Narrative Background

In this stagnant crypto cycle dominated by PVP dynamics, we are finally seeing the dawn of something truly interesting.

If regulatory and compliance frameworks provide sufficient clarity and freedom for tokenized U.S. stocks, these assets could potentially surpass tokenized government bonds in the short term, as they offer the high volatility and speculative nature that crypto users prefer.

Business Logic

Compared to narratives like Crypto AI agents and DeSci (decentralized science) that have emerged in this cycle, the value proposition of on-chain U.S. stocks is clear, with well-defined demand from both supply and demand sides.

The value proposition of tokenized U.S. stocks is similar to other DeFi products, characterized by a more open market and superior composability:

1. Expanded market access: It provides a 24/7, borderless, and permissionless trading venue for U.S. stocks—something Nasdaq and the NYSE currently cannot offer (even though Nasdaq has applied for 24-hour trading, it is expected to be implemented only in the second half of 2026).

2. Superior composability: By integrating with existing DeFi infrastructure, tokenized U.S. stocks can be used as collateral, margin, or components in index and fund products, enabling innovative financial applications beyond current imagination.

The demand from both sides is also clear:

Supply side (publicly traded U.S. companies): They can access a global investor base through a borderless blockchain platform, increasing potential buy-side liquidity.

Demand side (investors): Many investors who previously couldn’t trade U.S. stocks due to various restrictions can now directly gain exposure and speculate on these assets via blockchain.

In fact, the concept of tokenized U.S. stocks has been attempted before. Coinbase had already explored issuing security tokens representing its stock ($COIN) in 2020, but the initiative was stalled due to regulatory barriers from the SEC.

During the last DeFi boom, projects like Terra’s Mirror and Ethereum’s Synthetix introduced synthetic U.S. stock assets, but they gradually declined under SEC regulatory pressure.

Even earlier, Polymath, a security token issuance project founded and funded in 2017, promoted the concept of Security Token Offerings (STOs), where companies could issue blockchain-based tokens representing securities, granting investors rights similar to traditional financial instruments such as stocks and bonds (e.g., dividends and voting rights). At the time, STOs gained significant market attention.

Today, what makes STOs relevant again and on-chain U.S. stocks feasible is a fundamental shift in the SEC’s stance following leadership changes. The focus has moved from rigid enforcement to fostering innovation within regulatory frameworks.

Looking ahead, STOs may be one of the few crypto narratives this cycle that have strong business logic, significant impact potential, and a high growth ceiling.

Relevant Projects

Based on the narrative background and logic, we can outline the relevant projects in the crypto secondary market. In reality, there are very few established STO-related projects that have already issued tokens and been listed on major exchanges. The most relevant one is likely Polymath, which was founded in 2017 and was among the first to introduce the STO concept to the crypto industry. Polymath later launched Polymesh, a permissioned public blockchain specifically designed for compliant assets such as security tokens, featuring built-in identity verification, compliance checks, privacy protection, governance, and instant settlement. Polymesh’s token, Polyx, is already listed on Binance, with both its market cap (MC) and fully diluted valuation (FDV) around $100 million, making it a relatively low-cap asset.

Additionally, RWA-focused projects like Ondo, which has primarily been involved in tokenizing government bonds, could pivot its products to accommodate stock tokenization under regulatory guidelines. Ondo also has close ties to the Trump family, potentially granting it both direct and indirect advantages, including possible endorsements from Trump family members—though the marginal impact of such moves is diminishing.

Chainlink has also been actively working on bridging traditional financial institutions with blockchain networks. As the leading oracle solution and a key player in securities tokenization services, it is well-positioned to benefit from this trend.

Risks to Consider

The reason this article describes the STO narrative as “latent and yet to emerge” is that there are still many uncertainties regarding its momentum. Although the new SEC leadership has shown a more lenient stance toward STOs—evidenced by the withdrawal of multiple crypto lawsuits—a clear regulatory framework for STOs has yet to be introduced. The timing of its release remains uncertain and requires close monitoring, as it will determine how quickly companies like Coinbase can follow through and advance their initiatives.
A key upcoming event to watch is the SEC Crypto Working Group’s first roundtable meeting on the 21st of this month. This roundtable is specifically designed to establish a clearer regulatory framework. The theme of the first session is “Defining Security Status: Historical and Future Pathways,” and one of the key agenda items is the design of compliance pathways.
Notably, one of the featured speakers is Paul Grewal, the Chief Legal Officer of Coinbase—the central player in this emerging STO narrative.
If the rollout of STO-related regulatory frameworks is slow and the waiting period becomes too long, the current undercurrents of this narrative may be delayed or even dissipate entirely.

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