Odaily Space Review | The wave of securities tokenization is coming: Buy 1 U of Nvidia and Apple stocks, revolution or bubble?

Original | Odaily Daily Report (@OdailyChina)

Organized by｜Wenser（**@wenser 2010 ）

In the past two weeks, the wave of tokenization of securities has gained momentum, with several major crypto exchanges successively launching blue-chip US stock token trading services.

At this critical moment, Odaily Planet Daily successfully held an online Space on Wednesday titled "The Wave of Security Tokenization is Coming: Can 1 U Buy Apple and Nvidia Stocks, Revolution OR Bubble?" Special guests included trading platforms such as MyStonks, Bybit & Byreal, GoRich, and well-known crypto KOLs, who delved into key issues of security tokenization from the perspectives of platform operations and users.

Guest List:* MyStonks Founder Bruce, Bybit Spot Head & Byreal Founder Emily, Bit.com GoRich Business Head Raymond, Crypto KOL "Bit Factory Manager" and Crypto KOL "Kailin".*

This discussion focuses on the core concerns of the industry, producing many insights on key points of platform compliance operations, differentiated competition paths for exchanges, and the sources of user profits and risks. Odaily has carefully selected the core viewpoints summarized below for readers' reference.

Q1. A few years ago, the cryptocurrency market attempted tokenization of US stocks (Mirror Protocol, FTX), but it did not create significant waves. Now, security tokenization has become a hot topic again. What are the guests' thoughts on this? How do they view the market prospects for security tokenization?

MyStonks Founder Bruce: Personally, I believe that this change is closely related to the improvement of the regulatory environment. During the time of the Democratic Party in the United States, the SEC's attitude towards crypto was extremely unfriendly, and after the presidential transition, the Republican Party came to power, easing restrictions for the development of the cryptocurrency industry. Secondly, the overall scale of cryptocurrency users is continuously rising. To date, the number of crypto users in the United States has roughly surpassed 60 million, and globally, the number of crypto users exceeds 800 million. These users are very attractive to any market, not just the U.S. securities market, but to the financial markets of any country. Therefore, in the U.S., especially Wall Street, the promotion of securities tokenization is a major trend, and it can even be understood as a national strategy of the United States or a strategic direction of Wall Street. Thus, for us, this represents a significant opportunity for a transformation of the entire industry.

Bybit spot head, Byreal founder Emily: Previously, the main reason was that the previous agreements or products lacked compliance and market depth support. Especially in the market environment at that time, liquidity was relatively good, and there were many options available, so the security tokenization platforms at that time failed to survive the cycle and make it to now. Now, with the development of the Internet Capital Market Onchain, that is, the trend of security tokenization and U.S. stock tokenization is gradually emerging. This is a new development following the proof of concept (POC) from the previous cycle. The market environment, compliance policies, user demand, and DeFi Infra underlying technologies have all improved significantly. Looking at the future from the present, it is clear that this is not just a simple concept hype but a release of structural demand. Moreover, this trend has actually emerged since the approval of Bitcoin spot ETFs early last year. It is only now that mature platforms and products like xStocks and MyStonks have appeared. After a long period of construction and compliance review, including Robinhood's proactive approach, it is evident that there is real demand, which is also the feedback we received from many real users.

The launch of Byreal is also aimed at combining the deep liquidity of centralized CeFi with the transparency and innovation of DEX, providing the market with richer investment options.

Raymond, the head of GoRich at Bit.com: The previous US stock tokenization products were more like derivatives of US stocks. Of course, the subsequent collapse of FTX exposed the conflict between on-chain transparency and compliance issues. Technically speaking, the previous oracles, on-chain asset custody, and risk control mechanisms were not mature enough to maintain a relatively stable price system and certain clearing mechanisms; moreover, the RWA infrastructure back then cannot be compared to the current state. Therefore, my view is that US stock tokenization may not be an explosive revolution, but rather an incremental innovation in financial infrastructure. Because from an external perspective, users from any country can invest in US stocks; from an internal environment perspective, Hong Kong has recently provided some regulatory support and may even allow investors to gradually trade US stocks directly with RMB in the future.

Moreover, it is noteworthy that the "Coin-Stock Linkage Effect" has always been a market focus. For instance, in the past two years, a significant pre-market rise in U.S. stocks would also drive the BTC market upward, allowing users to adopt a catch-up strategy when market liquidity is abundant. Conversely, if market funds are relatively scarce, users can place bets based on capital flow in advance. For instance, if U.S. stocks hit the ceiling, BTC might decline, leading to a reverse judgment. In the short term, the regulatory costs for security tokenization are quite high, and currently, on-chain trading depth is generally average. Therefore, it will exist as a supplement rather than a replacement. In the future, if liquidity depth is sufficient, security tokenization will reduce asset issuance or user trading costs, enabling global investors to participate and facilitating convenient and diversified investments. This is also the direction that GoRich is striving for.

Crypto KOL Bichang Zhang: First of all, the tokenization of US stocks has attracted a large number of traditional financial industry professionals, forcing them to re-evaluate and learn, which is undoubtedly a positive factor for the crypto industry. The previous failure of FTX's synthetic assets was mainly due to high regulatory pressures. Under the influence of factors such as Wall Street's entry into the cryptocurrency industry and Trump's crypto-friendly attitude, investors from traditional finance have gradually entered this space, creating such demand. Moreover, compared to the time-restricted traditional financial markets, 24/7 trading will greatly facilitate investors. In addition, regarding the subscription threshold, unlike the stock market's minimum purchase of one share, security tokenization fragments stocks, allowing users to buy even 0.01 shares of the corresponding token; including foreign exchange controls, which have also been one of the reasons limiting users from entering the US stock market, while security tokenization essentially opens up investment to the global market.

Of course, there are still differences between the two, such as voting rights and dividend payouts in traditional stocks; after tokenization, there may only be economic rights without other rights. But in any case, this is a major trend, and the potential user base in the industry is at least ten times larger. This is also one of the reasons many listed companies in the A-share and H-share markets have approached me recently. Moreover, their main question is how to buy Bitcoin, wanting to emulate companies like Strategy to boost their stock prices, or they want to hold Bitcoin for the long term.

Crypto KOL Kylin: I have been paying a lot of attention to the AI field, especially the Virtuals ecosystem. One phenomenon that I have noticed is that several projects I recently invested in have started to connect with RWA or securities tokenization, which was previously quite rare. Now, there is a project that uses AI to manage user funds, ensuring compliance for user deposits and withdrawals in Southeast Asia. This is also a highly imaginative track that deserves long-term attention.

Q2. Many people view the tokenization of securities as a "Trojan horse" for traditional financial markets to enter the crypto market, believing it will further compress the liquidity of altcoins and the trading space in the market. How do you see this viewpoint?

MyStonks Founder Bruce: I think this statement is not accurate. First, recent U.S. stock-listed companies have been purchasing mainstream coins like BTC, ETH, BNB, and SOL. Even without tokenizing securities, the liquidity of altcoins is diminishing; second, tokenizing securities will help accelerate the expansion of the crypto market size. Compared to the less than $4 trillion market cap of the cryptocurrency market, the overall market cap of U.S. stocks is $36 trillion, and this does not even include U.S. Treasury bonds. After tokenization, those investors who are not interested in investing in altcoins are very likely to invest in U.S. stocks, Nikkei, Middle Eastern stocks, or even Hong Kong stocks. Third, the majority of users' demand for trading altcoins is essentially for getting rich quickly, but there are many opportunities for getting rich in the traditional U.S. stock market, Nikkei market, etc., which can even rival altcoins.

Bybit Spot Head and Byreal Founder Emily: I fully agree with Bruce's point that the liquidity of altcoins is indeed somewhat constrained. Funds will always flow to places with higher profit potential. For trading users who want to make money, beyond speculating on altcoins and grabbing airdrops, if they have the opportunity to enjoy higher investment returns in the stock market, I believe many would choose such investment targets. As a trading platform, our goal is to be the first to bring similar assets to the platform while providing better trading services. Therefore, the tokenization of securities serves more as a bridge to bring traditional financial funds and liquidity into the Crypto market.

Bit.com GoRich Business Head Raymond: From the perspective of user attributes, every wave of industry boom creates a group of people who make money, many of whom develop path dependence as a result. This is why we previously saw people getting rich from different booms like DeFi, GameFi, and NFTs. However, there is also a group of people who are relatively more flexible; they capitalize on whatever is hot, earning early Alpha returns. After the tokenization of securities begins, there may be a third type of individual—those with a preference for more stable funds, inclined to invest in compliant assets with higher transparency. This group could be newcomers just entering the space or seasoned crypto investors looking to diversify their positions. Therefore, the trading activity of mid-tier altcoins will decline again, and many tokens on exchanges, especially those without real use cases, may gradually head towards extinction, forming a dumbbell-shaped market: on one side are stable mainstream coins or compliant assets; on the other side are Meme coins with the potential for wealth. The remainder consists of tokens gradually approaching zero, particularly some VC coins or 'bestie coins'.

Crypto KOL Bit Factory Chief: This is more of a two-way infiltration; it can be seen as traditional finance invading the crypto space, or it can be viewed as the crypto space's reverse transformation of the traditional financial market. In the past two years, brokerages, private equity funds, public funds, and some fund managers have been moving closer to the cryptocurrency industry, just as Jack Ma said: "If banks don't change, we change!" To some extent, the crypto space is actually forcing traditional finance to change. In the short term, it will definitely put pressure on altcoins, but in the long run, it will eliminate some low-quality projects and lead to the value consolidation of collapsed crypto projects; moreover, it significantly lowers the barrier for people in traditional finance to enter the crypto space. Furthermore, according to Morgan Stanley's forecast, the securities tokenization market is expected to exceed $100 billion in the future, and the derived on-chain demand, including clearing, lending, and derivatives, may create new ecological niches for altcoins. Including the possibility of achieving automatic dividend distribution and cross-protocol portfolio returns through smart contracts in the future, all of which are the transformations of cryptocurrencies on traditional finance.

Crypto KOL Kylin: In the early stages of the track, it will definitely siphon off from other tracks; however, the tokenization of securities will surely attract a group of traditional finance people, and then gradually develop vertically. As for other tracks, there will be an impact in the short term, but in the medium to long term, I don't think the impact will be significant. Taking myself as an example, I mainly focus on the AI track. If there is a particularly hot new track, I will first pay attention to the intersection opportunities between the new track and the track I am focused on, and then invest some funds to verify and try it out. But in the long run, I will still concentrate on my main track. The impact is not very large, because for investors, it is essentially about multiple horses running together, just looking at which different investment targets are running faster.

Q3. Previously, Robinhood announced the launch of tokenized equity assets for unlisted companies such as OpenAI and SpaceX, which has sparked controversy. What do the guests think of this behavior? Will it bring regulatory pressure? Do companies also consider launching tokenized stocks of unicorn companies when making their selections?

MyStonks Founder Bruce: Speaking of this, Robinhood is actually a very very sneaky company. Many people may not know that this company is basically fined a sum of money by U.S. regulators every year, but they don't care anymore, including this time when they launched the equity tokens for OpenAI and SpaceX.

From our perspective, Robinhood is actually not qualified to do this, because it should be OpenAI or SpaceX doing it themselves. But why are they simultaneously launching two? It's actually taking advantage of the discord between OpenAI's Sam Altman and SpaceX's Musk. They have predicted that with the launch of equity tokens from the two companies, one of them will definitely come out to issue a statement against it. The result is that OpenAI stated it does not recognize Robinhood's equity tokens, claiming no relation to them. Then, Musk indeed stood up to support Robinhood (referring to Musk's post mocking OpenAI about the non-existence of equity). Of course, he did not support Robinhood issuing equity tokens; he was just using this to satirize Sam personally.

From a business perspective, this is still quite a clever approach; however, at the regulatory level, there will definitely be pressure. Although the SEC's current regulatory policies are quite open, strictly speaking, Robinhood is still not qualified to do this (referring to the issuance of equity tokens for unlisted companies).

As for whether MyStonks will launch similar equity tokens for unicorn companies in the future, as a trading platform, MyStonks tends to support trading rather than the so-called "helping this company issue equity tokens", which is definitely non-compliant and unreasonable.

Bybit Spot Head and Byreal Founder Emily: From this perspective, Robinhood is also ambitious. Personally, I believe that from a broader viewpoint, there may be unicorn equity tokens in the future, or direct on-chain IPOs are also possible. In fact, Solana also formally submitted a document called Project Open to the US SEC in the first half of this year (Odaily Note: Referring to the new proposal aimed at authorizing the issuance and trading of traditional securities on public blockchains such as the Solana network, submitted by the Solana Policy Research Institute along with partners to the US SEC). Currently, the US SEC has not issued a rejection letter, so future explorations in this area are still very likely, and of course, they must be conducted within a compliant framework.

Bit.com GoRich Business Leader Raymond: In fact, the equity tokens of unicorn companies still carry a lot of risks, such as restrictions on equity trading and the credibility of authorization; as well as challenges in ensuring that on-chain tokens correspond to real private equity, or issues of trust and auditing. However, GoRich views this market as a game of attention economy, so once the timing and conditions are ripe, we will quickly follow up on the private original equity agency of some unicorn companies, and of course, we will conduct a thorough selection. Because we are a trading intermediary, or a trading aggregator, once due diligence is completed, we will respond to market hotspots in a timely manner. In the future, whether it's Robinhood or other on-chain IPO platforms, once a potential or relatively deep platform emerges, we will definitely follow up quickly.

Crypto KOL Bit Factory Director: Personally, I believe that currently, tokenized securities products can be classified based on different levels of risk. For example, platforms like xStocks and MyStonks have launched tokenized stocks of well-known companies like Apple, Nvidia, and Tesla, which are relatively easier to handle in terms of liquidity and regulatory resistance; the equity of unlisted companies launched on Robinhood naturally carries the highest risk coefficient, and it may be more attractive to retail investors because the potential returns could be very high, although there are legal risks involved; on the other hand, the revenue rights of bond funds under Goldman Sachs have a relatively moderate risk level, as they do not involve changes in ownership, leading to higher compliance levels. To some extent, the launch of tokenized equity for unlisted companies disrupts the traditional logic of IPOs, but it also carries risks similar to OpenAI not recognizing equity, forced redemption of tokens, or suspension of trading, etc. Robinhood's attempt can be considered a radical experiment, but overall, it is still a positive development.

Crypto KOL Kylin: I somewhat agree with Emily's point of view. In the short term, it will bring certain traffic and attention, but in the long run, the opaque asset packaging methods and regulatory risks are very real.

Q4. Currently, there are several types of security tokenization: the first type is launching spot and derivatives based on stock market data, and the second type is 1:1 pegged, backed by real "real stock-like asset reserves." How do you view these two methods? What are the advantages and disadvantages? (If real stock assets are launched, will the platform provide a transparency statement, verification methods, and audit reports?)

MyStonks Founder Bruce: Indeed, one option on the market is to create pools on Solana Raydium like the on-chain MM of xStocks, but for users, one issue is the high slippage, and the other is the uncertainty of transaction times. MyStonks is currently using a 1:1 peg method, adopting an order book model, which means there must be proof of asset reserves. On-chain, it's the security audit of the crypto industry; off-chain, it's the independent audit firms auditing the actual stocks held by the partners and the stocks we are actually custodizing. We are conducting both audits; a report was released during the first token issuance, and we will provide monthly updates thereafter.

Bybit Spot Head and Byreal Founder Emily: Bybit has currently opened a platform entrance, equivalent to a sub-section, allowing users to directly use stablecoins for deposits, supporting trading in assets such as gold, commodities, and US stocks. Currently, this is done using the CFD model, with price anchoring achieved through oracles like Chainlink to stabilize this price, making it easier to avoid securities attributes in terms of compliance. Additionally, for financial innovation technologies, asset confirmation is a very important matter, so we chose to collaborate with xStocks, whose audit compliance is relatively comprehensive. Furthermore, xStocks' advantage is that it is not affected by US stock market closures; during closures, it uses pre-market and after-hours prices for anchoring. In the future, more market makers will join, and market liquidity will continuously improve, enhancing the trading experience.

Bit.com GoRich Business Head Raymond: We have currently launched xStocks and Backed, which are some stock trading based on Base, and we are actively in talks with Coinbase and Robinhood. Because the trading volume of US stock tokens is unusually high, there are many instances of price manipulation, with a small number of users possibly manipulating the liquidity pool. In this regard, Robinhood has a lot of experience in handling these situations, as they adopt a 5 × 24 hour mechanism instead of a 7 × 24 hour one, so GoRich will also follow the corresponding compliance requirements. Therefore, GoRich is currently relatively conservative in risk exposure management, trying to minimize the possibility of sudden incidents occurring and avoiding users from losing all their assets.

Crypto KOL Bichangzhang: I believe that synthetic assets are more suitable for users in the crypto space because they pursue high risk, high returns, or high capital turnover efficiency. However, this also requires them to bear the so-called systemic risks. On the other hand, physical assets, which are 1:1 pegged and relatively transparent, are more favored by mainstream institutions because they basically solve issues such as compliance and redemption flexibility. In the future, both will coexist.

Q 5. Traditional stock markets have trading halts, while crypto operates 24*7. How can we prevent tokenized securities from decoupling during market closures? What are the good solutions available from various providers?

Bruce, the founder of MyStonks: To be honest, MyStonks currently does not have a good solution. Two months ago, we discussed whether to build a liquidity pool on Uniswap, but later due to internal compliance considerations, we felt we couldn't do that. Although there is an opportunity to be the first to take the plunge, the first one may also get pinched by the crab. As Chinese entrepreneurs, we tend to follow strategies, first observing what the foreigners do and then seeing how the U.S. SEC reacts, before doing our own thing. Although the current SEC's regulatory attitude is quite good, even including SEC Chairman Paul Altkins publicly saying "what can be done can be done, and what can't be done can be left alone," there are still many risks with the stock price being unpegged, and we are also working hard to find better solutions.

Bybit Spot Head, Byreal Founder Emily: Bybit indeed introduced external market makers to provide liquidity, but in the early stages, it was evident that the liquidity wasn't particularly good, especially with our first US stock token CoinX, which experienced some price spikes that were unavoidable. However, the other 9 tokens launched later have performed much better, as the market-making strategies are continuously being adjusted. Regarding the market closure period, the current solution is to monitor price differences through strong monitoring measures; we are also considering introducing a multi-oracle system on-chain and later combining CeFi and DeFi for market-making to ensure market liquidity. We expect new progress by the end of the month, so everyone can look forward to it.

Bit.com GoRich Head of Business Raymond: The GoRich pool for US stock tokens has been fully aggregated. In addition, we will set up an automatic reminder mechanism when users trade tokens similar to Pi Xiu or those with extreme volatility, such as reminding users when the transaction slippage is too high or when there is a significant loss of principal, etc. As a trading aggregator, GoRich hopes to convey a trading philosophy to users, changing some ordinary users' incorrect trading habits. Meanwhile, through platform features, such as automatically setting to sell when the increase reaches 30% or 100%, we hope users can make some money while ensuring they do not lose their principal in the high-intensity and high-risk cryptocurrency market.

Q 6. Will each platform impose restrictions on user participation qualifications or have other KYC and trading thresholds regarding access requirements?

MyStonks Founder Bruce: Although more people in the crypto industry hope to eliminate KYC policies and achieve true decentralization, MyStonks still needs to comply with relevant laws in the U.S. We are also working on the STO application (Odaily Note: that is, the Security Token Offering license).

Emily, Head of Spot at Bybit and Founder of Byreal: First of all, all information can be found in our terms and conditions. There are also restrictions for users from certain high-risk judicial areas. Additionally, the US stock token spot for xStocks is located in our Innovation Zone, and there are certain limits on user positions. However, this is not an entry barrier; it is primarily set for the purpose of protecting users' assets.

Raymond, Head of GoRich at Bit.com: GoRich has always insisted on compliance work globally, meeting local requirements, and the vast majority of both new and old users can trade U.S. stocks like Apple and Nvidia with just 1 dollar.

Conclusion: Moving Forward in Exploration, Securities Tokenization has Become a Foregone Conclusion

From the perspective of the comprehensive guest speeches, although there are still risks such as unclear regulations, price decoupling, and the need to improve the market-making mechanism, the tokenization of securities has become an important trend in the transformation of asset issuance. In the future, on-chain IPOs and the tokenization of equity in unicorn companies will also become possible. The feast belonging to the cryptocurrency industry still holds great promise for the future.