Tokenizing U.S. Stocks and STOs: A Story Yet to Unfold
TechFlow Selected TechFlow Selected
Tokenizing U.S. Stocks and STOs: A Story Yet to Unfold
If progress goes smoothly, U.S. stocks will become the third major category of RWA assets after stablecoins (USDT, USDC) and government bonds (Buidl).
Navigating Web3 tides with focused insightsNarrative Background
Just recently, Coinbase CEO Brian Armstrong and CFO Alesia Haas both indicated they are considering tokenizing Coinbase's stock to enable trading of U.S. equities on the Base blockchain.
In this innovation-starved crypto cycle dominated by PVP (player versus player) narratives, we are finally seeing glimmers of something genuinely interesting.
If successfully implemented, tokenized U.S. equities could become the third major category of RWA (real-world asset), following stablecoins (USDT, USDC) and tokenized Treasuries (Buidl). If regulatory and compliance frameworks provide sufficient clarity and flexibility, tokenized equities could surpass current tokenized Treasury assets in scale within a short timeframe—thanks to their higher volatility and speculative appeal, which resonate more strongly with crypto-native users.
Business Logic
Compared to other narratives emerging in this cycle—such as Crypto AI agents or DeSci (decentralized science)—on-chain U.S. equities offer a clear value proposition with well-defined supply and demand dynamics. Specifically:
The value proposition of on-chain equities is similar to that of other DeFi products: greater free-market access and superior composability:
1. Expanded market reach: Provides a 7×24, borderless, permissionless trading venue for U.S. stocks—a capability that even Nasdaq and NYSE currently lack (although Nasdaq has applied for 24-hour trading, it’s not expected to be available until late 2026).
2. Superior composability: By integrating with existing DeFi infrastructure, tokenized equity assets can serve as collateral, margin, or components of index and fund products—enabling innovative use cases yet to be imagined.
Supply and demand dynamics are also clearly defined:
Suppliers (U.S. publicly listed companies): Gain access to a global investor base via a borderless blockchain platform, expanding potential buyer interest.
Demand side (investors): Many investors who previously faced barriers to direct U.S. equity access can now directly allocate capital or speculate on these assets through blockchain.
In fact, attempts at tokenizing U.S. equities have been made before. For instance, Coinbase itself attempted to go public in 2020 via a security token representing its $COIN stock, but the plan was shelved due to regulatory obstacles from the U.S. SEC.
During the last DeFi boom, synthetic versions of U.S. stocks appeared on platforms like Terra’s Mirror and Ethereum’s Synthetix, but these eventually faded under regulatory pressure from the SEC.
Earlier still, Polymath—a security token issuance project founded and funded in 2017—popularized the concept of STO (Security Token Offering), where companies issue blockchain-based tokens representing securities. Investors would receive rights akin to traditional financial instruments (e.g., dividends, voting rights), generating notable market interest at the time.
Today, the resurgence of STO and feasibility of on-chain equities are primarily driven by a tangible shift in the post-transition SEC’s stance—from previous aggressive enforcement toward supporting innovation within a compliant framework.
Within visible horizon, STO may be one of the few high-impact, logically sound, and scalable narratives in this crypto cycle.
Related Assets
Based on the narrative background and logic, we can identify relevant assets in the crypto secondary market.
In reality, there are very few native STO projects that have issued tokens and been listed on major exchanges.
The most closely related candidate is Polymath, mentioned earlier, which was established in 2017 and pioneered STO education in the crypto space. It later launched Polymesh—a public, permissioned blockchain specifically designed for regulated assets such as security tokens, featuring built-in identity verification, compliance checks, privacy protection, governance, and instant settlement.
Polymesh enjoys a strong industry reputation. BlackRock issued a $500 million digital bond on Polymesh in November last year, and real estate giant CBRE has used it to tokenize property shares.
Polymesh’s native token, POLYX, is already listed on Binance, with both MC and FDV exceeding $100 million—still relatively low in market cap.
Additionally, RWA-focused projects like Ondo—though primarily active in tokenizing Treasuries—could adapt their offerings under compliance rules to support equity tokenization. Ondo also maintains close ties with the Trump family, potentially gaining implicit or explicit advantages, including endorsements (though such effects are increasingly marginal).
Chainlink has done extensive work bridging traditional finance institutions with blockchain networks. As a leading oracle solution and provider of security tokenization services, it stands to benefit theoretically from this trend.
Risks to Consider
The reason this article uses the phrase "dormant but imminent" to describe the current STO narrative is because its momentum remains uncertain. While the new SEC leadership’s actions—such as dropping numerous crypto lawsuits—suggest a more lenient stance toward STOs, the timing for issuing clear compliance guidelines remains unknown. This will directly affect how quickly companies like Coinbase can move forward—and must be closely monitored.
A key upcoming event to watch is the first roundtable meeting of the SEC’s Crypto Task Force on May 21st. The roundtable was established precisely to develop clearer regulatory frameworks. The theme of this inaugural session is “Defining Securities Status: Historical and Future Pathways,” with one agenda item being the design of compliant pathways.
Notably, one of the keynote speakers is Paul Grewal, Chief Legal Officer of Coinbase—the very company spearheading this STO narrative.
If the rollout of STO-related compliance frameworks is delayed too long, the current undercurrent of excitement may lose momentum or even dissipate entirely.
📜 Disclaimer: Information shared in this channel, along with the author’s commentary, may contain factual inaccuracies or subjective opinions, and should be treated for reference only. Discussion and corrections via comments are welcome.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
Alex Xu
