Three Modes of CEX Stock Products
Crypto exchanges (CEX) currently offer U.S. stock trading products that are not real equity ownership but instead come in three forms: tokenized spot, synthetic perpetual contracts, and traditional API routing. The tokenized model issues on-chain tokens representing shares, but asset custody and clearing are heavily dependent on Alpaca, which holds a 94% market share in clearing services, creating a de facto monopoly. Synthetic perpetual contracts track spot prices via funding rates without underlying asset settlement. API routing connects users to compliant brokers, allowing indirect ownership of real stocks.
Risks of Tokenization and DTCC's Disruption
The tokenized model suffers from a five-layer equity transmission chain (issuer, clearer, custodian, exchange, user) that dilutes ownership: voting rights are entirely lost, dividends become contractual distributions at predetermined ratios, and investors lack U.S. SIPC insurance coverage. DTCC (Depository Trust & Clearing Corporation) is advancing a compliant tokenization service that could replace Alpaca's monopoly with standardized on-chain settlement, offering true asset ownership and legal protections. This shift may fundamentally reshape the bridge between crypto and traditional finance.