The distinction between genuine equity ownership and synthetic price derivatives on cryptocurrency platforms has become a critical focal point for institutional adoption. Can Sun, co-founder of Backpack and former legal director at FTX, emphasizes that many assets marketed as 'US stocks' on crypto exchanges lack fundamental shareholder rights. These instruments often function merely as legally invalid credit commitments without dividend entitlements, voting capabilities, or protection under securities laws. Unlike traditional brokerage accounts on platforms like Futu or Etoro, these synthetic assets cannot be transferred across regulated systems, creating a significant disconnect between user expectations and legal reality.

Data compiled by Woofun AI indicates a sharp divergence in the structural integrity of tokenized equity products currently available in the market. While some platforms utilize Special Purpose Vehicle (SPV) structures where users hold rights to an SPV rather than the underlying stock, Backpack has secured a brokerage license regulated by New York state law. This regulatory framework ensures that clearing and custody services are provided by RQD Clearing, which is directly connected to the DTCC system. Consequently, assets purchased on Backpack are identical to those held in traditional brokerage accounts, granting users direct entry onto company shareholder registers with full voting and dividend rights.

The economic implications of this structural difference are profound, particularly regarding tax efficiency and asset isolation. Under the Sino-US tax agreement, mainland China residents utilizing Backpack can access a pre-tax dividend deduction rate of 10%, a significant advantage over the standard 30% rate applicable to most jurisdictions.

Furthermore, the legal separation of assets ensures that even in the event of platform operational failure, user holdings remain completely isolated and protected. For every share purchased, a corresponding real stock must be maintained in the clearing system, a core requirement of US securities regulation that synthetic products fail to meet.

Woofun AI notes that the market environment has shifted dramatically from the speculative fervor of six years ago to a demand for compliant, yield-generating assets. During the height of the DeFi boom, investors prioritized volatile tokens capable of doubling in value overnight, rendering stable equities like Apple or Microsoft unattractive. Today, driven by the AI revolution and regulatory clarity from figures like SEC Chairman Paul Atkins, the focus has pivoted toward tokenization as an irreversible trend.

Concurrently, the withdrawal of services by Hong Kong-based brokers such as Futu and Tiger for mainland Chinese users has created a substantial vacuum that compliant blockchain-based equity solutions are positioned to fill.

Strategic expansion plans for Backpack include a multi-market approach targeting the third quarter of 2026, where users will be able to trade equities from the US, Hong Kong, Japan, South Korea, and Europe simultaneously. The platform is also conducting internal tests to enable mutual conversion of these stocks with those listed on traditional platforms. While the primary focus remains on real stocks, Backpack is collaborating with Solana and Sunrise to develop applications for blockchain-based tokenized assets using the SPV structure. These secondary assets will offer leverage, arbitrage, and lending opportunities, though the platform will not actively encourage their use in the short term.

Woofun AI analysis suggests that the long-term vision extends beyond the current $3T crypto asset pool to tap into the $100T global stock market, the $130T bond market, and the $300T foreign exchange market. By establishing transaction fees comparable to traditional brokers and catering to both conservative investors seeking real equity rights and high-risk traders interested in DeFi applications, Backpack aims to facilitate a transition from niche crypto assets to mainstream financial infrastructure. The ultimate goal is to evolve into a true financial institution over the next 50 to 100 years, leveraging blockchain technology to bring the world's largest asset markets on-chain, starting with equities.