Stock Tokenization Platform: A Practical Guide from Concept to Implementation

Introduction

RWA (Real World Asset On-chain) is becoming a hot topic in the Web3 space, where tokenization of stocks (Tokenized Stocks) has emerged as one of the most viable directions due to its mature underlying assets, controllable technical barriers, and gradually clear regulatory pathways.

This article will focus on a core question: how to build a stock tokenization platform that can reach the retail market while controlling compliance risks?

Robinhood Mode: Simplified Securities Trading

Although Robinhood is not a traditional on-chain platform, its operating model provides valuable insights for the design of Web3 products.

Core Features

• The interface is extremely simple, avoiding complex terminology.
• Zero commission, low threshold, aimed at retail investors
• Securities clearing and custody are completed by partnering institutions.

compliance structure

• Headquartered in California, USA
• The subsidiary holds the relevant licenses and is subject to SEC and FINRA regulation.
• Stock trading services are only available to US users.

regional restriction reason

• Avoid facing complex securities sales licensing requirements in other regions.
• Avoid different regulatory requirements and high compliance costs in various regions

xStocks Model: Token Mapping of Real Stocks + Non-Security Positioning

xStocks achieves Token trading of stock price mapping through clever structural design, catering to retail investors while avoiding the regulatory red line of securities.

core structure

• Token is mapped 1:1 with stocks, held by institutions.
• Token does not include voting rights, dividend rights, or governance rights.
• "Dividends" are automatically reinvested in the form of Token.
• Basic KYC requirements, restrictions on users from high regulatory regions

physical structure

• The Token issuer is registered in Jersey.
• The service entity is registered in Bermuda.
• Deliberately avoiding the application of US law

Prohibited Area

Clearly not providing services to the United States, European Union, United Kingdom, Canada, Japan, Australia and other regions, mainly considering the strict securities regulatory requirements in these regions.

The Essential Difference Between the Two Modes

• Robinhood: "Operate securities business within regulatory framework"
• xStocks: "Avoiding securities regulation through structural design"

Key Roles of Stock Tokenization Platform

1. Platform: Responsible for price mapping, Token issuance, and user interaction
2. Partner: Responsible for position holding, reporting, and risk isolation
3. Both parties are linked through agreements and information synchronization mechanisms, but regulatory responsibilities are clearly separated.

Necessary Partners and Protocols

partner

• Licensed broker
• Blockchain issuance platform and technical party
• Legal Advisor
• KYC/AML service provider
• Smart Contract Auditor

Key Protocol

• Token issuance white paper and legal disclosure instructions
• Asset Custody Service Agreement
• Platform User Agreement and Risk Disclosure Statement
• Compliance Service Integration Agreement
• Token and platform interactive contract documentation

Key Considerations

• Tokens should not include any profit promises, governance rights, or claims.
• Avoid providing services to high-sensitivity jurisdictions
• Use caution with terms such as "stocks" and "shareholder rights".
• Dual control of user region and identity through technology and protocols
• Prepare legal opinions, risk disclosure statements, and KYC audit records.

Conclusion

Stock tokenization is a project direction that requires meticulous design but has practical potential. The key is to find a suitable landing point, design a clear structure, clarify what the token represents, while avoiding crossing the red lines of users, markets, and legalities.

Currently, the market is still in a stage of cautious institutions and hesitant entrepreneurs, which provides opportunities for prepared teams. The key to success lies in building a platform that is regulatory acceptable, user willing to participate, and technically feasible.