In an interview with crypto.news, Bitrue’s Chief Marketing Officer Adam O’Neill shared insights into the launch of its new xStocks platform, which brings tokenized U.S. equities to the blockchain and allows 24/7 trading of major stocks like Apple, Tesla, and NVIDIA.
Bitrue’s xStocks offering gives crypto users access to tokenized versions of traditional equities, enabling fractional ownership, faster settlement, and round-the-clock trading, even outside of U.S. market hours. The platform’s first batch includes six assets: Apple, Tesla, NVIDIA, MicroStrategy, Circle, and an S&P 500 ETF, with more stocks likely to follow soon. Each token is backed 1:1 by the underlying stock, verified through Chainlink’s Proof of Reserve mechanism.
Tokenized stocks are digital assets that attempts to offer similar returns of real-world equities but on the blockchain. This unique product offers global accessibility and lower entry barriers while offering indirect equity exposure.
In the conversation below, Bitrue’s O’Neill addresses how price discovery functions during non-market hours, the risks and advantages for retail traders, expansion plans, and how their approach compares to previous tokenized stock offerings.
crypto.news: Trading tokenized stocks 24/7 is a major selling point, but when U.S. stock markets are closed, there’s no official price feed. How exactly does price discovery work during these after-hours periods, and isn’t there increased risk for market makers providing liquidity during those times that result in a high premium paid by the user?
Adam O’Neill: For tokenized stocks, price discovery during these after-hours or weekend periods relies heavily on the supply and demand dynamics within the specific crypto exchange or blockchain platform where these tokens are traded. There is an increased risk for market makers providing liquidity for tokenized stocks outside of traditional market hours, and this risk often translates into wider spreads for users, but we feel that it’s important for users that are spread around the world in different timezones to have increased options.
CN: As a follow up from the prior question, for retail traders transacting during after-hours or weekends, what should they expect in terms of liquidity and spreads? Is slippage a bigger concern when fewer market participants and pricing references are available?
AO: Trading volumes are indeed lower during off-hours which does make for a tougher trading environment for users. Users are advised to take extra caution when trading during this time and make full use of the data available, including trading depths, which are fully transparent on the exchange. The problem mostly affects large traders who are generally aware of the risks to watch out for – the problem is lessened when trading in small amounts, which covers 95%+ of traders.
CN: What advantages do tokenized stocks on Bitrue offer to everyday retail investors compared to buying stocks through traditional brokers? On the flip side, what are the risks or limitations that investors should be mindful of when trading these tokenized stocks?
AO: The advantages are 24/7 trading access, fractional ownership, faster settlement, global accessibility, lower transaction costs, and increased transparency. Conversely the drawbacks include price dislocation risks, cybersecurity risks, and potential tax implications depending on where the user is located.
CN: The initial batch of tokenized stocks includes six major companies: NVIDIA, Apple, Tesla, MicroStrategy, Circle, and an S&P 500 ETF. Why did Bitrue choose these particular stocks to start with? Are there any minimum market cap considerations or other metrics that have to be met to be included?
AO: NVIDIA, Apple, and Tesla are among the most popular and actively traded stocks globally, so listing these allows us to meet a proven demand while reducing the potential friction of understanding the tokenization aspect. These stocks generally have very high trading volumes in traditional markets, which provides a strong underlying price reference.
Including an S&P 500 ETF provides retail investors with immediate diversification across a broad market index. We do not have minimum cap considerations, however we are currently focused on offering well-known blue-chip brands.
CN: Do you plan to expand the range of tokenized stocks available on Bitrue? What can users expect next, i.e more stocks, ETFs, or even other asset classes (gold?) as tokens?
AO: Further expansion of our offerings will be based on user feedback – we are constantly monitoring what our users are asking for on social media as well as analyzing the trading data that we have available to us. In the few days that these tokenized stocks have been made available for trading the feedback has been quite positive, so within the next few weeks we’ll be consistently adding more well-known names as tokenized stocks to the exchange. The exact stocks are still TBD, but Meta, Alphabet, and Amazon are among those shortlisted.
CN: How can users be confident that each tokenized stock is truly backed 1:1 by the real stock? Is there a custody or proof-of-reserves mechanism in place to ensure the tokens are fully collateralized?
AO: xStocks adopts the Chainlink interoperability and data standards, including the Chainlink Proof of Reserve, providing a robust and transparent mechanism to verify that the tokenized stocks are indeed backed 1:1. Chainlink has been operating for over a decade and is the gold standard for blockchain based verification systems.
CN: Once someone buys these xStock tokens on Bitrue, are they able to withdraw them off the exchange? Can users hold tokenized stocks in their own wallets or use them in DeFi ecosystems? Will it ever be possible to exchange a token for an equity share?
AO: These tokenized stocks are from a technical standpoint identical to other cryptocurrencies, and so they can be withdrawn and used in DeFi products that support them. They do not grant ownership or similar rights however, and cannot be converted into the underlying stock.
