Tokenized Stocks and the Liquidity Mirage: Structural Risks and Regulatory Arbitrage in RWA Markets

Abstract

The emergence of tokenized Real-World Assets (RWAs) promises to revolutionize financial markets by offering on-chain representations of traditional equities with enhanced liquidity and accessibility. However, the nascent market is characterized by opaque structures and significant risks, with a critical gap between its theoretical potential and observed reality. This study conducts a rigorous investigation of 106 tokenized stock products, synthesizing legal prospectuses, issuer disclosures, and on-chain transaction data to construct a definitive taxonomy of the ecosystem. Our analysis reveals a market dominated by Swiss-based Special Purpose Vehicles (SPVs), a strategy driven by regulatory arbitrage. Crucially, while these products successfully replicate the price of their off-chain counterparts, on-chain analysis exposes a fundamental failure to deliver on liquidity promises, revealing negligible trading volumes, concentrated ownership, and a near-total absence of secondary market activity. We further identify systemic risks stemming from reliance on centralized infrastructure and opaque custodial arrangements. Ultimately, this research demonstrates that tokenized stocks currently serve to democratize equity access for a niche retail audience but have failed to attract institutional capital or create liquid on-chain markets, exposing the critical frictions that must be resolved for this market to mature.