Original | Odaily Planet Daily ( @OdailyChina )
Organizing｜Wenser ( @wenser 2010 )
In the past two weeks, the trend of securities tokenization has gained momentum, and many mainstream crypto exchanges have launched blue-chip US stock token trading businesses.
At this juncture, Odaily Planet Daily successfully held an online Space on Wednesday this week, The wave of securities tokenization is coming: 1 U can buy Apple and Nvidia stocks, revolution or bubble?, and specially invited trading platforms such as MyStonks, Bybit Byreal, GoRich and well-known crypto KOLs to discuss in depth the key issues of securities tokenization from the perspectives of platform operation and users.
Guests list: Bruce, founder of MyStonks, Emily, head of Bybit spot and founder of Byreal , Raymond, head of Bit.com GoRich business, crypto KOL Bitcoin Factory Manager and crypto KOL Kalin.
This discussion focused on the core concerns of the industry, and produced many insights on the key points of platform compliance operations, the differentiated competitive paths of exchanges, and the sources and risks of user benefits. Odaily has specially selected the core views and compiled them as follows for readers reference.
Q1. In the past few years, the crypto market has tried to tokenize U.S. stocks (Mirror Protocol, FTX), but it did not make a big splash. Now, securities tokenization has become a hot topic again. What do you think of this? How do you view the market prospects of securities tokenization?
Bruce, founder of MyStonks: Personally, I think that, first of all, this change is closely related to the improvement of the regulatory environment. When the Democratic Party was in power in the United States, the US SECs regulatory attitude towards Crypto was extremely unfriendly. After the change of president this time, the Republican Party came to power and opened up the development of the cryptocurrency industry. Secondly, the overall scale of the number of crypto users is constantly increasing. To date, the number of crypto users in the United States has exceeded 60 million, and the number of crypto users worldwide has exceeded 800 million. These users are very attractive to any market, not only the US securities market, but also the financial market of any country. Therefore, the United States, especially Wall Street, is promoting the tokenization of securities. This is a major trend, and it can even be understood as a national policy of the United States, or a strategic direction of Wall Street. So for us, this is a great opportunity for the transformation of the entire industry.
Emily, the person in charge of spot trading at Bybit and the founder of Byreal: Previously, the main reason was that the previous protocols or products lacked compliance and market depth support, especially in the market environment at that time, liquidity was relatively good, and everyone had many options for targets, so the securities tokenization platform at that time failed to survive the cycle and survive until now. Up to now, the Internet Capital Market Onchain, that is, securities tokenization, and the trend of US stock tokenization have gradually emerged. This is a new progress after the proof of concept (POC) of the previous cycle. The market environment, compliance policies, user needs, and DeFi Infra underlying technology have all changed greatly. Looking at the future from now, it is obvious that this is not a simple concept hype, but the release of structural demand. Moreover, this trend has actually been generated since the Bitcoin spot ETF was passed at the beginning of last year. It is only at this point in time that mature platforms and products such as xStocks and MyStonks have emerged. After a long period of construction and compliance review, including Robinhoods proactive attack, they can see that there is a real demand, which is also the feedback given to us by many real users.
The launch of Byreal is also intended to combine the deep liquidity of centralized CeFi with the transparency innovation of DEX to provide the market with more investment options.
Raymond, head of Bit.com GoRich business: The previous U.S. stock tokenization products were more like products such as U.S. stock derivatives. Of course, the subsequent collapse of FTX also exposed the conflict between on-chain transparency and compliance issues. Technically speaking, the previous oracle or on-chain asset custody and risk control mechanisms were not mature, and could not maintain a relatively stable price system and some liquidation mechanisms; and the RWA infrastructure at that time was not the same as it is now. Therefore, my point of view is that the tokenization of U.S. stocks may not be an explosive revolution, but a gradually evolving innovation of financial infrastructure. Because from the external performance, users from any country can invest in U.S. stocks; from the internal environment, Hong Kong has recently given some regulatory support, and may even allow investors to gradually realize direct trading of U.S. stocks in RMB in the future.
Moreover, it is worth noting that the coin-stock linkage effect has always been the focus of the market. For example, in the past two years, the US stock market rose sharply before the market, which also led to the rise of the BTC market. In the case of sufficient market funds, users can adopt a strategy of compensating for the rise; if the market funds are relatively insufficient, users can also place bets in advance according to the flow of funds. For example, if the US stock market reaches the daily limit, BTC may fall, and thus make a reverse judgment. In the short term, the compliance cost of securities tokenization is very high, and the current on-chain transaction depth is average, so it will exist as a supplement rather than a substitute. In the future, if the liquidity depth is sufficient, then the tokenization of securities will reduce the cost of asset issuance or user transactions, allowing investors around the world to participate and facilitate convenient and diversified investment. This is also the direction that GoRich is working towards.
Crypto KOL Bit Factory Manager: First of all, the tokenization of US stocks has attracted a large number of people in the traditional financial industry to join, forcing them to re-pay attention and learn, which is undoubtedly a positive for the crypto industry. The previous failure of FTX synthetic assets was more due to high-pressure restrictions at the regulatory level. Under the influence of factors such as Wall Streets entry into the cryptocurrency industry and Trumps crypto-friendly attitude, investors in the traditional financial field gradually entered this circle, which gave rise to such demand. Moreover, compared with the traditional financial market with time limits, 7 × 24-hour trading will greatly facilitate investors. In addition, in terms of subscription thresholds, unlike the stock markets minimum purchase limit of one share, securities tokenization fragments stocks, and users can even buy 0.01 shares of corresponding tokens; including foreign exchange controls, is also one of the reasons for restricting users from entering the US stock market in the past, and securities tokenization is equivalent to investment in the global market.
Of course, there are still differences between the two, such as voting rights and dividends of traditional stocks; after tokenization, there may only be economic rights and no other rights. But in any case, this is a big trend, and the potential user scale of the industry is at least 10 times larger. This is also one of the reasons why many A-share and H-share listed companies have come to talk to me recently . And the main question they ask me is how to buy Bitcoin. They want to follow the example of listed companies such as Strategy to increase the stock price, or they want to hold Bitcoin for a long time.
Crypto KOL Kailin: I personally pay more attention to the AI field, especially the Virtuals ecosystem. What I have noticed is that several projects I have invested in recently have begun to be tied to RWA or securities tokenization. This was rarely seen before. Now there is a project that uses AI to custody user funds and conduct compliant user deposits and withdrawals in Southeast Asia. This is also an imaginative track that deserves long-term attention.
Q2. Many people regard the tokenization of securities as a Trojan Horse for the traditional financial market to enter the crypto market, and believe that it will further compress the liquidity of altcoins and market trading space. What do you think of this view?
Bruce, founder of MyStonks: I dont think this statement is accurate. First, recently, US-listed companies have been buying mainstream currencies such as BTC, ETH, BNB, SOL, etc. Even without securities tokenization, the liquidity of altcoins is also lost; second, securities tokenization will boost the expansion of the crypto market. Compared with the cryptocurrency market with a market value of less than 4 trillion, the overall market value of US stocks alone is 36 trillion, and this does not include US bonds. After securities tokenization, investors who are not interested in investing in altcoins are likely to use this to invest in US stocks, Nikkei, Middle Eastern stocks, and even Hong Kong stocks. Third, the demand of most users to speculate in altcoins is actually to get rich quickly, but there are many opportunities to get rich quickly in the traditional US stock market, Nikkei market, etc., and they are not even inferior to altcoins.
Emily, the person in charge of spot trading at Bybit and the founder of Byreal: I agree with Bruces point of view. The liquidity of altcoins is indeed somewhat unable to be compressed. Because funds will always flow to places with higher profit effects. For traders who want to make money, in addition to speculating in altcoins and airdrops, if they have the opportunity to enjoy higher investment returns in the stock market, I believe many people will also choose such investment targets. As a trading platform, our goal is to introduce similar assets to the platform one step ahead of others and provide better trading services. Therefore, the tokenization of securities is more like a bridge that can introduce funds and liquidity from traditional finance into the Crypto market.
Raymond, head of Bit.com GoRich business: From the perspective of user attributes, each wave of industry craze will create a group of people who make money, and many of them will develop path dependence, so there were people who caught different crazes such as DeFi, GameFi, NFT, etc. and became rich. But there is also a group of people who are relatively more flexible, and they make money by speculating on what is hot, and they earn early Alpha returns. After the tokenization of securities begins, there may be a third group of people - those who prefer more stable funds and tend to buy more transparent compliant assets. These people may be newcomers to the circle, or they may be old people in the coin circle who want to diversify their positions. Therefore, the trading activity of mid-range altcoins will decline again, and many tokens on exchanges, especially those without actual use cases, may slowly die, gradually forming a dumbbell-shaped market: on one side are stable mainstream currency assets or compliant assets; on the other side are Meme coins with the possibility of getting rich; the rest are tokens that gradually return to zero in the middle, especially some VC coins or girlfriend coins.
Crypto KOL Bitcoin Factory Manager: This is more of a two-way penetration. It can be said that traditional finance is invading the cryptocurrency circle, and it can also be seen as the cryptocurrency circles reverse transformation of the traditional financial market. In the past two years, securities firms, private equity funds, public equity funds, and some fund managers have all moved closer to the cryptocurrency industry, just as Jack Ma said: Banks dont change, we change! To some extent, it is actually the cryptocurrency circle that is 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 accumulate the value of failed crypto projects; and it will greatly reduce the threshold for people in the traditional financial field to enter the cryptocurrency circle. Moreover, according to Morgan Stanleys forecast, the securities tokenization market is expected to exceed $100 billion in the future, and the subsequent on-chain demand, including liquidation, lending, and derivatives, may create some new niches for altcoins. Including the possibility of automatic dividend distribution and cross-protocol combined returns with the help of smart contracts in the future, all of which are the transformation of cryptocurrencies to the traditional financial field.
Crypto KOL Kailin: In the early stage of the track, it will definitely siphon off other tracks; but the tokenization of securities will definitely attract a group of people in traditional finance, and then gradually develop vertically. But as for other tracks, there will be an impact in the short term, but in the medium and long term, I think the impact will not be significant. Take me as an example. I actually focus on the AI track. If there is a new track that is particularly popular, I will first pay attention to the crossover opportunities between the new track and the track I am concerned about, and then invest some funds to verify and try it, but in the long run, I will still focus on my main track. The impact is not too big, because for investors, it is a multi-horse race, just to see which of the different investment targets runs faster.
Q3. Previously, Robinhood announced that it would list the equity tokenization assets of unlisted companies such as OpenAI and SpaceX, which caused controversy. What do you think of this behavior? Will it bring regulatory pressure? When choosing, do you also consider listing some unicorn company stock tokens?
Bruce, founder of MyStonks: Speaking of this, Robinhood is actually a very, very cunning company. Many people may not know that this company is basically fined by US regulators every year, but they don’t care anymore, including the launch of OpenAI and SpaceX equity tokens this time.
From our perspective, Robinhood is not qualified to do this, because it is OpenAI or SpaceX that will be listed, but why did it list both at the same time? In fact, it took advantage of the fact that Sam Altman of OpenAI and Musk of SpaceX are not on good terms. They have predicted that if the equity tokens of two companies are listed, one of them will definitely come out and issue a statement to oppose it. As a result, OpenAI said that it does not recognize Robinhood’s equity tokens and has nothing to do with us. Then, Musk really stood up to support Robinhood (referring to Musk’s post mocking OpenAI’s non-existent equity). Of course, he did not support Robinhood’s issuance of equity tokens, but just used it to mock Sam personally.
From a business perspective, this is still a clever trick; but at the regulatory level, there will definitely be pressure. Although the current regulatory policy of the US SEC is very open, strictly speaking, Robinhood is still not qualified to do this (referring to the issuance of equity tokens of unlisted companies).
As for whether MyStonks will launch similar equity tokens of unicorn companies in the future, as a trading platform, MyStonks tends to support transactions rather than the so-called helping this company issue equity tokens, which is definitely non-compliant and unreasonable.
Emily, the person in charge of spot trading at Bybit and the founder of Byreal: From this point of view, Robinhood is also ambitious. I personally think that from a larger perspective, unicorn equity tokens may appear in the future, or direct on-chain IPOs are also possible. In fact, Solana formally submitted a document called Project Open to the US SEC in the first half of this year (Odaily Planet Daily Note: refers to a new proposal submitted by the Solana Policy Institute and its partners to the US SEC to authorize the issuance and trading of traditional securities on public blockchains such as the Solana network). At present, the US SEC has not issued a rejection letter, so future exploration in this regard is still very likely. Of course, it must be carried out within the compliance framework.
Raymond, head of Bit.com GoRich business: In fact , there are still many risks in the equity tokens of unicorn companies, such as equity transaction restrictions, authorization credibility, and how to ensure that the on-chain tokens are mapped to real private equity, or challenges in trust and auditing. But GoRich sees this market as an attention economy game, so once the time and conditions are ripe, we will quickly follow up on some unicorn companies private equity agents, and of course we will do a good job of screening. Because we are a transaction intermediary, or a transaction aggregator, after due diligence is completed, we will respond to market hotspots in a timely manner to promote it. In the future, whether it is Robinhood or other on-chain IPO platforms, once a potential or relatively deep platform appears, we will definitely follow up quickly.
Crypto KOL Bitcoin Factory Manager: I personally think that, at present, tokenized securities products can be divided according to different risk levels. For example, platforms such as xStocks and MyStonks have launched stock tokens of well-known companies such as Apple, Nvidia, and Tesla, so liquidity and regulatory resistance are relatively easy to deal with; Robinhood’s unlisted company equity has the highest risk factor and may be more attractive to retail investors because the return on investment may be very high and there are legal risks; and the income rights of bond funds under Goldman Sachs have a relatively medium risk level because it does not involve changes in ownership, so the degree of compliance is higher. To a certain extent, the launch of unlisted company equity tokens has subverted the logic of traditional IPOs, but there are also risks such as OpenAI not recognizing equity, forced redemption of tokens, or suspension of trading. Robinhood’s attempt is a radical experiment, but it is generally good.
Crypto KOL Kailin: I agree more with Emily’s point of view. It will bring certain traffic and attention in the short term, but in the long run, the opaque asset packaging method and regulatory risks are real.
Q4. Currently, there are several types of securities tokenization: the first is to launch spot and derivatives based on stock market data, and the second is 1:1 anchoring, with real real stock asset reserves behind it. What do you think of these two methods? What are the advantages and disadvantages? (If real stock assets are launched online, will the platform issue transparency instructions, inspection methods, and audit reports?)
Bruce, founder of MyStonks: That’s true. One of the solutions on the market is to build a pool on Solana Raydium like xStocks’ on-chain MM, but for users, one is that the slippage is relatively high, and the transaction time cannot be determined. MyStonks is now using a 1:1 anchoring method and an order book model, which means that there must be proof of asset reserves. On-chain, it is the security audit of the crypto industry; off-chain, it is an independent audit company auditing the stocks actually held by the partner and the stocks we actually hold in custody. We are doing both audits. We have already issued an audit report when the token was first issued, and will update it monthly in the future.
Emily, the person in charge of spot trading at Bybit and the founder of Byreal: Bybit currently has an entrance to the platform, which is equivalent to a sub-section, for users to directly use stablecoins to deposit funds, and supports trading assets such as gold, commodities, and US stocks. At present, it is done in the CFD mode, and the price anchoring is achieved through oracles such as Chainlink. In terms of compliance, it is easier to avoid securities attributes. In addition, for technologies such as financial innovation, asset confirmation is a very important thing, so we choose to cooperate with xStocks, whose audit compliance is relatively comprehensive. In addition, the advantage of xStocks is that it is not affected by the closure of the US stock market. During the closure period, the pre-market and post-market prices will be used for anchoring. In the future, more and more market makers will join, and the subsequent market liquidity will be better and better, and the trading experience will be better and better.
Raymond, head of Bit.com GoRich business: We have launched xS tocks and Backed based on some stock transactions on Base, and we are also actively contacting Coinbase and Robinhood. Because there are too many abnormal values in the trading volume and pool of US stock tokens, plug-in situations are more common, and there are a small number of users plug-in or the liquidity pool may be manipulated by a few people. Robinhoods handling solution in this regard is quite experienced, because they use a 5 × 24-hour mechanism instead of 7 × 24 hours, 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 emergencies and prevent users from losing all their assets.
Crypto KOL Bitcoin Factory Manager: I think synthetic assets are more suitable for cryptocurrency users because they pursue high risk, high returns, or high capital turnover efficiency, but they also need to bear the so-called systemic risks. Physical assets are 1:1 anchored and relatively transparent, and are more favored by mainstream institutions because they basically solve problems such as compliance and redemption flexibility. The two will coexist in the future.
Q 5. Traditional stock markets have a closed period, while cryptocurrencies are open 24/7. How can we avoid the decoupling of tokenized securities assets during the closed period? What are the good solutions?
Bruce, founder of MyStonks: To be honest, MyStonks does not have a good solution at the moment. Two months ago, we discussed whether to build a liquidity pool on Uniswap. Later, due to internal compliance considerations, we felt that we could not do so. Although there is an opportunity to be the first to try something new, the first person to try it may also be killed by the crab. As Chinese entrepreneurs, we are more inclined to follow the strategy, first observe how the US SEC will react after the foreigners do it, and then do our own thing. Although the regulatory attitude of this SEC is very good, even SEC Chairman Paul Altkins publicly said, Everyone can do it if they want to. We will not care if we want to manage it or not, there are still many risks in the stock price decoupling, and we are also working hard to find a better solution.
Emily, the person in charge of spot trading at Bybit and the founder of Byreal: Bybit did introduce external market makers to provide liquidity, but in the early stages, it was obvious that its liquidity was not particularly good, especially the first US stock token CoinX that we launched, which also had a plug-in situation. There was really no way to solve this problem. But the other 9 tokens that were launched later were much better, because the market-making strategy was also constantly being adjusted. For the off-market period, the current solution is to observe the price difference through strong monitoring measures; introduce a multi-oracle system on the chain, and we are also considering combining CeFi and DeFi to make joint markets to ensure market liquidity. It is expected that there will be new progress at the end of the month, so you can look forward to it.
Raymond, head of Bit.com GoRich business: At present, GoRich has aggregated the pool for US stock tokens. In addition, we will set up an automatic reminder mechanism when users trade tokens similar to Pixiu or tokens with great volatility, such as reminding users that the transaction slippage is too high, or the principal loss is large, etc. As a trading aggregator, GoRich still hopes to spread a trading concept to users and change the wrong trading habits of some ordinary users. At the same time, through platform functions, such as automatically setting a 30% increase or selling at a 100% increase, we hope that users can make some money in the high-intensity and high-risk currency circle without losing their principal.
Q 6. Regarding entry barriers, will each company restrict the platform users’ participation qualifications or have other KYC and transaction thresholds?
Bruce, founder of MyStonks: Although more people in the crypto industry hope to cancel the KYC policy and achieve true decentralization, MyStonks still needs to comply with relevant US laws, and we are also working hard to apply for STO (Odaily Planet Daily Note: that is, securities token issuance license).
Emily, the person in charge of Bybit spot and founder of Byreal: First of all, all the information can be seen in our terms and conditions, and there are also restrictions for users in some high-risk areas of the law. In addition, the spot of xStocks US stock tokens is located in our innovation zone, and there are certain restrictions on the size of user holdings. Of course, this is not an entry threshold, but is more for the purpose of protecting user assets.
Raymond, business manager of Bit.com GoRich: GoRich has always insisted on doing compliance work around the world and meeting local requirements. The vast majority of new and old users can trade US stocks such as Apple and Nvidia with $1.
Conclusion: Moving forward in exploration, securities tokenization has become a foregone conclusion
Judging from the speeches of the guests, although there are still risks such as unclear supervision, 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 unicorn company equity tokenization will also become possible. The feast of the cryptocurrency industry is still expected in the future.
