The core mechanism of Robinhood's stock tokens lies in its unique custody and mapping methods.

Recently, US-listed company Robinhood and crypto exchanges like Kraken have successively launched stock token businesses. Follow XinGPT Research to explore what stock tokens are and why they are worth market attention.

Robinhood Leads the Stock Token Innovation Trend

Fintech giant Robinhood recently launched its highly anticipated stock tokens in the EU market, aiming to provide European users with a brand-new way of trading stocks.

This innovative service allows users to buy and sell derivatives that track stock prices in US dollars, with Robinhood automatically completing the euro exchange in the background but charging a 0.1% exchange fee.

The stock tokenization process is shown in the figure below:

Crypto World Welcomes New Assets: A Full Analysis of Robinhood vs Kraken's Stock Tokenization Paths

1. Custody and Mapping Mechanism

The core mechanism of Robinhood's stock tokens lies in its unique custody and mapping methods. These tokens are price-tracking derivatives (note that they are not mappings of securities), with their underlying assets securely custodied by a US-licensed institution in Robinhood's European account. Robinhood Europe is responsible for issuing these contracts and recording them on the blockchain. It is worth noting that due to the derivative nature of stock tokens, the corresponding securities can only be custodied in Robinhood accounts, and users cannot directly redeem them.

2. Regulatory Compliance Under the EU MiFID II Framework

Robinhood's stock tokens are provided as derivative contracts under the MiFID II (Markets in Financial Instruments Directive II) framework. The MTF (Multilateral Trading Facility) license held by Bitstamp Exchange, which Robinhood previously acquired, meets the EU's licensing requirements for companies providing derivative trading services. This means that Robinhood's services are subject to corresponding regulation in the EU region, providing users with a certain level of compliance assurance. However, it should be noted that Robinhood's stock tokens are currently only available in the EU and cannot be traded in the US.

3. Trading Hours and Corporate Actions Processing

In terms of trading hours, in the first phase, Robinhood's stock tokens are available for trading five days a week, from 02:00 Monday to 02:00 Saturday Central European Time/Daylight Saving Time.

For corporate actions (such as dividends, bonuses, splits, etc.), Robinhood will act on behalf of the users:

Position adjustments: For stock splits, reverse splits, stock code changes, or spin-offs, the number of your stock tokens in the account may be automatically adjusted to reflect the changes in the underlying stocks.

Cash distributions: For events such as mergers, acquisitions, liquidations, or delistings, you may receive cash distributions in euros based on the event.

Dividends: Cash dividends will be automatically processed. You will receive dividends in euros, which will be displayed as cash distributions in the trading history. Dividend payments are not subject to exchange fees, but withholding tax may be applied depending on your location.

In terms of fund turnover, the proceeds from selling stock tokens can be used for trading immediately and can be withdrawn on T+1 day.

4. Stock Tokens on the Blockchain

The issuance of Robinhood's stock tokens utilizes blockchain technology, initially based on the Arbitrum blockchain, with plans to migrate to Robinhood's self-built Layer2 blockchain in the future. This indicates Robinhood's commitment to using blockchain technology to enhance trading efficiency and transparency.

Robinhood's newly launched stock tokens undoubtedly provide European users with more diverse investment options. However, as a new type of derivative, users need to fully understand its mechanisms, risks, and relevant regulatory provisions before participating in trading.

5. Entering the Private Equity Market: Tokenization of OpenAI and SpaceX

As part of its broader cryptocurrency promotion plan, Robinhood has for the first time reached private equity through blockchain technology, launching tokenized stocks of OpenAI and SpaceX to European users. This milestone move, thanks to the EU's more flexible regulatory environment, allows ordinary investors to access the equity of these unlisted companies, which are usually only open to insiders and high-net-worth investors.

Kraken's More Open and Crypto Native Design

1. Custody and Mapping Mechanism

Custody mechanism: xStocks is responsible for purchasing and custodizing real stocks or ETF assets by Backed Finance, which are deposited in compliant third-party custodians (such as Alpaca Securities in the US, InCore Bank in Switzerland, and Maerki Baumann). Each xStocks token is 1:1 pegged to the underlying assets, and the custody process is strictly regulated to ensure asset security and transparency. The official website emphasizes that Backed Finance's Proof of Reserves mechanism, verified regularly by Chainlink, ensures the matching of tokens with actual assets.

Mapping mechanism: xStocks are SPL tokens based on the Solana blockchain, representing partial ownership of the underlying stocks or ETFs. The tokenization process is realized through smart contracts, with prices synchronized in real-time with traditional markets through Chainlink oracles. Users can transfer xStocks to Solana-compatible wallets (such as Phantom) and use them for trading, liquidity mining, or collateral in DeFi protocols (such as Raydium, Jupiter, Kamino). The official website特别指出，xStocks 可随时赎回为底层资产的现金价值，结算流程快速高效。

2. Regulatory Compliance License

Compliance framework: Kraken and Backed Finance actively cooperate with global regulators to ensure that xStocks comply with local laws and regulations. The official website clearly states that Kraken implements strict KYC and AML processes, and all users must pass identity verification. The issuance and trading of xStocks are subject to the regulatory framework of Backed Finance, and specific terms can be viewed in the "Base Prospectus" on backed.fi.

Regional restrictions: xStocks are currently only open to non-US customers and do not support users from the US, Canada, UK, EU, and Australia, with target markets including Europe (some regions), Latin America, Africa, and Asia. The official website does not explicitly mention users from Mainland China, but a post on X indicates that users from Mainland China are not restricted from registering, which needs further verification.

Regulatory challenges and outlook: The official website acknowledges that tokenized securities face a complex international regulatory environment. Kraken is communicating with regulators and plans to gradually expand the supported jurisdictions. Kraken emphasizes its compliance-first strategy to reduce legal risks.

Supplementary details: Kraken holds a MiCA (Markets in Crypto Assets) license in the EU, which supports its compliant operations in Europe and may lay the foundation for the future expansion of xStocks in some European regions.

3. Trading Hours and Corporate Actions Processing

Trading hours: xStocks support 24/5 trading (all day Monday to Friday), breaking through the traditional US stock market's 9:30-16:00 (Eastern Time) restrictions. The official website confirms that xStocks can be traded on the Kraken platform or on the Solana chain through compatible wallets (such as Phantom). During market closures (weekends and US holidays), on-chain trading can still take place, with prices based on the last closing price provided by Chainlink oracles and market supply and demand, which may result in "prediction market" price fluctuations. Kraken plans to achieve 24/7 trading in the future.

Corporate actions processing: The official website clearly states that holders of xStocks do not have the voting rights or the right to participate in shareholders' meetings of traditional shareholders. Dividends are indirectly distributed through the token price adjustment mechanism, which is equivalent to airdropping equivalent tokens to users based on their holding ratios to ensure the transmission of economic benefits. Other corporate actions (such as stock splits, mergers) are handled by Backed Finance, and the number or value of tokens is adjusted accordingly to reflect the changes in the underlying assets.

Supplementary details: The official website emphasizes that on-chain trading of xStocks supports instant settlement (T+0), which greatly improves efficiency compared to the traditional market's T+2 settlement cycle. Participation in the DeFi ecosystem (such as using as collateral in Kamino Lend) further enhances the flexibility of xStocks, but the depth of liquidity pools during market closures may be limited, and slippage risks should be watched out for.

4. Supported Blockchain and Issuance

Supported blockchain: xStocks are currently based on the Solana blockchain and use the SPL token standard. The official website states that Solana was chosen as the launch platform due to its high throughput (thousands of transactions per second), low transaction costs (about $0.01 per transaction), and mature ecosystem (supporting DeFi protocols such as Raydium and Jupiter). Kraken and Backed Finance plan to expand xStocks to other high-performance blockchains (such as Ethereum or Arbitrum) in the future to enhance interoperability and market coverage.

Issuance: xStocks are issued by Backed Finance, with the first batch of 60 US stocks and ETFs going live, including Apple (AAPL), Tesla (TSLA), Nvidia (NVDA), Microsoft (MSFT), Google (GOOG), and SPDR S&P 500 ETF (SPY). The official website states that Kraken