equality between purchasing tokenized stocks and physical stocks, such as governance rights, at the legal level. This restricts many trading scenarios, such as company mergers through the secondary market. The compliant use scenarios for tokenized stocks are not yet clear, which to some extent also hinders the pace of financial innovation. Therefore, its progress heavily depends on the speed of regulatory policy advancement, considering that the core policy goal of the current Trump administration is still in the phase of manufacturing industry reshoring, the timetable may continue to be postponed.
• The development of stablecoin adoption: From the perspective of past development, the core target users of tokenized stocks are most likely not native cryptocurrency users, but rather traditional, non-US stock investors. For this group, the increasing adoption of stablecoins is also a concern, closely related to stablecoin policies in other countries. For example, for Chinese investors, obtaining stablecoins through OTC markets entails a premium of about 0.3% to 1%, significantly higher than the cost of investing in US stocks through conventional official channels for currency exchange.

Therefore, in conclusion, from a short-term perspective, the author believes that there are the following two market opportunities for stock RWA:

For listed companies, they can issue on-chain stock token by referring to the case of EXOD, although there are not many actual usage scenarios in the short term, at least the potential financial innovation ability can make investors willing to give the company a higher valuation. For example, for some companies that can provide on-chain asset management services, they can transform the investor's identity into a product user through this method, and transform the stocks held by investors into the company's AUM, thereby enhancing the business growth potential of the company.

For tokenized high-dividend US stocks, some income-based DeFi protocols may become potential users. As market sentiment reverses, the yields of most on-chain native real income scenarios will significantly decrease, and income-based DeFi protocols like Ethena need to constantly seek other real income scenarios to improve overall yield and enhance market competitiveness. Refer to the example of configuring BUIDL in Ethena. High-dividend stocks, usually belonging to mature industries, with stable profit patterns, abundant cash flow, can continuously distribute profits to shareholders, and most of them have the characteristics of low volatility and strong ability to resist economic cycles, making investment risks relatively controllable. Therefore, if some high-dividend blue-chip stocks can be introduced, they may be adopted by income-based DeFi protocols.

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