Tokenization of US Stocks: A Quietly Rising Financial Innovation

In the current context of innovation scarcity in the cryptocurrency market, a striking new trend is quietly emerging – tokenization of US stocks. The core of this concept is to transform traditional stocks into digital tokens on the blockchain, providing investors with a brand new way to trade and invest.

Recently, senior executives of a well-known cryptocurrency exchange platform stated that they are considering tokenizing the company's stock to facilitate trading of US stocks on their self-developed blockchain. This move has garnered widespread attention in the market, bringing a breath of fresh air to the stagnant crypto market.

If the tokenization project of US stocks proceeds smoothly, it is expected to become the third largest category of real-world assets (RWA) after stablecoins and treasury tokenization. Under a clear regulatory framework, US stock tokenized assets could quickly surpass the scale of current treasury tokens, as they can provide crypto users with greater volatility and speculative opportunities.

The value proposition of the tokenization of US stocks is mainly reflected in two aspects:

1. Expand the trading market size: Provide a 24/7, borderless, and permissionless trading venue for US stock trading, which is currently unattainable by traditional securities exchanges.

2. Superior composability: By integrating with existing decentralized finance (DeFi) infrastructure, US stock assets can be used as collateral and margin to create index and fund products, leading to various innovative applications.

For both supply and demand sides, the tokenization of US stocks has clear appeal. Listed companies can reach global investors through blockchain platforms, gaining more potential buyers; investors can break geographical limitations and directly participate in US stock trading.

In fact, the concept of tokenizing US stocks is not new. As early as 2020, a trading platform attempted to go public by issuing security tokens, but it was shelved due to regulatory hurdles. Additionally, during the last DeFi boom, synthetic assets of US stocks also emerged, but they gradually declined due to regulatory pressure.

Currently, the tokenization of U.S. stocks is regaining attention, mainly due to a shift in regulatory attitudes. The new leadership at the U.S. Securities and Exchange Commission ( SEC ) seems more inclined to support innovation within a compliance framework, creating favorable conditions for the development of related projects.

However, the development of tokenization in the US stock market still faces many uncertainties. The most critical issue is when a clear compliance framework will be established, which remains unknown. This will directly affect the speed and intensity with which major companies promote related businesses.

It is worth noting that the SEC's cryptocurrency working group recently held its first roundtable meeting to discuss topics such as the definition of securities and the design of compliance pathways. The chief legal officer of a well-known trading platform also participated in this meeting, which may indicate that the development of regulatory frameworks is accelerating.

Overall, the tokenization of US stocks represents an emerging direction in financial innovation, with clear business logic and high development potential. However, its actual momentum will depend on changes in the regulatory environment and the enthusiasm of market participants. The development trends in this area are worth closely monitoring in the near future.