The Development History and Future Prospects of Tokenized Stocks

Tokenization of stocks, as an innovative financial tool, has attracted attention from the cryptocurrency industry since 2017. It is an attempt to digitize traditional stock rights and put them on the blockchain, combining the compliance of traditional securities with the efficiency of blockchain technology.

Initially, tokenization of stocks primarily appeared in the form of STO( security tokens issuance ). Compared to the previously popular ICO model, STO places more emphasis on compliance. However, due to reasons such as the lack of unified standards and poor liquidity in the secondary market, the development of STO has not been smooth.

After the DeFi boom in 2020, some projects began to attempt to create synthetic assets linked to stock prices through smart contracts. This model avoids complex KYC processes and can bypass regulatory costs. However, due to a lack of sufficient trading demand, the synthetic asset model ultimately failed to achieve sustainable development.

At the same time, some centralized trading platforms also launched tokenized stock trading services. However, due to regulatory pressure, these services were quickly forced to cease. Since then, the development of tokenized stocks has come to a standstill.

Until recently, with the changes in the regulatory environment, tokenized stocks have re-attracted attention as a new form of RWA( real-world assets ). This model emphasizes the design of a compliant framework, issuing tokens backed 1:1 by real assets and strictly executing all operations according to regulatory requirements.

Currently, the tokenization of the stock market is still in its early stages, primarily focusing on U.S. stocks. Some companies have successfully tokenized their common stocks and put them on the blockchain, marking a shift in regulatory attitudes. In addition, some projects are exploring ways to allow users to trade on-chain stock assets through compliant structures.

The potential advantages of tokenized stocks include: 24/7 trading, reduced costs for non-US users to access US assets, and the financial innovation potential based on blockchain composability. However, it still faces uncertainties such as the advancement of regulatory policies and the adoption rate of stablecoins.

In the short term, tokenized stocks may provide listed companies with new valuation growth points and may also become potential investment targets for some income-generating DeFi protocols. With the regulatory environment becoming clearer and relevant technologies maturing, tokenized stocks are expected to play a larger role in the future.