Deep Dive: How Robinhood and xStocks Are Tokenizing U.S. Stocks

·

The resurgence of favorable regulatory conditions in the U.S., particularly amid shifting political landscapes, has opened a new window of opportunity for security tokenization. Platforms like Robinhood, Bybit, and Kraken are racing to launch tokenized stocks, reimagining how global investors access traditional equities through blockchain infrastructure. This convergence of capital markets and crypto isn't just technological—it's a strategic reengineering of compliance, custody, and user experience.

Three Main Approaches to Tokenized Stocks

The market for U.S. stock tokenization has evolved into three distinct models: the third-party compliant issuance model (e.g., xStocks), the licensed broker self-issuance model (e.g., Robinhood), and the CFD-based synthetic approach (e.g., Bybit). Each reflects different philosophies on regulation, decentralization, and financial inclusion.

Third-Party Compliance + Multi-Platform Access

This model separates compliant issuance from platform distribution. In this framework, a regulated entity—such as Backed Finance, licensed in Switzerland or under EU regimes—purchases real shares via IBKR Prime and holds them in regulated custodians like Clearstream or Interactive Brokers.

Once confirmed, these assets are 1:1 mirrored into blockchain tokens (e.g., TSLAx, AAPLx) on networks like Solana, with future expansion to Ethereum ERC-20. These tokens are then listed across multiple crypto platforms including Kraken, Bybit, and Jupiter, which provide liquidity and trading interfaces without bearing direct regulatory liability.

👉 Discover how decentralized platforms are reshaping stock access with blockchain efficiency.

Advantages:

This approach isn’t new. FTX pioneered a similar model in 2020 through its Swiss subsidiary Canco GmbH, offering tokenized versions of Tesla (TSLA) and Apple (AAPL) backed by real holdings. Partnering with German financial institutions CM-Equity AG and Digital Assets AG, they aimed for regulatory legitimacy. However, the collapse of FTX in November 2022 ended this initiative amid allegations of fraud and fund misuse.

Despite its promise, this model faces challenges:

Notably, concerns have been raised about Backed Finance’s team background. Critics, including crypto influencer cryptobraveHQ, point out that key founders were involved with DAOstack—a project whose $GEN token raised $30 million but later became inactive and effectively worthless. This history raises questions about long-term accountability.

Licensed Broker Self-Issuance + Closed-Loop Trading

Robinhood represents the most advanced implementation of the broker-native tokenization model. Unlike third-party systems, Robinhood leverages its own regulated entity—its Lithuanian MiFID-compliant subsidiary—to purchase and hold underlying stocks directly.

These real assets back tokens minted on Arbitrum (e.g., TSLA-t, APL-t), traded exclusively within Robinhood’s app. Every transaction updates both the blockchain ledger and off-chain inventory, ensuring perfect alignment between digital tokens and physical equity holdings.

This closed-loop system offers several advantages:

By owning the entire pipeline—from brokerage license to Layer 2 settlement—Robinhood avoids the trust assumptions inherent in third-party models.

CFD-Based Synthetic Exposure

Platforms like Bybit use Contract for Difference (CFD) instruments rather than actual securities. For example, their TSLAUSDT perpetual contract tracks Tesla’s stock price via oracles but doesn’t involve holding any real shares.

Users can trade with high leverage and go long or short, making it ideal for speculative activity. With over 100 traditional financial assets now available—including gold, oil, forex, and stock CFDs—Bybit has positioned itself as a hybrid TradFi-crypto gateway.

However, this model falls short of true stock tokenization:

While easy to deploy, CFDs represent a detour from genuine asset tokenization—one driven more by demand than principle.

Robinhood’s Strategic Edge: Building a Blockchain-Powered Brokerage

Robinhood is no longer just a retail trading app. It's evolving into a full-stack on-chain financial infrastructure provider, blending regulated brokerage services with blockchain innovation.

Europe as the Launchpad

In June 2025, Robinhood acquired Bitstamp for $200 million—a move that added over 50 licenses and access to 5,000 institutional clients. Combined with its earlier acquisition of Canada’s WonderFi ($179 million), Robinhood now has a solid regulatory foundation across North America and Europe.

Shortly after, it launched tokenized stock trading in 31 European countries using Arbitrum. Over 200 U.S. stocks and ETFs are available, with plans to include pre-IPO equities like SpaceX and OpenAI—all backed 1:1 by real holdings.

Importantly, Robinhood upgraded its Crypto App into a unified investment platform featuring:

This integration reduces friction for users migrating from traditional to digital assets.

The Three-Phase Roadmap to On-Chain Finance

Robinhood’s vision unfolds in three stages:

  1. Phase One: Centralized Issuance
    Robinhood buys real stocks → mints tokens on-chain → enables trading within its app.
  2. Phase Two: Liquidity Expansion
    Bitstamp integrates as a secondary liquidity layer, enabling trading even when U.S. markets are closed.
  3. Phase Three: DeFi Interoperability
    Users will eventually be able to self-custody tokens and transfer them to external wallets or DeFi protocols.

👉 See how next-gen finance platforms are bridging traditional markets with blockchain innovation.

This phased rollout prioritizes regulatory safety while laying the groundwork for future decentralization.

Coinbase’s Counterplay: Infrastructure First, Regulation Second

While Robinhood executes from the brokerage side, Coinbase takes a bottom-up approach: build the tech first, then seek regulatory approval.

Coinbase has already filed for a no-action letter from the SEC through its dormant broker-dealer entity. If granted, it would allow Coinbase to issue tokenized equities on its Base Layer 2 network with features like:

With native stablecoins, deep exchange liquidity, and growing developer adoption on Base, Coinbase could become a standard-setter for on-chain securities—if it clears the U.S. regulatory hurdle.

FAQ: Your Questions Answered

Q: Are tokenized stocks legally recognized in the U.S.?
A: Not yet. While platforms operate internationally under local licenses, the SEC has not approved any tokenized stock product for U.S. retail investors.

Q: Do I own real shares when I buy a tokenized stock?
A: It depends. In models like Robinhood’s or xStocks’, yes—each token is backed by a real share held in custody. In CFD models like Bybit’s, no—only price exposure is provided.

Q: Can I receive dividends from tokenized stocks?
A: Yes—on compliant platforms like Robinhood and xStocks—dividends are distributed proportionally to token holders based on real corporate payouts.

Q: What happens if the issuing company goes bankrupt?
A: In properly structured models, your claim lies against the custodied asset—not the issuer. However, redemption delays or opacity can pose risks if governance is weak.

Q: Is there a risk of duplicate tokens for the same stock?
A: Yes—especially in multi-issuer environments where no central registry exists. This could lead to liquidity fragmentation and confusion.

Q: Will tokenized stocks enable 24/7 trading of U.S. equities?
A: Already happening in Europe via Robinhood and others. Blockchain enables continuous trading regardless of NYSE/Nasdaq hours.

Final Outlook: The Race for On-Chain Equity Dominance

Robinhood bets on regulatory control + vertical integration, while Coinbase champions open infrastructure + regulatory advocacy. Both aim to solve the same problem: bringing traditional assets on-chain in a compliant, scalable way.

Core keywords naturally integrated throughout:

👉 Explore how blockchain is transforming traditional investing—start your journey today.

While challenges remain—liquidity fragmentation, cross-border regulation, dividend automation—the entry of major players signals a shift from experimental phase to institutional adoption. The era of on-chain equity is no longer speculative—it's operational.