Stock Tokenization: Market Innovation in the Blockchain Era

In the late 1980s, physicist Nathan Mostow proposed an innovative idea while working on a securities trading platform in the United States. He envisioned creating a product that could be traded like a single stock but would track the S&P 500 index. This concept was eventually realized in 1993, when the S&P Depositary Receipts (SPDR) debuted under the SPY ticker, becoming the first traded platform exchange fund (ETF).

Today, this story is being replayed in the Blockchain field. Multiple investment platforms have started offering tokenized stocks, which are blockchain-based assets designed to reflect the stock prices of companies like Tesla and Nvidia. These tokens are viewed as a way to gain price exposure rather than traditional equity.

Tokenization of stocks offers new opportunities for global investors, especially those who find it difficult to access the U.S. stock market. Through on-chain trading, these tokens eliminate many barriers in traditional investing, such as high minimum balances and lengthy settlement periods. However, regulatory and geographical restrictions still exist and may affect their practical application in certain regions.

Essentially, tokenized stocks have similarities with derivatives such as futures and options. They provide investors with a way to gain price exposure without directly holding the underlying asset. This new type of derivative may undergo a development trajectory from speculation testing to mainstream acceptance.

A unique feature of tokenized stocks is their 24/7 trading capability. Traditional stock markets have fixed opening hours, whereas tokenized stocks may react to news when the stock market is closed, providing new opportunities for investors while also presenting challenges in pricing and liquidity.

Currently, the underlying infrastructure and regulatory framework for tokenized stocks are still under development. Different platforms adopt various approaches, with some issuing under the European framework and others relying on smart contracts and offshore custodians. Regulatory agencies, especially the U.S. Securities and Exchange Commission, have yet to make a clear statement on this emerging field.

Despite the uncertainty, the demand for tokenized stocks is evident. They may not change the fundamental economics of stock ownership, but they are simplifying the participation experience. For many investors, especially retail investors, this convenience may be more important than the specific structure of the product.

The development of tokenized stocks reflects the market's demand for more convenient and flexible investment tools. Like ETFs, these new tools may eventually become part of the financial infrastructure. However, whether they can stand firm during market turbulence remains to be seen.

Overall, tokenized stocks represent a new frontier of financial innovation. They are not just substitutes for stocks, but rather a new way for global investors to participate. With advancements in technology and clearer regulations, this field may see broader applications and acceptance.