Key Insights
US stock trading products on centralized crypto exchanges (CEXs) do not represent real equity ownership of underlying stocks. Instead, they provide risk exposure through three distinct channels: traditional API integration, tokenized securities, and perpetual swaps. Among these, the tokenized path is the most complex, involving a five-layer architecture: issuer, custodian, clearing house, broker, and exchange. This structure strips holders of voting rights, converts dividends into contractual obligations, and eliminates SIPC (Securities Investor Protection Corporation) coverage.
Clearing Monopoly and Risk
Data shows that Alpaca controls approximately 94% of the clearing and custody market for tokenized US stocks. This near-total monopoly creates a single point of failure: any liquidity issue at Alpaca would trigger a cascading fault line across the entire tokenized stock ecosystem, with risks progressively shifting to end users. In reality, investors hold certificates or derivatives rather than the underlying shares, making their rights entirely dependent on the creditworthiness of all intermediaries.
Industry experts warn that users must be aware of the legal status of such products offered by CEXs, especially during extreme market conditions where clearing delays or custodian defaults could result in total capital loss.