Remember when everything onchain was a meme?
Yeah. Everything. Well, that meme is becoming a reality. You can now swap your meme coins for
tokenized Tesla or Nvidia stock, all backed one for one by real shares without coming in contact
with a broker and in some cases without KYC. In this video, we’ll dive into tokenized stocks,
how the worlds of tradi and crypto are coming closer together, where you can get involved right
now, and also the potential risks to be aware of before engaging in this new frontier. My name
is Nick and this is a video you cannot afford to miss. Before we start, a quick heads up. Although
we’re looking at a new financial product today, I am certainly not a financial advisor and this
is not financial advice. We are just sharing information for education and entertainment. So,
always do your own research before investing. Now, let’s get into it. Black Rockck CEO Larry
Frink has been telling anyone who will listen, which is pretty much everyone over the last
couple of years, that asset tokenization is the future. But why would we want to tokenize stocks?
I mean, who’s actually doing this and how are they doing it? Well, let’s first consider for a brief
moment how Trady works under the hood. Traditional equities still largely follow a timetable
stamped many decades ago. trade today, then wait hours or even days while clearing houses,
reconcile ledgers, and paper certificates sleep in vaults. Put that same share on a blockchain,
however, and the clock compresses the process into seconds. And what’s more, the rails are open
24/7. And this fixes a structural pain point for anyone who’s had a Friday Phil stuck in a clearing
limbo while shocking headlines nuke the markets. So tokenized stocks can give us a realtime
settlement and some vastly improved operational efficiency. What was once an ordeal involving
a myriad of middlemen and overlapping systems now becomes much more streamlined and efficient.
Not only that, but the access to markets at any given time can also extend to market access in any
given place. Because these tokens will be tradable on decentralized exchanges, it offers individuals
worldwide access to markets they may not have had otherwise. And what’s more, because the share
lives as a crypto token, fractional ownership is also coming as a standard feature by design.
Own 0.33 of a tokenized Tesla stock instead of the whole unit, or drop that fraction into a DeFi
lending market as collateral. So, who’s bringing this to the market? Well, for the crypto natives,
backed Finance grabbed headlines recently with its newly launched X stocks now tradable around the
clock from anywhere and in any fractional size you want on Salana. Zurich based backed Finance
is a regulated token issuer operating out of Switzerland. Obviously, it keeps the underlying
Apple, Tesla or Nvidia shares with licensed custodians and then it mints one token per share.
Holders can then swap those tokens, confident each represents a fully collateralized share. Each
Xtock is engineered to mirror its Wall Street twin through a classic peg and arbitrage loop. Back
Finance mints one token only after a regulated custodian locks the matching share and anyone,
typically professional market makers, can swap tokens for the underlying stock or vice versa.
When the onchain price on Bybit drifts from the quote on the New York Stock Exchange, arbitrage
desks step in. If XTSLA trades at a discount, they redeem tokens for real Tesla shares until
par returns. If it trades rich, they create new tokens and sell them down. That interplay keeps
the secondary 24-hour crypto venue glued to the primary market that opens 9:30 a.m. to 400 p.m.
in New York. While off hours trading effectively becomes something akin to a live prediction
market for the next bell. Across the Atlantic, San Francisco startup dinari took a slightly
different route. On 26th of June this year, it became the first company to win a US broker dealer
license solely for tokenized equities, clearing the way to mint its own ERC20 Dshares, each backed
one for one by stock held with a US custodian. And of course, we also have retail giant Robin
Hood joining the frey, recently unveiling more than 200 tokenized US stocks and ETFs on Arbitum
for EU users with plans to migrate all of those assets onto its own bespoke RH chain later this
year. To be clear, none of these projects share custody stacks or liquidity pools. Instead, they
form proof points to which regulators on both sides of the pond are starting to give a big green
light. So, stack those upgrades together and the pitch writes itself. Faster finality, borderless
participation, fractionalized ownership as a standard feature, plugandplay utility, and big
players getting involved. Tokenized stocks don’t appear to be a side project for crypto or tradefi.
They’re becoming the new rails that Legacy Equities have been waiting for. All we’ve been
waiting for is for the rest of you to subscribe. Apparently, 34% of the people who watch these
videos are not subscribed. So, if that’s you, hit the subscribe button as well as the bell for
good measure. And if you’re enjoying this video so far, fire up those likes. Back to the vid.
So, picture this. Instead of the traditional process that can take hours or days, a Tesla share
moves across a blockchain block in a matter of milliseconds. A standard onchain swap. That near
instant finality is precisely what is happening on Salana with Backed Finance’s X stocks. The
debut list covered over 60 US stocks and ETFs. Every SPL token exists only after BATS Swiss
custodians including Incor bank and Mowaki Bowman segregate an equal number of realworld shares
keeping the onchain supply one for one back. A purpose-built oracle stack brought to the market
by leading oracle solutions provider chain link helps to keep X stocks honest. The architecture
publishes proof of reserve attestations that help us verify that every token remains one for
onebacked. From a user’s perspective, swapping soul for XTSLA feels no different from exchanging
soul for USDC. Liquidity comes through dexes such as radium. So fractionalized slices like 0.03 03
of tokenized Nvidia stock can change hands at 2:00 a.m. on a Sunday after a user was convinced by a
bullish Nvidia thread on X, for example. You may have noticed a key design choice in that process,
the absence of mandatory KYC. This permissionless flow is a bit of a breakthrough for users who
want equity exposure without surrendering their privacy. Certainly a core feature of the original
crypto ethos. And once the tokenized stocks lands in your wallet, the onchain world opens up. As the
market grows, you’ll be able to provide liquidity post as collateral or simply park those tokenized
shares until earning season. DeFi builders are also expected to start building out more creative
use cases for such tokens as the market expands. But let’s be real for a moment. With all the new
tech tokens, chains, and protocols popping up daily, navigating DeFi can feel like a bit of
a maze. For those looking to simplify things, it’s worth checking out Axiom, a trading terminal
designed to simplify your onchain activity. If you’re unfamiliar with Axiom, then be sure to
check out our tutorial on it right over here. And if you want to start trading right now, then hit
this QR code or the link down in the description, which will give you 10% cash back on your trades
for life, as well as two times points multiplier, which will presumably help you get more of
any potential upcoming Axiom airdrop. Now, BAT’s Salana rollout offers a glimpse of equities
upgraded for an always on self-custody world. Instant settlement, 24-hour access, fractional
sizing, and DeFi compostability. No brokerage queue required. But Salana Dexes are not the
only places these tokenized stocks are trading. Kraken became the first major exchange to pipe
BATS X stocks straight into a spot order book, listing those 60 plus tokenized assets and
facilitating withdrawals to onchain wallets, so users can loop those shares back into Salana
DeFi whenever they like. The move flipped a switch for fiat-based traders on sexes. They can now buy
tokenized Apple stock with USD, withdraw that X APL to a Phantom and post it as collateral in
DeFi money markets within minutes. No brokerage lockups, no 4M bell. Bybit followed the same day,
rolling out the same suite of X stock to certain cohorts of its customer base. Bybit’s trading
guide introduces this new tech as a way to access popular tech stocks outside standard market hours.
And this foothold sets the stage for by real a Salana based hybrid DEX bybit is currently
test driving with Q3 mainet target by Real aims to pair central limit order book speed with
onchain finality effectively given the exchange an internal bridge between its custodial users
and the permissionless X stocks pools. Meanwhile, as mentioned earlier, retail titan Robin Hood has
thrown its hat into the proverbial ring with an even bigger splash. More than 200 tokenized US
stocks and ETFs are now live for EU customers with plans to migrate these assets to a bespoke
RH chain, a chain they claim will be optimized for realworld assets. Critics once wondered if
regulators would ever bless onchain equities. Now, one of Silicon Valley’s largest brokers is
issuing them directly. It’s also worth noting that Robin Hood’s tokenized stocks, initially issued
on Arbitum, will only offer 245 access until the firm has its own bespoke chain up and running,
which will then unlock 24/7 trading and full self-custody. Add dinar’s freshly minted US broker
dealer license to the mix of centralized entities, and the message is clear. Regulated venues on both
sides of the Atlantic are not just permitting but actively caught in tokenized equities and the
momentum is only building. Kraken and Bibbit are among the first to get involved along with
Gemini which now offers tokenized micro strategy stock for its users. More sectors are expected
to join this list in the coming months including Coinbase which is currently seeking SEC approval
to offer tokenized equities on its platform. The competition among crypto exchanges to capture this
market share is likely to heat up, but for you, it’s probably best to cut the noise and check out
the Coin Bureau deals page. That’s where you’ll find signup bonuses of up to $100,000, trading fee
discounts of up to 50% and cash backs on deposits of up to 75% on the best crypto exchanges around.
These deals won’t be around for long, so take advantage of them ASAP using this QR code right
here or the link down in the description. Now, so far, all of this sounds great, and indeed, much of
it is. However, as with any new financial product, there are risks and downsides involved that should
not be taken lightly. Tokenized stocks may seem friction-free on the surface, yet the fine print
can still give you a bite. Backed financ’s own terms let its contracts block interactions with
addresses which have been flagged as sanctioned and the issuer can pause or burn tokens if court
orders parties to do so. Compliance firms like TRM Labs note that exchanges or issuers can act
on law enforcement requests to freeze assets linked to flagged wallets. The onchain version of
a bank lockout. In practice, it appears that your XTO is only as censorship resistant as the
address reputation score behind it. Oracle and reserve risk sits next in the queue. Now,
Chainlink’s proof of reserve feed publishes real-time attestations that every token stays one
for one backed, but the oracle itself is a single point of failure that may cause issues with the
whole process. Now, chain link has earned its sterling reputation over the years, facing very
few issues and really being the gold standard for oracles in crypto. However, if price feeds were to
go dark or proof of reserves were somehow spoofed, Dexes could keep trading on erroneous data. And
while backed advertises a system that ensures its Salana based tokens are fully backed and secure,
no system is immune to data outages. Something to which Salana is certainly no stranger to put it
lightly. Then comes liquidity gaps. While volumes for Xark tokens are showing solid growth in their
first week, we are at this stage still talking about only millions in daily volume. Those figures
are of course lunch money next to the billions that churn in the trady world every session.
Depending on the token issuer and market makers, a surprise headline at midnight could possibly leave
sellers staring at nasty spreads that would never appear on a primary exchange. Corporate actions
are another rabbit hole entirely. On one side, dinari promises stable coin dividends or Dshares
only to verified wallets and explicitly says its tokens lack voting rights. At the same time, Bats
finances X stocks merely give economic exposure. In their own final terms, they state, quote,
“Each investor’s rights as a creditor do not consist of any shareholders rights, thus excluding
all rights of attendance, dividends payments, other participation rights, or voting rights.
And if you’re counting on yield or voting power, be sure to read the prospectus line by line
for the tokenized stock you’re choosing to hold. Regulation and geography complicate matters
further. For example, Bybit blocks XT stocks for users in the EA, Australia, Japan, the US, and
the UK. Meaning only KYC cleared residents of places in regions like South America, Africa,
and the UAE can trade them. And there is also the issue of insurance blind spots. Unless the
issuer is a member of the Securities Investor Protection Corporation, tokenized shares typically
sit outside the SIPC coverage, leaving holders on their own if markets get really ugly and broker
dealers implode. A recent compliance FAQ notes that SIPC applies to tokenized securities only
under specific conditions. Specifically, quote, “The tokenized security must be legally registered
with the SEC, meet the definition of a security under federal law, and be held by a broker that
belongs to SIPC.” Finally, as alluded to earlier, we must remember network risk. Salana has
developed a reputation for its tendency to face network issues from time to time. In such
a case, of course, your tokenized stocks are in limbo. If the chain stalls again during market
turbulence, traders could be locked out precisely when they most need liquidity. Consider these
assets together and you get the realworld risk profile for tokenized stocks. Assets that move
at crypto speed, but can still be frozen, deped, illquid, shortchanged on dividends, uninsured,
or even stuck during a network outage. However, we should note that as Tradfi and crypto continue
to merge, many of these issues are expected to be ironed out and or improved as the products
and markets develop. We truly are in the early innings here. So, treat X stocks as the leap
forward for market tech that they are. Just keep one eye on the legal plumbing, the price
feeds, and the chain’s status page beneath that glossy user interface. But where does all of
this go from here? Tokenized stocks feel new, yet they already point to something systemic.
McKenzie’s base case model puts the value of all tokenized financial assets or realworld assets at
about $2 trillion by 2030 with a blue sky scenario twice that size. Ripple and Boston Consulting
Group are much bolder, projecting an $18.9 trillion by 2033 as bonds, money market funds, and
equities migrate onchain. Those growth curves also seem to steepen every time a regulator opens the
door. Simply put, when we have regulatory clarity, it pulls in capital. As we’ve seen, centralized
venues, both Tradf Native and Cryptooriented are scrambling to frontr run that flow as excitement
builds. Robin Hood, Bybit, Kraken, Gemini will soon be joined by competitors looking to carve out
a slice of this market. On the crypto native side, Salana looks like the early liquidity magnet,
a fast network that currently averages over 100 million transactions and more than 3
million active addresses per day. Salana is primed to benefit from the growth of these
new products. NASDAQ issues see hundreds of billions of dollars in trading volume each
trading day. So, diverting even a small 1% of that flow onto Salana would be gamechanging.
Although of course Salana is not alone here and we expect more chains to see tokenized equities
boosting volumes in the future. Meanwhile, the product set is also expected to grow. Think
customized baskets that rebalance automatically, lending markets that accept those baskets as
collateral, and market neutral funds utilizing such products to borrow USDC without touching a
prime broker. Behind the scenes, projects such as Wormhole are building permissioned lanes that
enable cross-chain transfers and interoperability. We could see a future where Robin Hood’s arbitum
pool and backed Salana pool can arbitrage each other like two arms on the same global exchange.
But I digress and it’s important to remember that nothing is guaranteed. The risks and downsides are
certainly also there as we’ve discussed. However, we should reiterate that these are the early
days for tokenized stocks and they are part of what is arguably crypto’s most important
and promising sector in terms of growth, namely RWAs or real world assets. The direction
of travel is hard to miss. A decade ago, everything on chain was a meme. Now, we have
massive institutions worldwide stumbling over each other to ensure these memes do not remain dreams.
If the likes of BAT and dinari are version 1.0, version 2.0 will feel like a frictionfree
everything exchange where stocks, bonds, commodities, yield bearing stable coins, and
more can be swapped in a single click and under a single roof. Now, if you enjoyed that video,
don’t forget to check out our latest one right over here. And if you’re not subscribed to the
channel yet, you can do that right over here. That’s me for now. Thank you guys very much
for watching and I will see you again soon.
