Three Paths to CEX US Stock Products
The US stock trading products offered by crypto exchanges (CEX) do not represent actual equity ownership. There are three main implementation paths: traditional API access to brokers, tokenized assets, and perpetual contracts. Among these, tokenization stands out as the most problematic due to its complex structure and lack of transparency.
Equity Erosion Under the Five-Layer Tokenized Architecture
In the tokenization model, assets flow through five layers – from the underlying broker, clearing custodian, issuer, exchange, to the end user. Each layer introduces counterparty risk. Shareholder voting rights are completely lost, dividends become contractual promises rather than direct distributions, and SIPC investor protection does not apply. Users hold only an unsecured claim against the issuer, not actual equity.
Risks of Alpaca's 94% Clearing Monopoly
Alpaca, as the dominant clearing and custody provider, controls approximately 94% of the market share. This extreme concentration creates a single point of failure: any disruption at Alpaca could cascade to all tokenized products relying on its infrastructure, causing widespread settlement delays and asset freezes. Furthermore, centralized clearing exposes user assets to systemic risk without adequate safeguards.
Investors participating in CEX-listed US stock products must recognize the structural differences and evaluate the actual rights and protections – or lack thereof – associated with tokenized assets.