Three Paths: How CEXs Offer US Stock Exposure
Crypto exchanges (CEXs) advertise US stock trading, but users do not obtain genuine ownership of the underlying equities. The exposure is delivered through three distinct paths: traditional API integration, tokenized synthetic assets, and perpetual contracts. Under the traditional API model, the exchange acts as an intermediary executing real stock trades, granting users only contractual claims. Tokenized assets map US stocks onto blockchain tokens, divorcing ownership from the underlying. Perpetual contracts are pure price bets with no asset backing.
The Five-Layer Architecture and Equity Evaporation in Tokenized Models
Tokenized stocks pass through a five-layer structure: underlying US stocks → custodian → issuer → liquidity pool → end user. Each layer dilutes user rights: voting rights vanish entirely, dividends are converted into contractual payments governed by smart contracts, and SIPC insurance protection is voided. Should any intermediary fail, users face the risk of non-redemption. The cumulative effect is a complete evaporation of the equity rights that a direct stockholder would enjoy.
Alpaca's 94% Settlement Monopoly and Liquidity Disconnect
Data reveals that Alpaca alone controls 94% of the settlement and custody market for tokenized US stocks. This extreme centralization creates a severe liquidity disconnect and risk transfer problem: if Alpaca experiences technical failures or regulatory crackdowns, a massive portion of tokenized assets become unreedemable or unliquidatable. The tokens held by users would instantly lose their underlying backing. Exchange risk controls are inadequate to cover such systemic counterparty risk, leaving retail investors exposed to hidden vulnerabilities.