Author: Alex Xu
Narrative Background
Just a few days ago, Coinbase CEO Brian Armstrong and CFO Alesia Haas both stated that they are considering tokenizing Coinbase's stock to enable trading of US stocks on the Base blockchain.
In this monotonous crypto cycle dominated by PVP, we finally see the dawn of some interesting things.
If the progress goes smoothly, US stocks will become the third major RWA asset after stablecoins (USDT, USDC) and government bonds (Buidl). If the regulatory and compliance framework is clear, and there is sufficient freedom for US stock tokens, tokenized US stock assets should have the hope of surpassing the current scale of tokenized government bonds in the short term, as they provide the high volatility and speculative nature that crypto users prefer.
Business Logic
Compared to the narratives of Crypto AI agents and desci (decentralized research) that have emerged in this cycle, the value proposition of on-chain US stocks is clear, and the demand and supply sides are very clear:
The value proposition of US stocks on-chain is similar to other DeFi products, reflected in a larger free market and superior composability:
- Expanded trading market scale: Providing a 24/7, borderless, permissionless trading venue for US stocks, which the Nasdaq and NYSE currently cannot do (although Nasdaq has already applied for 24-hour trading, but it is expected to be realized until the second half of 2026).
- Superior composability: By combining with existing DeFi infrastructure, US stock assets can be used as collateral, margin, to construct indices and fund products, and many unimaginable use cases can be derived.
The demand and supply sides are also very clear:
- Supply side (US-listed companies): Through the borderless blockchain platform, they can reach potential investors from around the world and gain more potential buying power.
- Demand side (investors): Many investors who were previously unable to trade US stocks directly for various reasons can now directly allocate and speculate on US stock assets through the blockchain.
In fact, the idea of on-chain US stocks has been tried before, such as Coinbase's attempt to list its stock token ($COIN) as a security token in 2020, but it was shelved due to regulatory barriers from the US SEC.
In the previous DeFi boom, we also saw synthetic US stock assets on Terra's Mirror and Ethereum's Synthetix, but they gradually faded due to the regulatory threat from the SEC.
Even earlier, the security token issuance project Polymath, founded and funded in 2017, had promoted the concept of STO (Security Token Offering), where companies issue tokens representing securities rights through blockchain technology, and investors obtain rights similar to traditional financial instruments such as stocks and bonds. This concept had once gained considerable market attention.
Now, the main driving force for the resurgence of the STO concept and the feasibility of on-chain US stocks is the substantive attitude shift of the post-election SEC, from past strong regulatory confrontation to innovation support within the compliance framework.
Within the foreseeable future, STO may be one of the few crypto business narratives in this cycle that has a significant impact, a sound business logic, and a relatively high ceiling.
Related Targets
Based on the background and logic of the narrative, we can sort out the relevant targets in the crypto secondary market.
In fact, there are not many well-established STO concept projects that have already issued tokens and gone online.
The most relevant one is likely Polymath, which was founded in 2017 and was the earliest to provide STO concept education in the crypto industry. It later launched the Polymesh blockchain, a permissioned public blockchain designed for compliant assets (such as security tokens), with built-in identity authentication, compliance checks, privacy protection, governance, and instant settlement.
Polymesh's token, Polyx, has already been listed on Binance, with a market cap and fully diluted valuation both over 100 million, but the market value is not high.
In addition, projects like Ondo, which have historically focused on tokenizing debt assets, can also adjust their products according to compliance regulations to serve the tokenization of stocks. Moreover, Ondo is closely associated with the Trump family and may receive more overt or covert conveniences, or even endorsement from Trump family members (although the marginal impact of such actions is increasingly weaker).
Chainlink has also done a lot of work in connecting traditional financial institutions and blockchains, and as a mainstream oracle solution and security token service provider, it should also benefit from this.
Risks to be Aware of
The reason the title of this article uses the phrase "hidden but not yet revealed" to describe this wave of STO narratives is that there are still many uncertainties about whether it can take off. Although the new SEC team's actions (withdrawing a large number of crypto lawsuits) suggest a more relaxed attitude towards STO, it is still unknown when a clear compliance framework for guiding STO will be introduced, which determines the speed at which companies like Coinbase can follow up and push forward.
The most recent observation event is the first roundtable discussion held by the SEC's crypto working group on May 21, the theme of which is "Defining the Status of Securities: History and Future Pathways", and one of the agenda items is the design of the compliance path.
More notably, one of the keynote speakers at this event is Paul Grewal, the Chief Legal Officer of Coinbase, a key player in the emerging STO narrative.
If the release of the STO-related compliance framework is slow, and the waiting time is too long, the current undercurrent narrative may be delayed or even extinguished.
