Author: Airis.N
Our regulatory framework should not be shackled by past experiences — that is ruthless towards a new era. The future is rushing in, and the world will not wait. — Paul Atkins in a speech for Project Crypto.
We have all witnessed the success of Circle's listing this year, but who remembers that just two years ago, it experienced a significant de-pegging, with USDC once de-pegging to 0.87 dollars.
At that time, Circle had $3.3 billion in reserves deposited in SVB (Silicon Valley Bank), while SVB encountered a financial crisis on March 8, with its stock price plummeting 60% that day, triggering a chain panic among Silicon Valley startups and institutional investors. In the following 48 hours, investors in SVB faced a series of blows from circuit breakers, suspensions, and regulatory takeovers, ultimately leading to the bank's closure on March 10. This caused Circle to suffer as well, and USDC lost its peg.
However, those investors holding SVB stocks could only watch the market value in their accounts evaporate every night; the quick ones might take losses and sell off on Thursday morning, while the slower ones were forced to zero out. The holders of $USDC were completely different; during the weekend of SVB's closure, people in web3 were frantically arbitraging through platforms like AAVE and Curve. For example, one wallet address made a successful profit of $16.5 million by exchanging USDT for USDC/DAI during this period. Oh right, it was Sun's wallet.
This comparison of 'same source storm, different outcomes' is exactly what Paul Atkins wanted to express in the introduction: the deficiencies of traditional financial markets and the efficiency revolution of a new round of financial markets, yes, I mean tokenized stocks.
Restrictions of the traditional stock market
Time restrictions: For US stocks, trading is only allowed from Monday to Friday, 9:30 AM to 4:00 PM (EST), with limited liquidity for pre-market and after-market options. Often, many significant events occur outside trading hours, leading to 'gaps' at the open, preventing investors from reacting in a timely manner.
Geographical restrictions: Overseas investors wishing to participate in US stocks face complicated compliance processes and cross-border brokerage accounts. This is something many friends in the mainland should deeply understand.
This structure was reasonable in the past because securities trading relied on physical locations and centralized settlement systems. But in the face of blockchain? Forget it.
Why are tokenized stocks definitely the future?
1. Higher capital efficiency and liquidity
The biggest breakthrough of tokenized stocks is the non-stop 24/7 trading. This means:
Global investors can enter or exit the market at any time, facing black swan events without having to stay up all night or even wait until the next day.
Market sensitivity has significantly increased; just yesterday, even before the US stock market started to rally, E-guardians were already on their way to pick up cars.
Of course, higher liquidity will also attract excessive trading, inducing retail investors to even incur losses. But in any case, more efficient pricing and rights confirmation are the fundamental differences between tokenized stocks and traditional stocks.
2. Higher leverage and potential returns
Tokenized stock trading platforms are likely to offer higher leverage. Traditional brokers can only provide 2-4 times leverage, but for friends in web3, 10 times leverage is just tossing a chip on the roulette. In other words:
For risk-loving investors, tokenized stocks provide a new casino;
For arbitrage funds and quantitative funds, tokenized stocks offer more flexible risk hedging methods;
More dangerous? Yes, as a certain gangster once said —
3. Lower participation threshold
For the vast number of investors living in the mainland, the difficulty of opening a US stock account is well known. Now, we can already open accounts directly using crypto wallets on platforms like @xStocksFi and @stablestock. This means:
Investors no longer need to go through cumbersome cross-border broker account opening processes; one wallet can access US stocks.
For the United States, global capital can more easily enter US stock trading, thus opening channels for overseas capital investment.
And more widespread crypto adoption, along with higher market capitalization.
Let’s return to the SVB example; what would this event look like if it occurred on a tokenized stock platform?
At the moment SVB announced its loss report, the tokenized stock market would not experience a circuit breaker, and global investors could respond immediately, whether to quickly sell off or short, or to arbitrage on-chain price differences, etc. Countless trading experts on-chain are living examples — anyone can act quickly in a 24/7 market without passively waiting for the next trading day's opening.
Tokenized stocks are definitely not a digital mapping of traditional stocks, and the new round of financial revolution is absolutely not just empty words from the government. It represents faster trading and settlement, higher returns and risks, and lower participation thresholds.
This is the future that finance needs.
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