The social investment platform eToro is brewing a major innovation: launching tokenized US stock services on the Ethereum blockchain. This move tightly integrates traditional stock trading with the world of encryption, opening up a new avenue for investors.

eToro's move comes at a time when the wave of asset tokenization is rising. With Hong Kong recently implementing stablecoin regulations and the physical asset (RWA) market expected to reach a scale of $16 trillion by 2030, eToro's strategy clearly targets market hotspots. Considering the company's foundation in social investing and encryption business, as well as the significant growth in encryption revenue in 2024, this move seems like a natural progression.

However, this path is not easy. Earlier, exchanges like FTX and Binance also attempted to launch tokenized stocks, but ultimately ceased due to regulatory pressure. eToro chose Ethereum as the underlying technology, which can provide good on-chain liquidity, but it also faces the risk of price volatility. In the past, similar projects like Backed Finance's xStocks experienced price surges up to a hundred times their original value, which poses a significant challenge for ordinary investors.

Compliance issues are a significant barrier. eToro needs to meet the regulatory requirements of both the U.S. Securities and Exchange Commission (SEC) and the Hong Kong Monetary Authority. Key issues include the custody and auditing mechanisms of the underlying stocks to ensure that tokenized stocks correspond one-to-one with actual stocks, avoiding potential legal risks.

If eToro successfully launches this service, it will bring many innovative ways for investors. For example, investors can use tokenized stocks for collateralized lending on decentralized finance (DeFi) platforms. Combined with eToro's social attributes, users can also follow the strategies of investment experts to achieve more flexible investment methods.

Whether eToro can find a balance between innovation and compliance will determine whether this initiative becomes an industry benchmark or a cautionary tale. In any case, this attempt reflects the trend of integration between traditional finance and blockchain technology, which is worth close attention from the market.