Markets puts Tesla shares on-chain under regulator glare

Markets has begun offering around-the-clock, on-chain trading of a synthetic version of Tesla stock, a move that sharpens the debate over how far crypto platforms can go in replicating traditional equities without triggering the full weight of securities regulation.

The product, described by Markets as a tokenised representation of Tesla, allows traders to take leveraged positions of up to 12 times and to buy or sell at any hour, including when United States equity exchanges are closed. The company says the instrument tracks the price of Tesla shares through a synthetic structure rather than direct ownership, settling trades on a public blockchain.

Supporters of tokenised equities argue that such products expand access, cut settlement times and remove geographic barriers for investors unable to trade US stocks easily. Markets has framed the launch as part of a broader push to merge decentralised finance mechanics with familiar assets, pointing to growing demand for continuous trading and capital efficiency.

Yet the initiative has landed in a tense regulatory climate. Supervisory bodies across the United States, Europe and Asia have been signalling tighter scrutiny of crypto platforms that offer products resembling securities or derivatives without registering as broker-dealers or exchanges. Officials have repeatedly warned that simply labelling an instrument “synthetic” does not automatically exempt it from securities law if its economic reality mirrors a listed share.

Legal specialists say the Tesla-linked token raises questions on multiple fronts, from investor protection to market integrity. Unlike traditional equities, holders of the synthetic token do not receive shareholder rights such as voting or dividends, even though price exposure may be similar. That distinction, while clearly disclosed, could be misunderstood by retail traders attracted by the Tesla brand and the promise of leverage.

Another concern centres on price discovery and manipulation. Because the token trades continuously on-chain, its price can diverge from Tesla’s share price during periods when US markets are shut. Arbitrage mechanisms are intended to keep the token aligned, but sharp moves in the underlying stock at the open can expose traders to sudden losses, particularly those using high leverage.

Markets says safeguards are in place, including margin requirements, liquidation thresholds and oracle systems that feed external price data into the blockchain. The company argues that its model is comparable to contracts for difference or other cash-settled derivatives widely offered in various jurisdictions, though those products are typically subject to licensing and conduct rules.

The Tesla launch fits into a wider trend of crypto-native firms experimenting with tokenised versions of stocks, exchange-traded funds and commodities. Several platforms have tested similar offerings over the past few years, often retreating after regulators signalled discomfort or opened investigations. The persistence of the idea reflects both technological ambition and the commercial appeal of tying digital assets to high-profile companies.

Tesla itself is not involved in the product and has made no public comment on the use of its shares as a reference asset in on-chain trading. Analysts note that the electric vehicle maker’s volatile share price makes it particularly attractive for leveraged products, while also amplifying risk for inexperienced traders.

Market participants are divided on whether such innovations represent the future of finance or a regulatory grey zone destined for enforcement action. Some institutional investors see tokenisation as inevitable, but argue it must occur within clear legal frameworks, potentially through partnerships with licensed exchanges or custodians. Others warn that unchecked growth of synthetic equities could undermine confidence if losses mount or if platforms fail during periods of stress.