Tokenized U.S. Stocks Surge: Bybit, Robinhood, and Kraken Launch on the Same Day - The Biggest Narrative of This Cycle?

Author：Cubone WuBlockchain

This article was compiled with the assistance of GPT and is intended solely for informational purposes. It does not constitute any investment advice. Readers are advised to strictly comply with the laws and regulations of their respective jurisdictions and refrain from engaging in any illegal financial activities.

After Trump took office, U.S. cryptocurrency regulations were significantly loosened, and tokenized U.S. stocks quickly became a major hotspot. Nearly all major exchanges have joined the fray. “Trading U.S. stocks with USD stablecoins backed by U.S. Treasuries — Make America Great Again! Trump would love this idea!”

On June 30, 2025, both Bybit and Kraken launched xStocks products provided by Backed Finance, a Switzerland-based compliant asset tokenization platform. These tokens are backed 1:1 by real equities, held by regulated custodians, and deployed on the Solana blockchain, enabling 24/7 trading and on-chain settlement. Due to regulatory restrictions, the service is currently available only to non-U.S. users.

On the same day, Robinhood announced the launch of its tokenized stock trading service in Europe, built on the Arbitrum network. The platform aims to gradually enable 24/7 trading and will include tokenized shares of pre-IPO companies such as OpenAI and SpaceX. This service is also not available to U.S. users at present.

A Comparative Overview of U.S. Stock Trading Solutions Across Major Crypto Exchanges

1. Third-Party Issuance + Multi-Exchange Access Model (Representative Platforms: Bybit, Kraken, Gemini)

In this model, tokenized stocks are issued by regulated third-party issuers such as Backed Finance, with each token pegged 1:1 to real-world equities and deployed on public blockchains like Solana. Crypto exchanges serve as integration platforms, offering matching services and enabling on-chain transfers and DeFi applications. Users can trade these tokens 24/7 and enjoy corresponding economic rights such as dividends. Compliance responsibilities primarily rest with the issuer, while most exchanges involved do not hold securities licenses. Consequently, this model typically excludes U.S. users from participation.

2. Licensed Broker-Dealer + Proprietary Chain & Issuance Model (Representative Platform: Robinhood)

Under this model, licensed broker-dealers directly issue tokenized stocks and custody the underlying assets, enabling full on-chain integration of issuance, clearing, and settlement processes. Robinhood currently offers such services via the Arbitrum network and is planning to launch its own Layer 2 blockchain, Robinhood Chain, which will support self-custody and 24/7 trading. Token holders are entitled to the economic benefits of the underlying equities, such as dividends. This model offers a high degree of regulatory compliance and is suited for jurisdictions with stringent oversight, though it involves significant technical and legal complexity. As a result, its implementation remains limited.

3. Contract for Difference (CFD) Model (Representative Platform: Bybit)

Through platforms such as MetaTrader 5 (MT5), this model offers contract-for-difference (CFD) trading on U.S. stock prices, allowing users to take leveraged long or short positions using USDT as margin — without owning the underlying equities. The model provides convenient access and is suitable for short-term speculation; however, users do not enjoy any shareholder rights or dividend entitlements. As CFDs are classified as financial derivatives, they are subject to strict regulation in both Europe and the United States. Most platforms offering CFDs without licenses restrict access to offshore users only, and usage may be limited for European residents.

Additionally, Coinbase is seeking approval from the U.S. SEC to launch a tokenized stock trading service within a compliant framework.

The proposed plan involves issuing blockchain-based digital tokens that represent ownership of real-world stocks, supporting on-chain settlement and matching. Coinbase has already submitted a pilot proposal to the SEC. If granted a No-Action Letter or exemption, it would become one of the first fully compliant platforms to offer tokenized U.S. equities in the United States.

A Retrospective on Last Cycle’s Tokenized Stock Experiments: The Rise and Fall of FTX, Binance, and Decentralized Protocols

FTX (in partnership with CM-Equity):As one of the early pioneers in tokenized U.S. equities, crypto derivatives giant FTX launched a tokenized stock trading service in October 2020 through a collaboration with licensed German financial institution CM-Equity AG and Swiss digital asset firm Digital Assets AG. The platform allowed non-U.S. users to trade tokenized versions of popular U.S.-listed companies, including Facebook, Netflix, Tesla, Amazon, and others. These tokens were backed 1:1 by actual shares held by CM-Equity and enabled fractional trading — users could invest with just a few dollars, significantly lowering the entry barrier.

FTX initially saw promising traction. In Q4 2021, its tokenized equity products peaked in volume, reaching approximately $940 million in monthly trading volume (October). However, due to a hostile regulatory environment at the time — marked by caution and skepticism from global regulators — FTX’s tokenized stock offerings never received formal recognition or licensing from major regulatory bodies.

In 2022, FTX collapsed amid a liquidity crisis and allegations of fund misappropriation, filing for bankruptcy in November. Its tokenized stock services were terminated as part of the platform’s shutdown. The FTX case highlighted key compliance and trust risks: when an issuer platform suffers a credibility crisis, investors may lose access to the underlying tokenized assets. Moreover, in the absence of clear regulatory guidance, FTX’s offerings were subject to scrutiny and restriction in multiple jurisdictions — for instance, Germany’s BaFin issued a warning stating that such products may violate securities laws.

The FTX experience demonstrated that, without a solid regulatory foundation, unilateral efforts by exchanges to tokenize securities are difficult to sustain.

Binance (Stock Tokens):Following closely behind, Binance — the world’s largest cryptocurrency exchange — launched its tokenized stock trading service in April 2021, debuting with Tesla (TSLA) as its first listed equity. Like FTX, Binance partnered with CM-Equity AG and Digital Assets AG to issue the tokens, allowing users to purchase fractional shares of U.S. stocks using crypto assets. This move was widely seen as a competitive response to similar offerings from FTX and Bittrex Global, aiming to provide Binance’s massive user base with access to equity trading.

However, the service lasted only about three months. In July 2021, Binance voluntarily delisted all stock tokens following regulatory pushback from multiple jurisdictions. For instance, the UK’s Financial Conduct Authority (FCA) and Germany’s BaFin publicly questioned the compliance status of these products. Reports indicated that Binance had not secured the necessary licenses for issuing security tokens, thereby exposing itself to significant legal risks and prompting the abrupt shutdown of the offering.

The Binance case underscored the immense regulatory pressure faced by centralized platforms in tokenizing securities. Even top-tier crypto exchanges may be forced to discontinue such services quickly if launched without a robust compliance foundation.

Mirror Protocol on Terra (Synthetic Assets):

Taking a different path from centralized exchanges, the Terra blockchain ecosystem launched Mirror Protocol in late 2020, adopting a fully decentralized approach to synthetic assets. Mirror allowed users to mint synthetic tokens — called mAssets (e.g., mTSLA, mAAPL) — that tracked the prices of U.S. stocks via algorithmic mechanisms and oracles. To generate an mAsset, users had to overcollateralize using assets like UST (Terra’s algorithmic stablecoin), and trading was facilitated through automated market maker (AMM) liquidity pools.

Mirror quickly gained traction, offering a KYC-free, on-chain channel for global users who lacked direct access to U.S. equities. However, the protocol’s fate was tightly bound to the Terra ecosystem. In May 2022, the collapse of UST led to the sudden loss of collateral value across Mirror, causing mAssets to depeg rapidly and liquidity to evaporate.

To make matters worse, regulators had long been eyeing the protocol. The U.S. SEC issued a subpoena to Mirror in 2021 and later, in its 2023 lawsuit against Terraform Labs, accused Mirror of facilitating unregistered securities offerings. Ultimately, Mirror Protocol failed on both technical and regulatory fronts: its algorithmic stability model proved too fragile under extreme market stress, and its regulatory arbitrage model was unsustainable in the face of mounting scrutiny.

The rise and fall of Mirror exemplify the broader collapse of decentralized synthetic securities experiments in the previous cycle. It also provides a cautionary lesson for the current wave of tokenization projects, which are now pivoting toward asset-backed, regulation-friendly models.

Synthetix (On-Chain Synthetic Assets):

Synthetix is a long-standing decentralized derivatives protocol on Ethereum. In 2020, it introduced synthetic U.S. stock assets (known as Synths), such as sTSLA (synthetic Tesla), sAAPL, and others. These tokens were minted by overcollateralizing crypto assets and were designed to track real stock prices, allowing investors to gain price exposure to equities without holding the underlying shares. This model required no custodians and imposed no geographic restrictions — trading took place entirely on decentralized exchanges (DEXs), enabling theoretically permissionless global access.

However, the results were underwhelming. For instance, sTSLA saw only 798 total on-chain transactions (including minting and redemption) since launch, with consistently low trading volume. Due to limited user demand, most liquidity providers were unwilling to bear the short exposure and capital cost required to mint synthetic assets, leading to a gradual collapse in liquidity.

Regulatory concerns further compounded the problem, as such synthetic stocks operated outside traditional securities frameworks. Starting in 2021, Synthetix began phasing out its U.S. stock Synths and pivoted toward other derivatives such as foreign exchange products. The synthetic equity experiment was ultimately deemed a failure.

This case illustrates that purely decentralized, non-asset-backed models for stock tokens struggle to find viable product-market fit (PMF). Without sufficient user demand or regulatory clarity, they cannot effectively compete with more compliant and transparent alternatives.

Future Outlook: Can Tokenized Equities Achieve Regulatory Compliance?

The sustainability and regulatory success of this new wave of tokenized securities will largely depend on the constructive interaction between technological innovation and evolving regulatory frameworks. On the regulatory front, shifting political dynamics in the U.S. have brought renewed momentum to the space.

Since the Trump administration returned to power, it has signaled a more open stance toward crypto regulation. The new leadership at the Securities and Exchange Commission (SEC), including its chair and commissioners, has adopted a friendlier posture. The SEC has dropped lawsuits against several major crypto firms — Coinbase, Binance, and Kraken — and has established a dedicated Digital Assets Task Force to formulate updated regulatory guidelines. Notably, the agency’s enforcement division has recently shifted its tone, explicitly stating that certain forms of staking may not constitute securities offerings.

At the legislative level, breakthrough progress has also been made on stablecoin regulation. A federal bill is expected to pass, providing legal clarity and a statutory foundation for on-chain U.S. dollar stablecoins — potentially laying the groundwork for broader real-world asset (RWA) adoption on blockchain networks.

RWAs are receiving unprecedented recognition. U.S. policymakers and regulators are beginning to acknowledge that, when done compliantly, bringing traditional assets such as Treasury bonds and equities on-chain can enhance market efficiency and reinforce the global role of the U.S. dollar. This more favorable policy tone is beginning to remove some of the structural barriers to implementing tokenized securities within mainstream financial markets.

Meanwhile, regulatory frameworks in regions such as Europe and Asia are becoming increasingly clear. Laws like the EU’s Markets in Crypto-Assets Regulation (MiCA) are providing foundational guidance for security tokens, gradually reducing opportunities for regulatory arbitrage. Leading jurisdictions such as Switzerland and Singapore have already issued relevant licenses — such as Backed Finance’s platform authorization under Switzerland’s DLT Act and Singapore’s Recognized Market Operator (RMO) license issued by the Monetary Authority of Singapore (MAS) — setting benchmarks for compliant operations. This signals that a new generation of participants is more inclined to operate within licensing regimes or regulatory sandboxes to avoid the enforcement pitfalls that plagued earlier, unregulated experiments.

On the technical and market front, this new wave of tokenized securities demonstrates notable improvements in both product design and product-market fit. Platforms are placing greater emphasis on asset legitimacy and transparency: tokens are backed 1:1 by real-world assets, with regular disclosure of custody and audit information. Blockchain-based verifiability further enhances investor trust. For example, platforms like Backed and Swarm publish monthly reserve attestations, while Chainlink oracles are used to track real-time correlations between tokenized assets and their underlying instruments — minimizing the risk of “shadow assets” or depegging.

At the same time, user experience has become a core focus. Platforms like Robinhood are integrating tokenized equities into mature, mobile-friendly trading interfaces, while exchanges such as Bybit are embedding tokenized stocks into their existing crypto trading apps — enabling seamless, unified management of both digital and traditional assets. With features like 24/7 trading, T+0 settlement, and fractional share access now live, users can enjoy a more flexible and efficient trading experience than what traditional brokers offer.

These developments are addressing the core issues that hindered adoption in the previous cycle, particularly the failure to establish product-market fit. Earlier synthetic models failed to resonate with crypto-native users due to the lack of real backing. In contrast, today’s asset-backed tokenized stocks — augmented with DeFi functionalities such as staking, lending, and liquidity mining — may unlock new demand vectors across both institutional and retail user bases.

Despite these advancements, significant challenges remain before tokenized securities can reach mainstream adoption. The “last mile” of regulatory compliance has yet to be completed. In the U.S., while the regulatory climate is becoming more favorable, there is still no clear legal framework permitting retail investors to trade tokenized equities on-chain. Coinbase and others are actively seeking No-Action relief from the SEC, but it remains uncertain whether regulators will give the green light in the near term. If access to the U.S. retail market continues to be delayed, large-scale global tokenization of securities will remain constrained.

Nevertheless, industry participants expect that if leading players like Coinbase succeed in securing regulatory approval, it could set an important precedent for the broader ecosystem. According to research by Odaily, most licensed platforms currently suffer from cumbersome KYC procedures that make the user experience comparable to — or even more tedious than — traditional brokerages, failing to appeal to crypto-native users. Meanwhile, unlicensed platforms still raise user concerns regarding legal and custodial risks.

Moreover, for crypto traders who are accustomed to high-volatility markets, U.S. equities — with their comparatively limited price swings — may lack the speculative appeal seen in crypto assets. As a result, striking the right balance between compliance and accessibility, while identifying differentiated use cases, will be key to unlocking exponential growth in tokenized equities.

Some industry experts have suggested that innovation should focus on creating native on-chain investment experiences — such as equity rights fragmentation, DAO-based shareholding models, or gamified securities platforms. These approaches could offer fresh value propositions and reignite interest among crypto communities.

Secondly, one of the key challenges facing tokenized stocks lies in the lack of secondary market liquidity. Unlike traditional equities listed on centralized exchanges, tokenized stocks are essentially on-chain representations — issued by custodians or platforms as “claims to rights” — rather than the actual shares themselves. These tokens are often only tradable on specific platforms such as xStocks, Bybit, or Kraken, and lack direct arbitrage pathways with traditional financial markets.

Market makers are critical for improving liquidity, but several factors hinder their participation:

1. No access to efficient arbitrage or hedging:

A market maker providing liquidity for, say, xAAPL (tokenized Apple stock) cannot simultaneously hedge their exposure in the real U.S. equity market due to restrictions, costs, or regulatory constraints. This leaves them with unmanageable open risk.

2. Lack of on-chain infrastructure for compliant settlement:

If a token is to represent true securities ownership, it must support functions such as dividends, voting rights, and clearing processes. These features are difficult to standardize on-chain, making it challenging for market makers to assess the token’s intrinsic value.

3. High platform credit risk:

Market makers also face significant platform-level credit risk. Unless returns are sufficiently high to compensate for this, most have little incentive to participate.

To address these challenges, some platforms are exploring strategies such as partnering with reputable custodians to provide strong credit guarantees, introducing stablecoin trading pairs, and launching on-chain incentive programs to attract market makers and bootstrap initial liquidity. Mechanisms like on-chain AMMs or order books that interface with off-chain liquidity pools are also being considered. However, unless tokenized equities can establish tighter bridges with real-world securities markets, the liquidity dilemma will remain a structurally persistent issue.

Moreover, if these tokenized U.S. stock services were to become accessible to Chinese users, they would carry significant legal and regulatory risks — from both the platform’s and the investor’s perspectives. Chinese law strictly prohibits the provision of unlicensed overseas securities services or intermediaries. Even if a platform is registered offshore, offering U.S. equity-related services to Chinese users — especially those involving dividends, voting rights, or leverage — may be interpreted as conducting “unauthorized securities business.” Chinese individuals are generally not permitted to freely invest in foreign securities unless through regulated channels such as QDII. Using crypto-based methods to indirectly invest in foreign assets may be deemed as illegal currency exchange or regulatory evasion.

In conclusion, the new wave of tokenized securities is underpinned by a more favorable regulatory climate and more mature technological infrastructure, offering a stronger foundation than in previous cycles. If regulatory openness and industry self-discipline can progress in tandem — with both the deregulatory signals from the Trump administration and increasing focus on compliance and risk control within the industry — tokenized U.S. equities could gradually move toward sustainable development, potentially becoming an organic bridge between traditional finance and the Web3 ecosystem.

That said, this process will be incremental. Only when the market truly identifies real user pain points and delivers unique value — such as enabling 24/7 global capital market access or creating novel liquidity mining opportunities — will tokenized securities shed their “concept hype” label and achieve mass-scale, compliant adoption and practical utility.

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