A while back, CZ posted a view online that “IPOs will move on chain,” which sparked a lot of discussion at the time.

I saw that view too, but it didn’t strike me as particularly profound.

Looking back now, my initial reaction was simply that such a view amounted to this:

In the future, a stock’s IPO, besides happening on traditional centralized exchanges, might also place a portion on the blockchain. That is essentially no different from today’s tokenized stock trading — it still maps some off-chain business onto the chain, letting the business run both off-chain and on-chain.

Last week, when the U.S. SEC introduced its exemption rule, I wrote and shared an article about it, and felt there might be other consequences we cannot yet see from this SEC step.

It is a bit like 400 years ago, when the Mayflower carried a group of Puritans to North America.

To the Puritans on board, its meaning was merely that of a small group. It marked that these newcomers had finally found a new continent, where they could restart their lives and explorations in a new way.

But no one could have imagined that such a small act would lay the constitutional and cultural DNA of a new nation’s founding.

I could not, and still cannot, fully foresee what impact the SEC’s move will produce. But on reflection, I keep feeling that the combination of these elements — opening the door for DEXs to trade stocks, clearing market makers that provide liquidity, and letting genuinely on-chain trading of stocks happen — may turn out to be far larger than what I had long considered the “conventional” meaning of RWA.

What is that “conventional” meaning of RWA I had long held?

That kind of RWA is merely an extension of off-chain business and trading forms onto the chain; it simply gives RWA assets one more trading venue — where they could only be traded off-chain before, now they can also be traded on-chain.

Holding this mindset, RWA’s significance is indeed very limited. The most typical and most doubtful point for me is: I can already trade these so-called RWA assets off-chain, and quite conveniently — so why trade them on-chain?

Just for speculation? For trading meme coins?

I could never fully convince myself on this question.

But over the weekend, I suddenly thought of a detail in the history of stock development:

In the early days, all stocks had paper certificates. Every shareholder proved their ownership precisely by holding that real paper stock in their hand.

Even in my own country, which only restarted its stock market in the 1990s, the early stock issuances were all paper stocks.

Yet barely 20-plus years later, do we still need, or even have, paper stocks when we buy stocks now?

We don’t, and there aren’t any.

Why?

Because electronic trading systems and the internet became so developed that they naturally eliminated paper stocks.

Of course, in the early days of trading systems and the internet, paper stocks still had clear advantages. Back then, electronic systems were immature and frequently broke down, so people naturally felt safer holding a real, tangible paper certificate.

But the rapid advance of science and technology quickly closed that gap, eliminating physical certificates and driving stocks fully toward “electronification.”

By the same logic, is it possible that one day traditional stock trading systems will also be completely eliminated and move fully on-chain?

I believe this is entirely possible:

On-chain trading runs around the clock, requiring none of the enormous maintenance costs of centralized systems.

On-chain trading’s native confirmation of token (ERC-20 token) ownership is far more efficient than the cumbersome processes of centralized exchanges.

On-chain trading’s global reach and arbitrary asset-pair trading vastly enrich variety and liquidity.

These are characteristics that traditional centralized exchanges can hardly achieve, or can only achieve at enormous cost — yet they come built-in on-chain.

Of course, on-chain trading still has various technical and user-experience problems today, but I have always believed these can be quickly solved as technology advances — just as electronic systems completely eliminated traditional paper stocks.

If one day, not only IPOs but all stock trading thoroughly eliminates traditional centralized exchanges, the way electronic systems once eliminated paper stocks, then such an RWA would be a system and ecosystem with boundless imagination and infinite potential.

The realization of that scenario requires two things:

First, regulation must give the green light;

Second, the technology must mature.

The current situation is this:

Technologically, I believe Ethereum already possesses such carrying capacity today. And it continues to scale and iterate, so the future will be even less of a problem.

So regulation is the key.

Before the SEC issued its exemption rule, such relaxed conditions looked like a “pipe dream.” But now I believe this condition has become faintly visible. Moreover, this administration still has time ahead, and its direction and confidence in pushing the crypto ecosystem forward will not change.

So I believe the regulatory door will only open wider.

In the future, the full on-chaining of stock trading and the thorough elimination of traditional centralized exchanges at least no longer faces major obstacles.

If this scenario is realized, RWA could truly change our current trading methods and behaviors — and that is certainly a scenario large enough, imaginative enough, to matter.