Narrative Background
Just a few days ago, Coinbase's 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 with PVP as the main theme, 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 sufficient freedom is provided for US stock tokens, tokenized US stock assets should have the hope of surpassing the current scale of government bond-based tokens in the short term, as they offer the crypto users' preferred high volatility and speculative nature.
Business Logic
Compared to the narratives that have emerged in this cycle, such as Crypto AI agents and desci (decentralized scientific research), the value proposition of on-chain US stocks is clear, and the demand and supply sides' needs are very clear:
The value proposition of listing US stocks on the chain is similar to other DeFi products, reflected in a larger free market and superior composability:
- Expanding the scale of the trading market: 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 other existing DeFi infrastructure, US stock assets can be used as collateral, margin, to construct indices and fund products, and derive many unimaginable use cases at the moment
The demand and supply sides' needs are also very clear:
- Supply side (US-listed companies): Reaching potential investors from around the world through the borderless blockchain platform, gaining more potential buying power
- Demand side (investors): Many investors who were previously unable to trade US stocks directly can now directly allocate and speculate on US stock assets through the blockchain
In fact, the idea of listing US stocks on the chain has been tried before. For example, Coinbase actually tried to go public by issuing security tokens (representing its $COIN stock) as early as 2020, but was shelved due to regulatory barriers from the US SEC.
During the previous DeFi boom, we also saw synthetic US stock assets in products like Terra's Mirror and Ethereum's Synthetix, but they gradually faded due to the regulatory threat from the SEC.
Even earlier, the security token offering (STO) project Polymath, founded and funded in 2017, had promoted the concept of STO, where companies issue tokens representing securities through blockchain technology, and investors obtain rights similar to traditional financial instruments like stocks and bonds (such as dividends and voting rights), which also gained considerable market attention at the time.
Now, the main driving force for the STO concept to regain momentum and the feasibility of listing US stocks on the chain is the substantive shift in the SEC's attitude after the change of administration, from past strong regulation and confrontation to supporting innovation 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 one of the earliest to provide STO concept education in the crypto industry. It later launched the Polymesh blockchain, a permissioned public blockchain specifically designed for compliant assets (such as security tokens), with built-in identity authentication, compliance checks, privacy protection, governance, and real-time settlement functions.
Polymesh's token, Polyx, has already been listed on Binance, with a current market cap and fully diluted valuation both over 100 million, but the market value is not high.
In addition, projects like Ondo, although they have previously focused on tokenizing debt assets, their products can also be adjusted according to compliance regulations to serve the tokenization of stocks. And Ondo is closely associated with the Trump family, which may bring more overt or covert conveniences, or even endorsements from Trump family members (although the marginal impact of such actions is becoming weaker).
Chainlink has also done a lot of work in connecting traditional financial institutions and blockchains, as a mainstream oracle solution and security token service provider, which should also benefit from this.
Risks to be Aware of
The reason why 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 gain momentum. Although the new SEC administration's actions (such as withdrawing a large number of crypto lawsuits) suggest a more lenient attitude towards STO, when the clear compliance framework for guiding STO will be released remains unknown, and this will determine the speed at which companies like Coinbase can follow up and advance.
The most recent observation event is the SEC Crypto Working Group's first roundtable meeting on March 21, where the topic is "Defining the Status of Securities: Historical 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 delayed, and the waiting time is too long, the current undercurrent of the narrative may lose momentum or even dissipate.
