Tokenized stocks, a new venture by ambitious cryptocurrency companies, aim to revolutionize the stock market using blockchain technology. However, their initial launch has faced significant challenges. These digital tokens, designed to track popular stocks like Amazon and Apple, have shown substantial price discrepancies from the actual stock prices, with some platforms experiencing premiums over a hundredfold.
Companies such as Robinhood, Kraken, Gemini, and Bybit have introduced blockchain-based tokens for U.S. stocks and ETFs, targeting non-U.S. clients. These tokenized stocks offer reduced trading costs and faster settlement. Despite the initial excitement, the tokens have displayed flaws, with prices deviating significantly from the underlying stocks. For instance, the token AAPLX, tracking Apple's stock, showed a 12% premium, while AMZNX, tracking Amazon, surged to four times the actual stock price.
Backed Finance, the issuer of these tokens, is working to align token prices with their stock counterparts. However, low trading volumes on crypto exchanges lead to price volatility, especially during off-market hours. Concerns about potential market manipulation and regulatory evasion are rising, as these tokens often lack the stringent oversight present in traditional stock markets.
