Tokenization of Stocks: Development History, Current Status and Prospect Analysis

In recent years, with the development of financial technology and changes in the regulatory environment, the concept of tokenized stocks has once again attracted market attention. This article will review the development history of tokenized stocks, analyze the current market situation, and explore its future opportunities and challenges.

The Development of Tokenization Stocks

The concept of tokenization of stocks dates back to the rise of STO( security token offerings in 2017. STO aims to digitize the rights of traditional securities through blockchain technology, combining the compliance of traditional securities with the efficiency of blockchain. Prior to this, ICO) initial coin offerings were the mainstream financing method in the blockchain field, but many issues arose due to the lack of regulation and support from real assets.

In 2017, the U.S. Securities and Exchange Commission issued a statement regarding the DAO incident, stating that certain tokens may fall under the category of securities. This marked the official emergence of the STO concept. In 2018, STO gained attention as a "compliant ICO," but market development was slow due to various factors.

The DeFi boom in 2020 drove the development of synthetic asset models. Some projects attempted to create derivatives linked to stock prices through smart contracts, allowing investors to invest in traditional stock markets without complex KYC. Projects like Synthetix and Mirror Protocol are representative, but ultimately failed to achieve widespread adoption due to insufficient demand and other reasons.

During the same period, some well-known centralized exchanges also launched tokenization stock trading services. However, due to regulatory pressure, these services were quickly halted.

Recently, with changes in the regulatory environment, tokenized stocks have regained market attention as a new form of RWA( real-world assets). This model emphasizes the issuance of tokens backed 1:1 by actual assets through a compliant framework, strictly adhering to regulatory requirements.

Current Stock RWA Market Overview

Currently, the stock RWA market is still in its early stages, mainly focusing on the US stock market. According to data from RWA.xyz, the total issuance of stock RWA is approximately $445 million, of which $430 million comes from EXOD, which is the on-chain stock issued by Exodus Movement, Inc. Exodus is the first U.S. company approved by the SEC to tokenize common stock on-chain, which is of landmark significance.

Except for EXOD, approximately 16 million USD market share belongs to the Backed Finance project. This Swiss company allows users who have completed KYC to mint on-chain stock tokens using USDC, with the actual stocks managed by a Swiss custodian bank. Investors can trade these assets directly on the DEX but do not have ownership or voting rights in the underlying stocks.

Ondo Finance's recently announced Ondo Global Markets strategy will also focus on the tokenization of stocks as a core trading target, which is worth noting.

Advantages and Challenges of RWA Stocks

( Potential Advantages:

1. 24/7 Trading: Break through the time constraints of traditional exchanges and fully tap into trading demand.
2. Reduce the cost for non-U.S. users to acquire U.S. assets: Utilize stablecoins for direct transactions to lower cross-border fees.
3. Financial Innovation Potential: Programmability brings more possibilities to the DeFi ecosystem.

![Promoting the RWA narrative in US stocks with a friendly crypto policy, interpreting the opportunities and challenges of tokenized stocks])https://img-cdn.gateio.im/webp-social/moments-bace5857bea209ca4935e71a12a39ce2.webp###

( is facing challenges:

1. Regulatory policy progress: The "same rights for stocks and coins" issue has not yet been fully resolved, which restricts certain trading scenarios.
2. Stablecoin adoption: The cost for non-US users to acquire stablecoins is still relatively high, affecting adoption rates.

![The pro-crypto policy promotes the RWA narrative in US stocks, interpreting the opportunities and challenges of tokenized stocks])https://img-cdn.gateio.im/webp-social/moments-989e5e24c9b94347235153dca2872816.webp###

Short-term Market Opportunities

1. Listed companies can refer to the EXOD case to issue on-chain stock tokens, enhancing valuation potential.
2. Tokenization of high-dividend U.S. stocks may attract income-generating DeFi protocols to adopt, such as projects like Ethena.

With the regulatory environment gradually becoming clearer and the growing market demand, tokenized stocks are expected to play an important role in future financial innovations. However, their development still requires time and efforts from all parties to fully realize their potential and overcome existing challenges.