Tokenization of US stocks: a return of a narrative or a signal of the evolution of Web3 financial structure?

Question

Recently, when I opened Twitter, the screen was full of tokenization of US stocks. It is no exaggeration to say that if you haven't been discussing this matter these days, it might indicate that you have fallen out of touch with the market.

"The "US stock on-chain" is the biggest market highlight this week. Robinhood launched stock tokenization services in Europe, while xStocks also landed on Kraken and Bybit; Solana DEX and the Arbitrum ecosystem started listing trading pairs like AAPLx and TSLAx, rapidly spreading this new narrative of stock tokenization.

But if you only see the hype and haven't understood the structure, you might become a victim in this narrative.

In my opinion, the tokenization of stocks is essentially not about "issuing a token", but rather a stress test for on-chain finance:

Can the Web3 world really support the issuance, trading, pricing, and redemption of mainstream financial assets?

is not hype, it is a structural stress test of on-chain finance.

From my perspective, the narrative of our industry is one of continuous cyclical development. As early as 2019, both Binance and FTX attempted the tokenization of U.S. stocks, but were ultimately halted by regulators. The Mirror Protocol simulated U.S. stock prices with synthetic assets, but also perished along with the collapse of Terra and SEC regulation. This is not a new concept; it was just that the industry's development was not mature at that time.

The tokenization of stocks today is not a grassroots experiment, but a compliant path led by licensed institutions such as Robinhood and Backed Finance. This is a key watershed.

Taking Robinhood as an example, its newly launched stock tokenization service in Europe follows an unprecedented "broker proprietary + on-chain issuance" closed-loop path.

They are not just simply displaying a price on the chain, but rather Robinhood is licensed in the EU, purchasing actual US stocks, and issuing tokens that are 1:1 mapped on the chain. From custody, issuance, to clearing, settlement, and user interaction, the entire process is seamless, making the trading experience similar to a combination of a securities account and a wallet.

Initially, they deployed these tokens on Arbitrum to ensure that the speed and cost of on-chain transactions are controllable. Later, they also plan to migrate to their own Robinhood Chain, which means they will have to master the entire infrastructure themselves.

Although voting rights cannot be opened yet to avoid governance-related regulations, the overall structure already shows a prototype: it is like establishing an almost independently functioning "on-chain securities trading system" at the structural level.

For the cryptocurrency industry, this is the first time we have seen a traditional internet brokerage not only having autonomy in the issuance end but also carrying out a deconstruction of the asset's blockchain structure.

From grassroots experiments to compliant closed loops

The recent surge in stock tokenization is, as I have previously repeated, not an accidental event. Essentially, it is a resonance of several core variables occurring at the same time. The so-called timing, location, and harmony of people can be summarized like this.

Firstly, there has been a relaxation at the regulatory level, as well as a clear direction. For example, Europe's MiCA has officially landed, and the U.S. SEC is no longer just hammering down, but has started to release some signals of "things that can be discussed and done."

Robinhood was able to quickly launch stock token services in the EU thanks to the securities license it obtained in Lithuania; xStocks being accessible on both Kraken and Bybit is also closely linked to its compliance structure established in Switzerland and Jersey.

At the same time, as funds on the chain are indeed looking for new asset outlets, the structure of on-site funds has changed. The gap between traditional financial markets and the non-MEME Crypto market will only continue to narrow.

Looking at the present, there are a bunch of projects on the chain with no fundamentals, yet sporting extremely high FDV. Liquidity is piled up with nowhere to go, and conservative funds are starting to seek "anchored and logical" asset allocation exits. At this time, legitimate players like Robinhood and xStocks come in with compliant structures and trading experiences, making stock tokens attractive. They are familiar, stable, have narrative space, and can also be paired with stablecoins and DeFi.

The integration of TradFi and Crypto has deepened significantly. From BlackRock to JPMorgan, from UBS to MAS, traditional financial giants are no longer standing by and watching; they are actively building chains, running pilots, and engaging in infrastructure development. As the most mainstream and recognized asset, stocks will obviously become the priority choice for tokenization.

Is traditional asset on-chain an opportunity for encryption or a threat to projects?

Jiayi's subjective opinion:

Looking ahead, stock tokenization is unlikely to be an explosive growth curve, but it could become a highly resilient infrastructure evolution path in the Web3 world.

The significance of this narrative lies in its ability to leverage two important structural changes: first, the boundaries of assets are truly beginning to migrate onto the chain; second, the traditional financial system is willing to organize a portion of transactions and custody processes in an on-chain manner. Once these two things are established, they become irreversible.

So, is it good or bad for stocks to come and grab liquidity from Crypto projects?

In my opinion, this is a typical double-edged sword. It brings higher quality assets, but it can also subtly rewrite the flow structure of funds on the chain.

From the front:

The entry of traditional finance's "blue chip assets" has provided new avenues for on-chain funds and added some options for the allocation of "stable assets." In a market where narratives shift rapidly and funds wander long-term, these clearly structured assets with real-world anchors are actually helping liquidity rediscover the basic coordinates of "where it should be allocated and where it can be allocated."
At the same time, this will also bring about the "catfish effect." As the strong narrative asset of U.S. stock tokenization comes into play, the entire benchmark on the chain will be raised, which will inevitably push the overall quality of Web3 projects to start improving. Let the market eliminate the junk projects, to be honest.
Crypto players can directly purchase stocks in Crypto Native form, reducing the liquidity drain on the large pool of Crypto from the US stock market.

But looking at it the other way around:

It will also put pressure on native crypto projects. Not only will the narrative be stolen, but the on-chain capital structure and user preferences will also be gradually reshaped. Especially when tokenization of stocks gains liquidity and starts to run perp, lending, and portfolio configurations, it will directly compete with native assets for stablecoin flow, mainstream users, and attention on the chain.
For project parties: Financing will become more difficult. When tokenized private equity like AAPLx, TSLAx, and potentially OpenAI or SpaceX appears in the asset pool on the chain, investors and users' intuitive judgments about "what is worth investing in" and "what has a pricing anchor" will shift.

Stock tokenization makes us rethink: Is Web3 really a system that can support mainstream assets and real trading activities? Can we use an open financial structure to rebuild a securities system that has lower friction and higher transparency than traditional markets?

Source: OdailyNews