[TL;DR]
- In H1 2025, competition heated up as Kraken’s xStocks, Robinhood, and Coinbase moved into tokenized U.S. equities.
- The market is about $676 million today and hampered by thin liquidity and regulatory uncertainty, but a friendlier SEC posture and frameworks like Solana’s Project Open are opening paths forward.
- On-chain trading models led by Backed Finance and xStocks are realizing DeFi integrations and composability; players that secure liquidity are poised to lead.
1. Why Tokenized Stocks Now?
1.1 What Lit Up the Industry in H1 2025
In the first half of 2025, momentum around tokenized U.S. equities became real. In May, centralized exchange Kraken announced xStocks—a tokenized equities trading platform—in partnership with Backed Finance and Solana. Around the same time, Coinbase said it was seeking regulatory approval to offer tokenized stock trading. Solana went further by submitting its own framework to the SEC for blockchain-based tokenized U.S. equity products.
Major U.S.-based blockchains and exchanges began piling into this market. The timing coincided with news of Circle’s IPO, which buoyed sentiment across the space and naturally lifted expectations for tokenized U.S. stocks. On June 30, two products went live: Kraken officially launched xStocks, and Robinhood unveiled a tokenized U.S. stock offering for European investors the same day.
Robinhood’s product mints initially on Arbitrum, with a plan to migrate longer-term to a proprietary Arbitrum-based L2. Within a matter of months, heavyweight entrants turned tokenized equities from an experiment into a mainstream business arena—thanks in no small part to a decisive shift in the regulatory climate.
With former SEC Chair Gary Gensler’s departure and the appointment of the comparatively friendly Paul Atkins, industry sentiment flipped. Projects that had been cautious under uncertainty began publicly sharing roadmaps and actively engaging regulators. The rapid growth of tokenized equities now reflects both technical readiness and regulatory tailwinds.
1.2 Market Size and Growth Potential
According to RWA.xyz, current tokenized equities market cap stands near $676 million. That’s tiny versus traditional equities or other crypto assets—but the small base signals a large opportunity.
The value proposition is clear. First, true 24/7 trading. Nasdaq and NYSE don’t offer it yet. Even though Nasdaq has applied for 24/7 trading, realistic timelines point to late 2026. Until then, 24/7 access is a benefit unique to tokenized stocks.
More interesting is what happens when you combine tokenized equities with DeFi: borrow against U.S. stocks, take margin exposure, or create index funds—plus entirely new products that don’t exist yet. On the supply side, U.S. public companies can reach global investors directly via blockchain rails.
Demand is even clearer. Investors who historically couldn’t access U.S. stocks can now do so on-chain. The current figures—roughly $300 million market cap and ~2,000 holder addresses—hint at how much room there is to grow. To convert potential into reality, we need the right products and infrastructure.
1.3 Traditional Market vs. Tokenized Equities
Traditional securities markets boast centuries of history—NYSE since 1792, Nasdaq since 1971—and mature investor protections, clear trading windows, and well-defined clearing and settlement. Multi-step intermediation (brokers, CCPs, custodians) adds cost and latency but provides stability.
Tokenized markets flip the approach. Blockchains increase transparency and efficiency and compress intermediaries. Smart contracts auto-execute trades, and on-chain records update ownership instantly. Borders don’t matter, and DeFi integrations enable novel products.
We’re still early. Liquidity is thin, frameworks are evolving, and investor protections considered “table stakes” off-chain aren’t fully replicated on-chain. Many projects still rely on traditional brokers/custodians, falling short of full decentralization.
This isn’t a zero-sum contest. For now, the two markets are more complementary than competitive. Traditional venues supply stability and deep liquidity; tokenized rails deliver access and flexibility. As rules clarify and infra matures, the line will blur. We’re at a pivotal moment that will shape what tokenized equities become.
2. What Are Tokenized Stocks?
2.1 Core Concept and How It Works
Tokenized stocks represent traditional equities as digital tokens on a blockchain, typically at a 1:1 backing with the underlying shares. Ownership is recorded on-chain; price exposure mirrors the real stock. Dividends flow through proportionally.
A regulated entity purchases and safekeeps the underlying shares, then mints an equivalent number of tokens. Investors buy the tokens and experience P&L from the real stock’s price moves; dividends are distributed to token holders. Issuers regularly disclose underlying holdings and undergo independent attestation. Redemption burns tokens and releases the corresponding shares.
Not all tokenized stocks are the same. Some grant actual ownership; others merely track price as a derivative. Some allow free on-chain transfers and trading; others force primary-platform dealing only. Structures vary by regulation and strategy—investors must know exactly what they’re buying.
2.2 The Core Value
First: time and geography disappear. U.S. equities trade 9:30–16:00 ET (23:30–06:00 in Korea). Break news outside those hours? You wait. Tokenized stocks run 24/7/365.
Borders fade, too. Traditional access requires foreign brokerage accounts and fees; sometimes FX controls block participation entirely. With tokenization, anyone online can access markets; stablecoins cut out multiple FX steps.
Second: DeFi composability. Tokenized stocks can back loans, seed liquidity pools, power indices, or enable leverage—functions that off-chain require multiple institutions and paperwork but on-chain run via smart contracts.
In practice, Backed Finance pools have already shown ~33% APY historically for LPs, and Kraken’s xStocks integrates with Kamino for collateralized borrowing. This composability is why tokenized stocks mean more than “stocks on a blockchain.” As more protocols support them, expect products we can’t yet imagine.
2.3 Benefits for Investors and Issuers
For investors, access is the biggest draw: no offshore brokerage hurdles, low minimums, simpler onboarding—just a wallet.
Costs can be lower. Traditional cross-border investing stacks FX, wire, and brokerage fees. Tokenized trading often reduces this to blockchain gas plus a venue fee, with stablecoins streamlining settlement—especially impactful for smaller tickets.
For issuers, global reach improves. Historically, courting foreign investors required listings abroad or complex ADR programs. Blockchain opens a direct channel.
Tokenization also hints at new capital formation paths—primary issuance via tokens to a global base with faster timelines and potentially lower costs. It’s early and contingent on regulatory clarity, but the trajectory is clear: more efficient, more open capital markets for both sides.
3. Key Players: A Comparative Look
3.1 Regulation-First: Dinari
Dinari (founded 2021, U.S.) has pursued tokenization within U.S. regulatory bounds from day one, raising a $10M seed (2023) and a $12.7M Series A (2024) from notable names like Hack VC, Blockchain Ventures, Balaji Srinivasan, F-Prime Capital, and VanEck Ventures—signaling TradFi’s interest.
Dinari serves non-U.S. users only. Users KYC, pick U.S. stocks, and pay with Dinari’s USD+ (a short-term T-bill-backed stablecoin swappable from USDC). Orders route to Alpaca Securities or Interactive Brokers; upon custody, Dinari mints dShares 1:1.
Live on Arbitrum, Base, and Ethereum mainnet, dShares mirror splits and dividends, and Dinari offers a trading API. But dShares aren’t freely tradable on-chain: selling is only via Dinari’s site, during U.S. market hours. Functionally, it resembles a Futu/Robinhood-style experience—often with fewer features and potentially higher fees.
Unsurprisingly, Dinari’s tokenized stock footprint remains small: only MSTR exceeds $1M market cap; just five tickers are above $100K. Most TVL sits in variable-rate T-bill products. Regulatory purity sacrifices on-chain composability; users gain little over legacy brokerages, so Web3 natives aren’t drawn to it.
3.2 On-Chain Trading: Backed Finance
Backed Finance (Switzerland, founded 2021) launched products in early 2023 and raised $9.5M (2024) led by Gnosis, with Cyber Fund, Blockchain Founders Fund, and BlueBay Capital participating. Like Dinari, U.S. users are excluded.
Here, professional issuers KYC and pass review, buy U.S. stocks for tokenization, and receive bSTOCK (and wrapped wbSTOCK) upon custody. Crucially, both are freely tradable on-chain as unrestricted ERC-20s; wrapping simplifies dividend mechanics.
Backed’s liquidity centers on SPX, COIN, TSLA pairs. Users supply AMM liquidity (bSTOCK vs. stables). Aggregate LP TVL is ~$8M with ~33% average APY, spread across Gnosis (Balancer/Swapr), Base (Aerodrome), and Avalanche (Pharaoh). The bCOIN–USDC pool has posted ~149% APY recently.
The key difference: no transfer restrictions on bSTOCK, allowing non-KYC users to buy in DEXs—effectively bypassing KYC on the secondary market and providing a familiar Web3 experience with full composability.
Legally, Backed operates via a Swiss entity and has European approvals for freely transferable ERC-20 securities tokens, plus regular proof-of-reserves attestations by The Network Firm. The U.S. SEC has not stated an official position—ultimately pivotal since the underlyings are U.S. stocks.
Despite being ~10× Dinari’s scale, Backed still sits near low-tens of millions AUM and ~$8M TVL—modest with subdued on-chain activity. Two main constraints: (1) tokens mostly serve LP use today; risk protocols (lending/stables) move cautiously under regulatory fog; (2) Backed isn’t an exchange, so no native liquidity support—current liquidity depends on issuer incentives, which appear limited for now.
3.3 Ecosystem-Integrated: xStocks (Kraken)
In May 2025, Kraken announced xStocks with Backed Finance and Solana, and on June 30 the product launched. Partners include centralized exchanges (Kraken, Bybit), Solana DEXs (Raydium, Jupiter), the Kamino lending protocol, the Bybit-incubated DEX Byreal, Chainlink for oracles/proof-of-reserves, Alchemy Pay for payments, and Alpaca as the broker.
xStocks mirrors Backed’s legal structure. It supports 200+ tickers and offers 24/5 trading. CEX partners (Kraken, Bybit) and DEXs (Jupiter, Raydium, Byreal) provide venues; Kamino enables collateral use and swap support. Solana is the base chain; Chainlink secures reserves; Alpaca handles brokerage.
It’s early; data are limited and volumes are still small. But integration is far stronger than Backed’s standalone footprint. CEXs can onboard market makers and users; multiple DEXs and Kamino add on-chain venues and utility. As more protocols integrate xStocks, composability expands, giving xStocks a plausible path to early leadership through the trifecta of CEX liquidity, DEX depth, and DeFi utility.
3.4 Hybrid: Robinhood and Exodus
Robinhood has pushed deeper into crypto. In April 2025 it submitted an SEC report advocating RWA frameworks that include tokenized stocks. In May, Bloomberg reported a plan to let European investors trade U.S. stocks on a blockchain platform, with Arbitrum or Solana floated as candidates.
On June 30, Robinhood launched its tokenized U.S. equities product for European users with dividends and 24/5 access. It mints on Arbitrum first and plans to migrate to a proprietary Arbitrum-based L2.
However, official docs indicate the instrument is a derivative that tracks the stock, not true tokenized equity. A licensed U.S. entity holds the underlying in Robinhood Europe’s account; Robinhood Europe issues the contract and records it on-chain. Trading is Robinhood-only for now; transfers are disabled.
Exodus, a U.S. non-custodial wallet company listed on the NYSE, partnered with Magic Eden on wallets. In 2021, Exodus allowed holders to migrate common shares to Algorand via Securitize. But the on-chain token wasn’t transferable or tradable and carried no economic rights (no votes/dividends)—a digital twin, more symbolic than functional.
EXOD’s market cap is $770M, about $240M of which sits on-chain. Exodus is the first SEC-approved “tokenizable” stock—more precisely, the first SEC-approved NYSE listing with tokenization capability—after multiple delays from May to December 2024.
Still, Exodus tokenization is company-specific and non-transferable, so limited relevance to Web3 investors. Robinhood’s product currently resembles a platform-bound derivative, not a fully composable tokenized equity.
3.5 Derivative Models: Gains Network, Helix, Shift
Projects like Gains Network (Arbitrum/Polygon) and Helix (Injective) offer synthetic exposure via perpetuals. No real stock is tokenized; users post stablecoins as collateral, often without KYC, and trade during synchronized U.S. market hours with Chainlink prices and funding to anchor to fair value.
Thus far, no platform has achieved meaningful volume. Synthetix and Mirror saw similar limits; today Helix’s synthetic U.S. equities volume is <$10M/day, Gains is <$2M/day. Reasons: (1) regulatory risk (they function like exchanges enabling U.S. equity exposure sans KYC), and (2) insufficient liquidity depth, since liquidity is internalized and lacks external sources—e.g., even Helix’s top COIN orderbook lacks depth.
On the CEX side, Bybit launched an MT5-based U.S. stocks platform using perpetual-like mechanics (index exposure, stablecoin collateral).
Shift proposes Asset-Referenced Tokens (ARTs) and claims KYC-free U.S. stock access. Shift buys U.S. shares, custodies them (e.g., Interactive Brokers), and uses Chainlink proof-of-reserves to verify assets, then issues ARTs pegged to the stock—not tokenized equity. Holders can buy ARTs without KYC, as ARTs confer no ownership, dividend, or voting rights. How Shift will maintain a strict peg under existing rules is unclear, and final design/implementation remains to be seen. Still, it’s an interesting attempt to exploit a regulatory seam.
4. Infrastructure for Tokenized U.S. Stocks
4.1 Trading Infrastructure
Liquidity venues are indispensable. Without counterparties, even great products fail. Today, CEXs and DEXs co-evolve to form the market.
CEX strengths: operational expertise, user bases in the millions, and market-maker relationships that bootstrap depth. Users benefit from familiar, fast, polished UIs.
But CEXs alone can’t unlock tokenization’s full value. DEXs deliver disintermediated trading and user-controlled custody. AMM DEXs are especially apt: LPs pair tokenized stocks with stables, enabling anytime swaps. Backed’s ~33% APY pools incentivize LPs, creating a virtuous cycle: more liquidity → better pricing → more users.
CEXs and DEXs are complementary. CEXs seed initial depth and users; DEXs layer on composability and permissionless activity. xStocks’ dual-track partnerships reflect this: capture deep and broad liquidity by leveraging both.
4.2 The DeFi Protocol Stack
Trading venues answer “where to buy/sell.” DeFi answers “what can I do next?” That’s where tokenized stocks’ true potential appears.
Collateralized lending is the most direct use. Off-chain, stock-backed loans are slow and paperwork-heavy. On-chain, smart contracts collateralize instantly. Kamino’s acceptance of xStocks as collateral is an early proof point.
Oracles are critical. Accurate, real-time prices from Chainlink and others enable safe lending and fair AMM pricing and also power proof-of-reserves to attest 1:1 backing.
Stablecoins and on/off-ramps are the bloodstream: most users buy with USDC/USDT; fiat–crypto bridges smooth UX. Dinari’s USD+ reflects a push to streamline payments.
For now, few protocols deeply integrate tokenized stocks beyond LP use. Regulatory ambiguity keeps lending, derivatives, and asset-management protocols cautious. Clearer SEC guidance and a few successful case studies could catalyze rapid adoption—and a wave of novel products.
4.3 Wallet Infrastructure
Even with venues and protocols, mass adoption needs friendly wallets. WaaS (Wallet-as-a-Service) is crucial to make tokenized equities mainstream.
Traditional self-custody is secure but unforgiving: seed phrases, gas management, failed TX debugging—non-starters for mainstream users.
WaaS hides the complexity while preserving blockchain benefits: email/social login, managed key workflows, and familiar, banking-app-like UX. Exodus x Magic Eden points in this direction.
There’s a trade-off: some centralization for usability. The win condition is striking the right balance. Most mainstream users prefer convenient yet reasonably safe over fully trustless.
To truly grow, tokenized equities must be trivial for stock-native users who don’t care about crypto. WaaS and account abstraction bridge that gap. Technology recedes; familiar UX prevails.
5. Limits Today, Outlook Tomorrow
5.1 Liquidity Is Scarce
The biggest problem is liquidity. Backed’s TVL is ~$8M; Dinari’s is far smaller—dust compared to TradFi. Without depth, users can’t get in or out cleanly.
Helix’s synthetic equities volumes <$10M/day underline the issue; even top COIN books lack depth. Large orders move price. Serious capital stays away.
It’s a negative loop. Low depth → few users → even lower depth. Incentives like ~33% APY help but aren’t enough if issuers won’t warehouse risk or rules remain cloudy.
This is why xStocks is compelling: Kraken and Bybit can import existing market makers and users, while multiple DEXs add on-chain depth. The surest fix is to enlist players who already have liquidity. As rules clarify and TradFi enters, liquidity likely follows.
5.2 Narrow Use Cases
Today, tokenized stocks mostly sit in LP pools. The vaunted composability hasn’t fully materialized—few live examples in lending, derivatives, or structured products.
Kamino’s collateralization of xStocks is the first step beyond LP. Dinari’s model can’t even be composable—no on-chain transfers, U.S. hours only—functionally a blockchain-skinned brokerage.
Backed is freer but hasn’t crossed the next chasm. Protocols fear securities-law tripwires. With guidance and wins, expect an explosion of products we can’t yet predict.
5.3 The KYC Dilemma
KYC is mandatory in securities; Dinari, Backed, and xStocks all KYC at issuance. The challenge is the secondary market.
Backed allows free on-chain trading, letting non-KYC users buy bSTOCK on DEXs—practically bypassing KYC and explaining its stronger traction among Web3 natives.
But the SEC may balk. Solana’s Project Open proposes KYC for all holders. If adopted, Backed-style models must adapt—e.g., enforce KYC checks pre-transfer.
Tech like account abstraction and on-chain identity attestations can help (re-usable KYC proofs), but they’re early and not yet regulator-standard. The market must balance decentralization with compliance; lean too far either way and you lose the plot.
5.4 What Winning Platforms Need
- Liquidity—non-negotiable. Partner with players who already have it (Kraken, Bybit, market makers).
- Regulatory clarity—either design compliance-first (Dinari) or secure approvals where possible (Backed), while engaging U.S. regulators.
- Composability—go beyond “stocks on chain” to collateral, structured exposure, leverage, indices.
- UX—WaaS and familiar flows so mainstream users can invest without thinking about blockchain.
5.5 Exchange-Centric vs. DeFi-Native
Two approaches compete: exchange-centric (Kraken/Coinbase) leveraging infra, users, KYC, and market makers; and DeFi-native (Backed) emphasizing decentralization and open composability.
In practice, they’re converging. xStocks shows CEX liquidity + DEX composability + DeFi utility (Kamino). Power users will go on-chain; mainstream will stay on exchanges. A hybrid model likely wins.
5.6 Liquidity Decides Everything
History rhymes. In 2020, Synthetix, Mirror, and Gains launched equity exposure, but FTX dominated because it was an exchange with massive liquidity and users. Tech wasn’t the differentiator; depth was.
Today, Backed has solid tech and approvals but limited TVL. xStocks, with Kraken/Bybit, can flood the market with depth and seize share. If Coinbase enters successfully, the game changes again—U.S. scale and KYC’d users could solve liquidity overnight.
5.7 Looking to 2026
The swing factor is regulation. If the SEC provides clear rules and greenlights U.S. offerings from Coinbase/Kraken, market cap could jump from hundreds of millions to multiple billions. TradFi participation would accelerate, solving liquidity.
DeFi integration will broaden—collateral, leverage, structured notes, novel hybrids. Portfolio tools mixing stocks, crypto, and stables will emerge.
UX will improve dramatically. With WaaS and account abstraction, users will trade tokenized stocks without noticing the chain. As mainstream investors arrive, tokenization hits the mass-market. Robinhood-like brokers will ship more blockchain-based products, blurring boundaries.
Risks remain: delayed rules, licensing setbacks, security incidents, or lobbying that tightens requirements.
But the arc is clear: tokenized equities are no longer a lab experiment. Kraken, Robinhood, and Coinbase are here; the SEC is talking; tech is ready; demand is obvious. Solve for clarity and liquidity, and the market enters its next phase.
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