Today, major exchanges like Kraken and Robinhood have launched on-chain stock trading services, allowing investors to buy and sell tokens that represent real stocks. These products enable 24-hour trading of popular U.S. stocks (such as Apple, Tesla, Nvidia, etc.) outside of normal market hours.

• What is the mechanism behind the considerations for KYC?

• Are investors more likely to prefer cryptocurrency-based stock trading over traditional brokers?

• I think this is a reason for a bull market.

Understanding mechanism

Gradually analyze

The above figure provides you with a basic overview, and below I will highlight some important additional information:

• When you purchase tokenized Apple stocks through Kraken's xStocks, you are not buying derivatives or futures contracts. Instead, Kraken's partner, Backed Finance, buys and holds an actual share of Apple stock and ensures compliance custody. Then, a corresponding token is issued on the Solana blockchain, creating a digital representation of the physical stock.
• Stocks ≠ Cryptocurrencies. On-chain stocks introduce interesting arbitrage opportunities. During off-market trading hours, when the New York Stock Exchange is closed but blockchain trading continues, token prices may slightly deviate from the last known stock prices based on trading activity and market sentiment. Arbitrageurs can profit from these discrepancies by buying or selling tokens and redeeming them through the issuer, bringing prices back in line. Be cautious when purchasing on-chain stocks during off-market hours.
• This structure means that token holders do not enjoy traditional shareholder rights, such as voting - custodians retain these privileges. What you are purchasing is an economic exposure to the performance of the stock, rather than an actual shareholder identity. This is a trade-off that allows blockchain-based transactions to occur while maintaining compliance.

24/7 trading?

The most significant advantage of tokenized stocks is continuous trading. Unlike traditional exchanges that operate approximately 6.5 hours on weekdays, blockchain-based tokens can be traded continuously. Kraken's xStocks enables 24/7 trading, while Robinhood currently offers 24/5 trading and plans to expand to full-time availability after the launch of its proprietary Arbitrum-based layer two.

This continuous availability creates interesting market dynamics. When important news is released outside of traditional trading hours—such as earnings announcements, geopolitical events, or company-specific developments—your tokenized stocks can react immediately. Token prices become real-time sentiment indicators, potentially providing price discovery that traditional markets cannot match during off-hours.

Tradition and tokenization?

Overall overview, but I will emphasize more on KYC and custody below.

1. KYC

In practice, any compliant platform offering stock exposure requires KYC and must adhere to regulations—if the platform wants to remain legal, completely anonymous stock trading is largely illegal. That said, there have been past attempts at decentralized non-KYC stock tokens—but they faced legal issues. A notable case is Terra's Mirror Protocol, which from 2020 to 2022 allowed anyone to mint and trade synthetic "mAssets" reflecting U.S. stocks (like Tesla, Google, etc.) without any KYC (just a crypto wallet). The U.S. Securities and Exchange Commission later classified Mirror's stock tokens as unregistered securities and took action against Terraform Labs and its founder Do Kwon for illegally offering these tokens.

The entry path is different.

This time is different, as major exchanges like Kraken and Bybit also support trading stocks on their platforms. You can simply think of these "stock coins" as memecoins, except that a third party promises that each coin is backed by a stock. I think Trump might be very interested. This provides retail investors with an easier way to enter the U.S. stock market through stablecoins. As long as the final settlement is conducted in USD, I don't think there will be too much regulatory pressure.

2. Custody Model Related

Tokenization platforms prioritize accessibility and flexibility. Both Kraken and Robinhood offer commission-free trading of stock tokens, earning income through spread and other services. They essentially allow for fractional ownership, enable 24/7 trading, and have the potential to integrate with decentralized finance protocols.

These trade-offs are significant. Traditional brokers offer regulatory protection, mature customer service, and direct shareholder rights. Tokenized platforms provide greater accessibility and innovative features, but have lower regulatory transparency and newer operational infrastructure.

Custody models are fundamentally different. Traditional brokers hold stocks in street name through central custody, and your ownership is recorded in their systems. Tokenization platforms issue blockchain tokens, allowing you to choose self-custody, which gives you direct control over the assets you hold, but also requires you to take responsibility for managing private keys and security.

Why do I think this is a bull market case?

• Capital magnetic effect
  Considering the structural advantages of tokenized stocks compared to traditional equity markets, retail investors in Nigeria can now access shares of Apple Inc. without having to deal with complex international brokerage relationships or currency conversion fees. This is not just convenience, but a fundamental expansion of market access that could drive unprecedented capital inflow into crypto infrastructure.

The mechanism here is more complex than simple user acquisition. When someone purchases tokenized Tesla stock, they are not just entering cryptocurrency—they are creating a sustained demand for stablecoins, generating transaction fees for the second-layer network, and validating the entire crypto stack as a legitimate financial infrastructure.

• Compound Interest Effect
  Ethereum and its second layer [Robinhood] will see sustained trading volumes from stock trading, creating real economic value for ETH holders through fee burn and network effects. Solana's [Kraken & Bybit] high throughput architecture may gain market share in high-frequency stock trading, thereby driving demand for SOL for transaction fees.

Tokenized stocks may address the "ghost town" issue of cryptocurrencies during bear markets. Historically, when cryptocurrency prices crash, trading volumes disappear, and users flee to traditional assets. With on-chain stocks, capital may have a higher chance of remaining in the crypto ecosystem, maintaining liquidity and platform participation even when altcoins are struggling.

• Secret Adoption
  Tokenized stocks may achieve a goal that years of cryptocurrency promotion have failed to accomplish: frictionless widespread adoption. Robinhood users in the EU trading stock tokens on Arbitrum are not actively choosing to enter the cryptocurrency space – they are simply accessing better financial services. This implicit adoption model could attract millions of users who have never actively chosen to buy cryptocurrency but are happy to use crypto infrastructure when it is abstracted away.

Next step

Regarding investment arguments, it largely depends on adoption and regulatory evolution. In a bull market scenario, tokenized stocks could become a killer application; if the non-KYC purchasing demand for U.S. stocks is large enough, it will exponentially grow the crypto user base and put millions of real-world assets on-chain. In the long term, the majority of stock trading (and eventually other assets) will occur on the blockchain, benefiting from efficiency and accessibility.

The strategy for short-term operations is bullish on the following industries:

• stablecoin
• RWA
• Using Ethereum/Solana as the settlement layer
• U.S. fintech stocks such as $HOOD, $SOFI, any form of exposure to Kraken (2026 IPO)

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