The interest in trading stocks on blockchain platforms is undeniable.
Backed Finance, based in Switzerland, has launched its tokenized U.S. stock product, xStocks, which has reached over $300 million in trading volume in under a month on platforms like Bybit, Kraken, and Solana’s decentralized finance (DeFi) networks.
xStocks are tokens available around the clock, representing shares in publicly listed U.S. companies. Each token is backed one-to-one by the respective stock held by a licensed custodian, providing investors access to traditional assets while maintaining transparency and security.
Issued by Backed Finance, these tokens conform to Switzerland’s DLT regulatory standards and are created using the Solana Program Library (SPL) token standard, enabling swift transfers and compatibility with Web3 and decentralized applications.
“xStocks have surpassed $300 million in total on-chain transaction volume, highlighting the growing demand for tokenized stocks,” xStocks stated on X, suggesting this is “just the beginning” and that volumes could potentially double.
The rising interest in tokenized stocks reflects a larger trend of merging traditional markets with decentralized finance. Recent offerings by major players like Robinhood and Gemini, providing tokenized U.S. stocks to European clients, underscore this shift.
Skepticism Surrounds Tokenized Equities
Despite the innovation of moving stocks to blockchain and offering international investor access, some remain skeptical.
Anton Golub, COO at FreedX crypto exchange, argues that tokenized equities are simply a facade, not actual stocks.
“You’re not purchasing Tesla itself. You’re acquiring a token that mirrors Tesla, issued by an offshore structure that holds the underlying shares,” Golub remarked on LinkedIn.
Golub further explained that owning tokenized equities doesn’t grant voting rights, direct stock custody, or true ownership, similar to the situation with stock CFDs in Europe.
A Contract for Difference (CFD) is an agreement where the buyer pays the seller the difference between the current asset value and its value at contract initiation.
Stock CFDs are fractional, allowing traders to engage with portions of an asset’s value with leverage, enabling larger position control with less capital.
“European CFD brokers have offered trading in fractional U.S. stocks for years. You can trade Tesla, Apple, or the S&P 500 with 5x leverage and full liquidity,” Golub pointed out. “Tokenization doesn’t democratize access; it merely reframes CFDs with a tokenization narrative.”
There are also concerns about reduced liquidity during weekends. Liquidity refers to the ease of executing substantial buy and sell orders at stable prices.
“These new products still face significant challenges,” Parsec Finance noted in a recent newsletter. “Liquidity initiation issues (liquidity encourages volume but depends on market makers willing to take risks and believe in real usage), with spreads likely to be wide and erratic over weekends.”
Further Reading: Backed Finance Introduces Tokenized Stocks on Bybit, Kraken, and Solana DeFi Protocols
