De-Regulatory Policies Drive the RWA Narrative of U.S. Stocks: Opportunities and Challenges for Tokenized Stocks
Author: @Web3 _Mario
Abstract: As Trump's policies are being fulfilled one by one, attracting manufacturing backshore through tariffs, actively detonating the stock market bubble and forcing the Federal Reserve to cut interest rates and release water, and then promoting financial innovation and accelerating industrial development through de-regulatory policies, this combination is really changing the market. Among them, the RWA track under the favorable de-regulatory policy has also attracted increasing attention from the crypto industry. This article focuses on the opportunities and challenges of tokenized stocks.
An overview of the history of tokenized stocks
In fact, tokenized stocks are not a new concept, and since 2017, attempts have begun with STOs, the so-called STO (Security Token Offering). , security token issuance) is a financing method in the field of cryptocurrency, the essence of which is to digitize the rights and interests of traditional financial securities and put them on the chain, and realize the tokenization of assets through blockchain technology. It combines the compliance of traditional securities with the efficiency of blockchain technology. As an important security class, tokenized stocks are the most interesting application scenario in the STO space.
Before the advent of STOs, the mainstream financing method in the blockchain space was ICO (Initial Coin Offering). The rapid rise of ICOs mainly relies on the convenience of Ethereum smart contracts, but the tokens issued by most projects do not represent real asset rights and interests, and there is a lack of supervision, resulting in frequent fraud and runaways.
In 2017, the SEC (Securities and Exchange Commission) issued a statement in response to the DAO incident, stating that certain tokens may be securities and should be regulated under the Securities Act of 1933. This was the starting point for the official germination of the STO concept. In 2018, STO became popular as a concept of "compliant ICO" and began to attract attention from the industry. However, due to the lack of unified standards, poor liquidity in the secondary market, and high compliance costs, the market has developed slowly.
With the advent of DeFi Summer in 2020, some projects have begun to try to create derivatives pegged to stock prices through smart contracts through decentralized solutions, so that on-chain investors do not need to be complicatedBased on the KYC process, it is possible to invest directly in the traditional stock market. This paradigm, often referred to as the synthetic asset model, does not directly own U.S. stocks, and does not require trust in a centralized authority for trading, bypassing expensive regulatory and legal costs. Representative projects include Synthetix and Mirror Protocol in the Terra ecosystem.
In these projects, market makers can provide excess crypto collateral to mint on-chain synthetic U.S. stocks and provide market liquidity, while traders can trade these underlying stocks directly through the secondary market in the DEX to gain price exposure to the anchored stocks. I still remember that the stock in the U.S. stock market at that time was still Tesla, not Nvidia in the previous cycle. Therefore, most of the project slogan has played the selling point of trading TSLA directly on-chain.
However, judging from the final market development, the trading volume of synthetic U.S. stocks on the chain has been unsatisfactory. Taking sTSLA on Synthetix as an example, counting the minting and redemption in the primary market, its total cumulative on-chain transactions are only 798Times. Later, most of the projects claimed that due to regulatory considerations, they would remove the synthetic assets of the U.S. stock market and turn to other business scenarios, but the essential reason is likely to be that the PMF was not found It is impossible to establish a sustainable business model, because the premise of the establishment of the business logic of synthetic assets is that there is a large demand for on-chain transactions, attracting market makers to mint assets through the primary market and earn fees for market making in the secondary market, and if there is no such demand, market makers will not only be unable to obtain income through synthetic assets, but also have to bear the risk exposure brought by synthetic assets and short anchoring U.S. stocks, so liquidity will further shrink.
In addition to the synthetic asset model, some well-known CEXs are also trying to bring crypto traders the ability to trade U.S. stocks through a centralized custody model. This model has a third-party financial institution or exchange that escrows the actual stock and creates a tradable underlying directly in the CEX. The more typical ones are FTX and Binance. FTX launched a tokenized stock trading service on October 29, 2020, in partnership with German financial firm CM-Equity AG Partnered with Switzerland's Digital Assets AG to allow non-U.S. and restricted users to trade tokens pegged to shares of U.S.-listed companies, such as Facebook, Netflix, Tesla, Amazon, etc. In April 2021, Binance also began offering tokenized stock trading services, with Tesla (TSLA) being the first to list.
However, the regulatory environment at that time was not particularly friendly, and the core sponsor was CEX, which meant that it formed a direct competition with traditional stock trading platforms, such as Nasdaq, etc., and naturally came under a lot of pressure. FTX saw an all-time high in tokenized stock trading volume in Q4 2021. Of this, the trading volume in October 2021 was $94 million, but in November 2022After the bankruptcy of the month, its tokenized stock trading service was discontinued. Binance, on the other hand, announced in July 2021 that it would cease its tokenized stock trading services just three months after launching the business.
Since then, as the market has entered a bear market, the development of the track has also come to a standstill. It wasn't until Trump's election that his de-regulated financial policies brought about a shift in the regulatory environment and renewed the market's focus on tokenized stocks, but at this time it had a new name, RWA. This paradigm emphasizes the introduction of compliant issuers to issue tokens 1:1 guaranteed by real-world assets on-chain through compliant architecture design, and the creation, trading, redemption, and management of collateral assets are strictly implemented in accordance with regulatory requirements.
The current state of the stock RWA market
So let's take a look at the current market status of stock RWA. Overall, the market is still in its early stages and is still dominated by US equities. According to RWA.xyz, the total issuance of the current stock RWA market reached $445.40M, but it is worth noting that among them: $429.The issuance of 84M is attributable to an underlying EXOD, which is Exodus Movement, IncIssued on-chain shares, a software company focused on developing self-custodial cryptocurrency wallets, the company was founded in 2015 and is headquartered in Nebraska, USA. The company's shares are listed on the NYSE America and allow users to migrate their common Class A shares to the Algorand blockchain for management, where users can manage on the Exodus Wallet Looking directly at the price of this part of the on-chain assets, the company's total market capitalization is currently $1.5B.
The company also became the only company in the U.S. to tokenize its common stock on the blockchain. However, it is worth noting that the on-chain EXOD is only the on-chain digital identification of its stock, and does not contain voting, governance, economic or other rights, and the token cannot be directly traded and circulated on the chain.
This event is symbolic, marking a clear shift in the SEC's attitude towards on-chain equity assets, and in fact Exodus' attempt to issue on-chain shares has not been smooth sailing. In May 2024, Exodus submitted an application for the tokenization of common shares for the first time, but due to: At that time, the SEC's regulatory policy did not turn, resulting in the initial rejection of the on-chain plan. But then, in December 2024, after continuous improvements in technical solutions, compliance measures, and information disclosure, Exodus finally obtained Approved by the SEC and successfully completed the on-chain listing of common stock tokenization. The event also made the company's stock highly sought after in the market, with prices reaching all-time highs.
In addition, the remaining market share of about $16M is mainly attributed to a project called Backed Finance. It is a Swiss company that operates through a compliant architecture that allows users who meet KYC requirements to pay USDC to mint on-chain stock tokens through its official primary market, and after receiving crypto assets, exchange them back for USD, and buy them in the secondary market COIN shares, (there may be some delays in the middle due to the opening hours of the stock market), after the successful purchase, the shares are managed by a Swiss custodian bank, and then 1:1 mint bSTOCK tokens are sent to users. The redemption process is reversed. The Reserve Asset Security Guarantee is a regular release of Reserve Certificates in partnership with an audit firm called Network Firm. On-chain investors can buy such on-chain stock assets directly through DEXs such as Balancer. In addition to this, Backed does not provide ownership or any other additional rights, including voting rights, to holders of stock tokens. And only users who have passed KYC can redeem USDC through the primary market.
In terms of issuance, Backed's adoption is mainly focused on two assets, CSPX and COIN, with the former having an issuance of about $10M and the latter $3M or so. In terms of on-chain liquidity, it is mainly concentrated in the two chains of Gnosis and Base, of which the liquidity of bCSPX is about $6M. The liquidity of wbCOIN is about $1M. In terms of trading volume, it is not very high, taking the largest liquidity pool of bCSPX as an example, since the deployment on February 21, 2025, the cumulative trading volume is about$3.8M, the cumulative number of transactions is about 400.
Another noteworthy move is the progress of Ondo Finance, with the launch of Ondo on February 6, 2025The company announced its overall strategy for Ondo chain and Ondo Global Markets, with tokenized shares being the core trading target in its Ondo Global Markets. Perhaps Ondo, with its broader TradFi resources and better technical background, can accelerate the development of this track, but it remains to be seen.
Opportunities and Challenges of Equity RWA
Next, let's explore the opportunities and challenges of equity RWA. Typically, the market believes that stock RWA has three advantages:
l7-24 hours trading platform: Due to the technical characteristics of the blockchain, it has the characteristics of all-weather operation. This allows the trading of tokenized stocks to be free from the trading time constraints of traditional exchanges, and fully tap the potential trading demand. In the case of Nasdaq, although the ability to provide 24-hour trading services has been achieved through extended pre-market and after-hours trading, regular trading hours are limited to mid-week. And if the trading platform is directly developed through the blockchain, round-the-clock transactions will be realized at a lower cost.
l Low-cost acquisition of U.S. assets by non-U.S. users: With the large-scale adoption of payment-based stablecoins, non-U.S. users can directly use stablecoins to trade U.S. assets without bearing the cost of fees and time caused by cross-border funds. Assuming a Chinese investor invests in U.S. stocks through Tiger Brokers, the cross-border remittance fee is about 0.1% without considering the exchange fee, and the settlement of cross-border remittance usually takes 1-3 business days. If the transaction is carried out through on-chain channels, these two parts of the cost can be avoided.
l Financial innovation potential brought by composability: With programmability, tokenized stocks will embrace the DeFi ecosystem, making them have stronger on-chain financial innovation potential. For example, on-chain lending and other scenarios.
However, the author believes that the current tokenized stock still faces two uncertainties:
l Speed of regulatory policy advancement: according to EXOD and BackedWe can know that the current regulatory policy has not been able to solve the problem of "equal rights of stocks", that is, the purchase of tokenized shares and physical shares have the same rights and interests at the legal level, such as governance rights. This restricts many transaction scenarios, such as mergers and acquisitions through the secondary market. And the compliance use scenarios for tokenized stocks are not clear, which also hinders the pace of financial innovation to a certain extent. Therefore, its progress is very dependent on the speed of regulatory policy, and considering that the core policy goal of the current Trump administration is still in the stage of reshoring manufacturing, the timeline is likely to continue to be pushed back.
l Development of stablecoin adoption: Judging from past developments, the core target users of tokenized stocks are most likely not crypto-native users, but traditional, non-US stock investors. For this part of the group, whether the adoption of stablecoins is getting higher and higher is also a matter of concern, and this will be closely related to the stablecoin policies of other countries, for example, for Chinese investors, compared with the regular official channel exchange, the acquisition of stablecoins through the OTC market needs to bear 0.3%~1% This is also much higher than the cost of investing in U.S. stocks through traditional channels.
Therefore, in summary, in the short term, the author believes that there are two market opportunities for stock RWA:
1. For listed companies, they can issue on-chain stock tokens by referring to the case of EXOD, although there are not many practical use scenarios in the short term, but at least the potential financial innovation ability, investors are willing to give the company a higher valuation. For example, for some enterprises that can provide on-chain asset management business, this method can be used to transform the identity of investors into product users, and the stocks held by investors into AUM of enterprises, so as to enhance the company's business growth potential.
For tokenized high-dividend U.S. stocks, some yield-based DeFi protocols become potential users. With the reversal of market sentiment, the yield of most on-chain native real yield scenarios will drop significantly, and yield DeFi protocols like Ethena need to constantly look for other real yield scenarios in order to increase the overall yield and enhance market competitiveness. For details, see Ethena for the example of configuring BUIDL. High-dividend stocks, on the other hand, usually belong to mature industries, with stable profit models, abundant cash flow, and can continue to distribute profits to shareholders, and most of them have the characteristics of low volatility, strong resistance to economic cycles, and relatively controllable investment risks. Therefore, if some high-dividend blue-chip stocks can be launched, it may be adopted by yield-based DeFi protocols.