The Prospects and Challenges of STO and Tokenization of US Stocks

Recently, Coinbase announced the restart of its stock tokenization program, which has sparked market interest in the topics of STO and securities tokenization. In this episode, we invited Min Dao, the founder of dForce, to delve into the current state of STO development, its potential value, and the challenges it faces.

Value Proposition of STO

Minda believes that the core value of STO lies in "empowering" traditional stocks, granting them more practical functions:

• Expand the capital pool from regional markets to global markets
• Provide more practical value to stock tokens, such as collateral, gas payments, etc.
• Improve capital efficiency and reduce settlement costs
• Establish closer connections with consumers, such as ticket discounts, etc.

However, STO also faces some challenges:

• The territorial principle of traditional securities regulation conflicts with the decentralized nature of blockchain.
• Compliance issues, such as KYC requirements, etc.
• Market demand is limited, and the trading volume in past attempts has not been high.

Outlook on the STO Market

Minda is cautiously optimistic about the mid-term development of STO:

• The market structure is changing, with more non-crypto native users entering.
• The infrastructure is relatively mature and can quickly integrate new assets.
• A market of a certain scale is expected to form within 3-5 years.
• The key is whether a compliant issuance framework can be established.

He believes that the biggest beneficiaries are likely to be the asset issuers, especially those who can quickly form scale and liquidity network effects.

Analysis of the Policy Environment in the Cryptocurrency Industry

Regarding the current policy environment, the People's Path expresses a complex view:

• Recently, many favorable policies have been introduced, such as treating Bitcoin as a strategic reserve asset.
• But some policies are too closely tied to the interests of the Trump family, raising concerns.
• The key is to see how many policies can be solidified into law in the next four years.
• Overly binding with political figures may bring backlash risks.

Overall, STO is an important direction worth paying attention to, but it still faces many challenges that need to be overcome. Although the policy environment is favorable, there is also uncertainty that needs to be approached with caution.