Armani Ferrante, the CEO of Backpack, has introduced a plan to increase the accessibility of tokenized stocks on Solana, intending to grow from around 200 symbols to an impressive 10,000. This initiative will enable shares to be transferred seamlessly between brokerage accounts and decentralized finance using a single API.
Summary
- Ferrante has set a target of 10,000 stock symbols as the next goal for Backpack, although no timeline for implementation has been provided.
- Currently, qualified users can convert certain brokerage holdings into Solana tokens and vice versa through Backpack.
- The recent SEC exemption for trading tokenized stocks is restricted to specific venues that meet certain criteria.
In a statement from Solana dated September 26, Ferrante detailed his ambition to facilitate comprehensive stock market access through a framework linking traditional securities accounts with DeFi applications.
“Not 10 stocks, not 100 stocks. We aspire to bring the entire stock market to Solana,” Ferrante emphasized in a video shared by Solana.
Ferrante described an API that will allow real shares to move from a brokerage account into DeFi and back. He described the transition from 200 to 10,000 symbols as “the next leap,” although the announcement did not provide a launch date or specify which stocks would be added initially.
The reference to 200 symbols pertains to Ferrante’s initial count. The announcement does not confirm that Backpack Securities has launched 200 distinct tokenized stocks on Solana; thus, the envisioned expansion should not be interpreted as a count of available tokens currently in circulation.
How Backpack supports stock integration onto Solana
Backpack launched its securities platform in June, highlighting that customers could hold U.S. stocks and exchange-traded funds through its brokerage and convert eligible holdings into tokenized securities. Upon depositing a supported token through Backpack Exchange, it can revert back into traditional security ownership, as reported by the company.
According to Backpack, its brokerage holdings qualify as security entitlements under New York’s Uniform Commercial Code Article 8. The company also asserts that its service supports cash dividends, corporate actions, and transfers involving standard brokerage systems like ACATS and the Depository Trust & Clearing Corporation.
On Solana, tokens issued by Backpack can be stored in compatible wallets and exchanged among users. Furthermore, these tokens are usable within DeFi applications, depending on the specific features and conditions of the corresponding products and services.
A report from June on SPCX highlighted Backpack Securities’ launch of the tokenized SpaceX product, introduced alongside Sunrise on Solana. Backpack noted that qualified holders could convert the token back to its associated share through its brokerage service, with Sunrise providing the requisite infrastructure for issuing and distributing the token.
Subsequently, Backpack began to include tokenized representations of additional publicly listed U.S. companies. In July, crypto.news reported on its ongoing trading of various equities available to users outside the United States, including products tied to SpaceX, Micron, and SanDisk. The company stated that users could exchange recognized Solana tokens one-for-one for the equivalent shares on its platform.
The conversion process was explained in Backpack’s announcement concerning CoreWeave on September 23. A customer can withdraw a CoreWeave holding from Backpack Exchange as a CRWV token on Solana, which can then be deposited to revert it back into a brokerage holding, according to the company. Backpack identified decentralized exchanges, wallets, and various Solana applications where the token could be accessed.
Understanding ownership rights as per Backpack’s explanation
Backpack clearly differentiates between brokerage holdings and their tokenized counterparts, asserting that conversions can occur on a one-for-one basis. In its description of the Micron product, the company clarifies that holders of brokerage shares receive cash dividends and corporate actions through traditional securities infrastructure.
For holders of its tokenized Micron security, Backpack indicates that dividend payments are reinvested into additional tokens. They also claim that relevant corporate actions are handled through proportional adjustments to token balances to preserve the economic value of the underlying holdings.
The U.S. Securities and Exchange Commission (SEC) has warned that not every tokenized security released by third parties confers the same rights to holders. In a statement from January, the agency mentioned that the rights linked to a token are determined by its specific structure and may differ from those associated with the underlying security. The statement further distinguished tokens backed by securities kept via custodial agreements from synthetic products that create alternative claims.
For American readers, these distinctions are crucial when assessing stock tokens in comparison to traditional brokerage positions. Backpack’s explanations regarding redemption, dividends, and corporate actions apply specifically to its declared product structure and should not be assumed to be universally applicable to every token with a recognizable stock ticker.
Current status of U.S. tokenized stock regulations
On September 17, the SEC provided conditional relief allowing specific venues to trade tokenized National Market System stocks through approved automated market makers and liquidity pools. This five-year framework imposes restrictions on the number of symbols a qualifying venue can manage, as well as limitations on trading volume.
According to the SEC’s publicly stated requisites, a venue must ensure that a tokenized stock grants its holder rights and privileges equivalent to those of a traditional share. If a company’s stock is tokenized by an unaffiliated third party, the venue must inform the issuer and grant them an opportunity to raise objections.
The SEC also requires public, auditable smart contracts and an immediate halt in token trading if the underlying stock is suspended on its primary exchange. The agency’s announcement did not specify Backpack as a participating venue, nor did it indicate whether its existing products comply with the exemption.
Additionally, Backpack’s U.S. operations have necessitated a further corporate development. In September, the company’s U.S. division appointed Kyle Samani to its board, indicating that the former Multicoin Capital executive would assist in progressing its initiatives within regulated U.S. financial services and on-chain markets; the announcement did not disclose a timeline for expanding its U.S. stock or tokenized asset services.
