PaperImperium@ImperiumPaper
> Trading spot equities is virtually free for retail traders on any reasonable brokerage. The costs are and spreads are ZERO. The people arguing for tokenization makes NO sense.
Arguments like this are a lot like arguments about stablecoins. The product is intended for a different audience!
Unlike stablecoins, however, a tokenized stock does have a market in the US… if the underlying stock is not issued in the US!
In fact, this is exactly what an American Depository Receipt (ADR) is: a way to wrap a foreign asset and put it on an American exchange.
For example, those BABA shares are not actually shares in Alibaba. They’re claims on shares (and various rights like dividends and voting and corporate actions like spinoffs) that are held in custody by Citibank.
This allows American investors to get close to the same ownership rights as if they purchased Alibaba shares in Hong Kong.
But holders of BABA on the NYSE are not shareholders of record for the underlying company - Citibank is.
This is exactly what wrapped RWAs are *supposed* to do - buy an asset on a foreign (non-EVM) market, structure a claim on that asset that is meaningfully similar to direct ownership, and let it be composeable with the local (EVM) market.
So of course it makes little sense for a US person to buy tokenized Tesla stock, just like it would make little sense for a Chinese citizen to buy BABA rather than the underlying, ceteris paribus.
Tokenized RWAs offer an ADR-like solution for all those people and companies that cannot directly access US or other markets where the underlying assets live.
So the concept is sound. It is, unfortunately, the case that execution is not as good as we would like in many cases.
In particular, issuers are not the typical issuer of ADRs: Citibank, JP Morgan Chase, Deutsche Bank, and BNY. So the extra layer of risk is material and the structures have not been perfected to be investor friendly and cover edge cases.
The value proposition for tokenized RWAs isn’t (for now) better trading for US investors. It’s allowing investors in India, Argentina, Turkey, Vietnam, etc to have a way to get access to assets in markets foreign to them.
This is a huge need for people with savings they need to deploy productively.
If you are issuing a tokenized RWA, and are using a robust, investor-friendly structure, I would love to learn about your specific product.
