Tokenised Stocks: What They Are, What They Aren't, and Why They Matter

Tokenised stocks are making headlines as the finance world flirts with the blockchain revolution. From Wall Street to Hong Kong, everyone seems to be talking about bringing equities on-chain. But as exciting as it sounds to have Apple or Tesla in your crypto wallet, it's important to understand what tokenised stocks really are – and equally important, what they are not. In this comprehensive look, we'll explore the proliferation of tokenised stocks, their use cases and benefits, and clear up some common misconceptions. Along the way, we'll keep a global perspective and touch on both primary markets (raising money) and secondary markets (trading those tokens).

What Exactly Are Tokenised Stocks?

Simply put, a tokenised stock is a digital token on a blockchain that represents a share (or a fraction of a share) of a real company. Think of it as a crypto wrapper for a traditional stock. Instead of owning a paper share certificate or an entry in your broker’s database, you hold a cryptographic token in a digital wallet. That token is meant to confer the economic value of an actual stock.

How does this work in practice? Typically, a trusted institution (a custodian or broker) holds the actual shares of the company in reserve. They then issue tokens on a blockchain that are each linked to one underlying share (or a fraction thereof). For example, if a custodian holds 100 shares of MegaCorp Inc., they could issue 100 tokens on a blockchain, each token representing one share (or say 1,000 tokens each representing 0.1 of a share, if fractional).

These tokens can be bought, sold, and transferred just like cryptocurrencies, but their value is tied to the price of the real-world stock. Because they reside on a blockchain, tokenised stocks can leverage the blockchain’s features. They can potentially be traded 24/7 across borders, settled near-instantly, and divided into tiny fractions.

It’s not just theory anymore. In recent years, several platforms have launched tokenised versions of well-known stocks. Crypto exchanges and fintech firms alike are creating offerings so that investors can get exposure to equities through blockchain. The idea has moved from a futuristic concept to something functional: real users around the world are buying tokenised Apple or Tesla shares on various platforms. The stock market on blockchain is gradually becoming a reality.

What Tokenised Stocks Are Not?

Before we dive into why this innovation is exciting, let's pump the brakes for a reality check. Tokenised stocks are not a magical new type of equity that bypasses all the rules of finance. In fact, most current tokenised stock offerings are more like fancy IOUs or derivatives rather than a new class of stock. Here are some key things tokenised stocks are not, in the current landscape:

• When you buy a tokenised stock on, say, a crypto exchange, you are usually not being registered as a shareholder of the underlying company. The actual share is held by the provider or a custodian on your behalf. The token in your wallet gives you economic exposure (price movements, and often dividends), but it typically doesn’t give you shareholder voting rights or direct legal ownership. In other words, holding a token representing Google doesn’t mean Sundar Pichai knows to invite you to the shareholder meeting.
• Tokenised stocks represent existing assets (company shares) in a new format. They shouldn't be confused with cryptocurrencies or ICO tokens that create a new asset out of thin air. If you own a tokenised Microsoft stock, its value is tied to Microsoft’s stock price in the real stock market. The token is a mirror, not an entirely separate thing. This also means the usual forces that move stock prices (company earnings, market trends, Elon Musk’s tweets about competitors, etc.,) will move your token’s price just the same.
• A big ethos in crypto is “be your own bank” with no intermediaries. Tokenised stocks only partially achieve this. Yes, you might be trading on a decentralised ledger, but remember: a real-world entity is holding the actual stocks in custody. You have to trust that custodian to actually hold the shares and honor the tokens. In many ways, this setup is akin to stablecoins (where a company holds USD in a bank and issues tokens like USDC or USDT). If the custodian mismanages funds or the platform goes bust, token holders could be left in the lurch. In essence, tokenised stocks today introduce new tech, but they still rely on some old-school trust.
• Buying a stock in token form doesn’t mean securities laws vanish. In fact, these products often exist in a regulatory gray zone. Many providers offer them only outside certain jurisdictions (for instance, several crypto exchanges offer tokenised U.S. stocks to customers outside the U.S., because U.S. regulators haven’t fully blessed the practice yet). Regulators around the world are actively scrutinizing how tokenised stocks fit into laws – investor protections, market integrity, etc. The bottom line: a tokenised stock is still a security, just delivered in blockchain form.
• It’s worth noting that not every "tokenised stock" product is identical. Some tokens are backed 1:1 by shares (the issuer holds a share for every token and even pays out dividends to token holders), while others might be synthetic – basically contracts that track the price of the stock without holding it (more like a CFD or a swap). Always read the fine print of how a given platform implements tokenised stocks. For instance, Robinhood's much-hyped new stock tokens in 2025 offer price exposure and even dividend rights to U.S. equities on a blockchain, but redemption is only in cash – meaning you can sell the token for money, but you can’t redeem it for the actual underlying stock certificate. In essence, Robinhood’s tokens are wrapped stocks you can trade on-chain, but they aren’t handing you the actual share ownership. It's an important distinction: you get the economic benefits, but the token remains a layer removed from the traditional share registry.

So, Why Bother? Use Cases and Benefits of Tokenised Stocks

Okay, so if tokenised stocks are largely a new technical wrapper around the same old equities, why all the excitement? It turns out there are some compelling benefits and use cases that explain the buzz. By merging traditional stocks with blockchain technology, we can unlock features that conventional markets struggle to provide. Here are some of the major benefits and use cases driving the proliferation of tokenised stocks:

• Tokenisation allows even high-priced stocks to be broken into tiny pieces. You no longer need $3,000 to own a slice of a company whose stock trades at $3,000 a share – with tokens, you could buy 0.01 of that share for $30. This fractional ownership isn’t entirely new (some traditional brokerages offer fractional share trading), but blockchain makes it easier and potentially more universal. For markets where investors have historically been priced out of blue-chip stocks, tokenisation is a game changer. It lowers the barrier to entry, so a college student in Nigeria or an entrepreneur in Vietnam can invest in Berkshire Hathaway or Google with whatever amount they have. In short: everyone gets a seat at the table, no matter how small their chair (or wallet).
• The crypto markets never sleep. In contrast, stock markets keep bankers’ hours and take weekends off. This around-the-clock trading offers flexibility especially to global investors who aren’t in the same time zone as New York or London. No need to wait for the opening bell – the market is whenever you want it to be. This could also reduce gaps and surprises; for instance, if major news breaks on a Sunday, token markets can reflect it immediately instead of waiting for Monday’s open. 
• In traditional equity markets, when you buy or sell a stock, the trade might take T+2 days to fully settle (meaning actual transfer of ownership and money). With blockchain, the trade clears as soon as the transaction is confirmed on-chain. Faster settlement reduces counterparty risk (the risk someone defaults before the trade settles) and frees up capital.
• By cutting out some middlemen (like clearinghouses or certain broker fees) and using automated smart contracts, tokenised stock trading can potentially be cheaper. Of course, the platforms might still charge a fee or spread, but overall, the infrastructure can be leaner. For example, distributing dividends to thousands of token holders can be done by a few lines of code executing on the blockchain, rather than a flurry of bank transfers and paperwork. Corporate actions (like splits or mergers) could be programmed into tokens for smoother processing. In theory, this efficiency could trickle down to investors through lower fees and also make it cost-effective to service investors with very small holdings (since a smart contract doesn’t care if you own $10 or $10 million – it will execute the same).
• A stock exchange is often geographically tied – if you want to buy Japanese stocks, you usually need access to the Tokyo exchange or an intermediary offering you an ADR. Tokenised stocks can be accessible to anyone with an internet connection and a compatible wallet or account, regardless of geography (subject to legal restrictions, of course). This has huge implications: investors can diversify globally with fewer hoops. Likewise, companies can potentially tap a global investor base without needing multiple exchange listings. A tech startup in India might one day issue tokens that any accredited investor around the world could buy, rather than being limited to domestic stock markets or expensive cross-listings.
• Because tokenised stocks live on programmable platforms, they can be integrated into other financial applications. Imagine using your stock tokens as collateral in a decentralised finance (DeFi) app to borrow against, or pooling tokenised stocks to create index fund tokens, or automating complex trades via smart contracts. We’re already seeing early signs of this: some platforms are integrating tokenised equities into DeFi liquidity pools and lending protocols. It opens the door for creative financial products. It’s as if stocks could plug-and-play into any software, allowing innovation at the speed of coding. (Whether this makes regulators nervous is another question – but technologically, the cat’s out of the bag.)
• Tokenisation isn’t just about trading existing stocks; it can reinvent primary issuance too. Companies, especially smaller ones or those in markets without strong stock exchanges, can raise capital by issuing tokenised shares directly to investors. This is essentially the security-token offering (STO) concept. By doing so on blockchain, they might sidestep some of the heavy paperwork of an IPO, reach investors globally, and do it at lower cost.

A Global Movement: Stock Exchanges and Regulators Hop on Board

Tokenised stocks might have started on the fringes, but the concept is quickly gaining global legitimacy. Around the world, stock exchanges and regulators are exploring or actively building tokenised stock markets. This is a sure sign that the idea is moving in the right direction – from experimental to mainstream. Let’s take a quick world tour:

The US is home to the biggest capital markets, and while regulation here has been cautious, the winds are shifting. Major players are pushing the envelope. In 2025, Coinbase – one of the largest crypto exchanges – publicly revealed it is seeking SEC approval to offer tokenised stock trading to U.S. customers. If it succeeds, Americans could trade stock tokens under the SEC’s nose, a major step that would put blockchain-based stock trading in direct competition with the likes of Robinhood and traditional brokerages. Additionally, an earlier initiative called BSTX (Boston Security Token Exchange) received SEC approval to operate a blockchain-powered exchange for securities – indicating that even the regulators see potential in using DLT (distributed ledger technology) to upgrade market infrastructure.

Europe has been quite proactive in exploring tokenised securities. The EU's DLT Pilot Regime created a sandbox for trading and settling tokenised financial instruments. Several European stock exchanges jumped in. For example, Switzerland  launched the SIX Digital Exchange (SDX), a fully regulated digital exchange that has already issued tokenised bonds and is ready for stocks. In the EU, exchanges like those in Spain and Luxembourg have run pilot projects trading tokenised bonds under the new regime, paving the way for equities. The London Stock Exchange Group (LSEG) (in the UK) recently announced plans for a blockchain-based platform for traditional assets – essentially aiming to tokenize assets like stocks and offer a new digital markets business. Germany’s Deutsche Börse has invested heavily in digital asset infrastructure and ran pilots for tokenised securities (they have partnerships to use DLT for settling securities, and they’re exploring token markets through ventures and consortia). In France, Italy, and elsewhere, regulators are tweaking rules to accommodate DLT-based trading under the EU pilot, trying not to miss out. 

Across Asia, interest in tokenised stocks and assets is growing. Singapore and Hong Kong – major financial hubs – have launched regulatory frameworks for security tokens. Singapore’s stock exchange (SGX) partnered on a platform called Marketnode to issue and trade digital bonds; naturally, equity could be next. Hong Kong, as it warms back up to crypto, has been looking at how to integrate tokenised securities within its markets (Hong Kong’s regulator has started allowing licensed platforms for digital assets, and discussions include security tokens). Japan updated its laws to recognize electronic share registry systems, and major Japanese financial firms have trialed tokenising bonds and stocks (Mitsui, SBI and others are on that track).

 In the Middle East, Abu Dhabi and Dubai have been very forward-looking: Abu Dhabi’s international financial center (ADGM) created a regulatory framework for virtual assets that includes security tokens, and they’ve attracted startups building tokenised securities exchanges. The Tel Aviv Stock Exchange in Israel announced a plan to expand into blockchain and tokenised asset trading as part of its strategy. Even Saudi Arabia and Bahrain have run fintech sandboxes that include tokenised securities. It's truly a global race – not to mention emerging markets like Africa where leapfrogging to blockchain could open up capital markets.

Many exchanges are in fact choosing to join – either by investing in new tech or lobbying for regulatory changes to allow them to tokenize the assets they list. In addition to LSE and SIX mentioned, even the Nasdaq has made moves, like exploring blockchain for private market share trading and building custody for digital assets. Australia’s ASX (Australian Securities Exchange) attempted a bold project to replace its settlement system with a blockchain-based one (though that project hit some snags, it shows the intent to modernize with DLT). India’s regulators have discussed using blockchain for record-keeping in markets. We also saw the first national stock exchange to list a tokenised security was actually in Seychelles (MERJ) as noted earlier – a tiny exchange making a big statement that was heard worldwide. Now, in 2025, these isolated efforts are coalescing into a trend: tokenisation of stocks is on the strategic roadmap of exchanges globally.

Challenges and the Road Ahead 

No comprehensive discussion would be fair without highlighting the challenges and open questions. Tokenised stocks hold a lot of promise, but they also inherit or create some issues that need ironing out.

First, as mentioned, one of the biggest question marks is how regulators treat tokenised equities. We may see new regulations specifically addressing tokenised securities to clarify things. Until then, many providers will tip-toe, offering products only where they’re clearly allowed and sometimes holding back in major markets like the US. Compliance requirements could also reduce some of the blockchain efficiency if not handled smartly – for instance, a truly permissionless, anonymous trading of stock tokens is a regulator’s nightmare (think money laundering and sanctions evasion concerns). So, finding the balance between open access and necessary controls will be key. You might end up with whitelisted blockchains or permissioned networks for regulated stock tokens, which is fine but different from the free-wheeling crypto markets people are used to.

Second, a stock market is only as useful as its liquidity – the ease of buying and selling without big price swings. Many tokenised stocks currently have low trading volumes compared to their Wall Street counterparts. They are new, relatively unknown, and often restricted to smaller venues. This can mean wider bid-ask spreads and difficulty executing large orders. It’s a bit of a chicken-and-egg: without more users, liquidity stays thin; without liquidity, it’s hard to attract users. As more platforms and major players (like big exchanges or brokers) offer tokenised stocks, this should improve. But it will take time for the tokenised markets to reach the depth of traditional exchanges. The goal is that eventually, the two might merge or at least arbitrage away differences – if a token price strays from the actual stock price, traders will jump in to profit, which keeps things aligned. However, robust liquidity will require big institutional participation too, and many institutions will wait for clearer regulations before diving in.

We touched on this, but it’s worth reiterating: when you hold tokenised stocks, you’re adding at least one extra entity to the chain of ownership – the token issuer/custodian. This introduces counterparty risk that people might not fully appreciate. If that entity fails to hold the underlying stocks properly or mismanages the collateral, token holders could lose value or face legal battles to claim what’s theirs. This is not just a theoretical concern: one need only recall the collapse of FTX in 2022. FTX offered tokenised stocks via a partner, and when FTX went bankrupt, holders of those tokens were left in limbo for a while regarding how to redeem or what would happen to the underlying shares. While reputable and regulated issuers mitigate this risk (e.g., ensuring the underlying shares are held in segregated accounts, regularly audited), investors should be mindful that “not your keys, not your coins” extends to “not your shares” in this context. True decentralisation – where the token itself is the share and no one can default on you – might come if laws evolve to recognize on-chain registration as definitive. Until then, some trust in intermediaries remains necessary.

Third, different platforms might use different blockchains and token standards for tokenised stocks. This can lead to fragmentation. If your Apple stock token is on one chain and mine is on another, they aren’t directly interchangeable or jointly liquid. Interoperability solutions or standard approaches could help unify markets. Also, the choice of blockchain matters: issues of scalability, transaction fees, and security of the smart contracts are all important. As the tech matures and perhaps specific blockchains are optimized for financial assets, these concerns should lessen. Industry groups and consortia (like those led by the World Economic Forum or Global Blockchain Business Council) are actively working on standards for tokenised assets to make them safer and more interoperable.

Finally, for many investors, the concept of tokenised stocks is new and possibly confusing. People understand what a stock is, and some understand what crypto is, but mixing them can raise questions. How do I know this token really represents the stock? Who ensures its value? Can I convert it to the real stock? These are natural questions, and the industry will need to educate users in plain terms. There’s also possibly some psychological hurdle: large institutions might be hesitant to say “we trade stocks on a blockchain” because it sounds like merging with the wild west of crypto. That stigma is fading as crypto tech goes mainstream, but it hasn’t fully disappeared. Clear communication, transparency about how systems work, and maybe not using too much technical jargon in customer-facing materials will help broader adoption.

Despite these challenges, the trajectory for tokenised stocks is largely positive. Solutions are being explored on all fronts: laws are gradually adapting, technology is improving, and more players coming in will likely bring liquidity and trust through reputable brands.

Conclusion: Evolution, Not Revolution – But Certainly a Big Step Forward

Tokenising stocks doesn’t tear down the entire edifice of traditional finance overnight, but it certainly is an evolution of how we handle equity, using new tools to improve an old system. The exciting part is that it’s not just theory anymore – it’s happening in real time. Whether it’s Robinhood putting stocks on a blockchain for European users, Kraken enabling on-chain stock trading integrated with DeFi, or legacy exchanges like LSE and Nasdaq gearing up to enter the chat, the momentum is undeniable.

For investors, this means more choices and more flexibility. Your portfolio in a few years might seamlessly contain a mix of crypto, tokenised stocks, and other tokenised assets, all side by side, all tradable on the same apps or wallets. Geographical and procedural barriers could be lower – for example, as an investor you might not care whether a stock is listed in New York or Tokyo; if it’s tokenised, you can buy it either way on a global platform. For companies, it could mean new ways to raise money and manage their shareholder base. Imagine a world where a startup can do a tokenised equity offering, and its cap table is automatically maintained on-chain with every investor (from venture capitalists to a retail investor in another country) recorded transparently.

That said, tokenised stocks today remain a hybrid. They offer the speed and openness of crypto markets but are still tethered to the legal and financial realities of traditional markets. In practical terms, you still rely on legal frameworks, you still ultimately need real businesses generating profits behind those tokens, and regulators still have a big say in how this will unfold.

As we move forward, keep an eye on trust and transparency. Those will be the keystones of success for tokenised stocks. Providers need to be transparent about how tokens work and be worthy of investors’ trust. Regulators need to provide enough clarity that trustworthy players can operate (while weeding out the charlatans). And the technology needs to prove it can handle scale and security for something as important as the world’s equity markets.

To answer the ultimate question: Is this moving in the right direction? – Absolutely, yes. The fact that stock exchanges and fintech innovators across the globe are converging on tokenisation suggests real value is being recognized. We are likely witnessing the early days of a financial infrastructure upgrade that, in a decade’s time, people will take for granted. Much like we moved from paper stock certificates to electronic records decades ago, we may move from today’s electronic records to blockchain-based tokens as the new normal.

In my usual degen banker tone, one might say: Every stock, bond, and asset will be tokenized – and while that might be slightly hyperbolic, it speaks to a trend that feels inevitable. Tokenised stocks are showing that the marriage of traditional finance and crypto tech can bring out the best of both worlds. It’s not a total revolution, but it is a significant evolution – one that aims to make markets more accessible, more efficient, and perhaps a tad more interesting.

Tokenised stocks are here, growing, and worth understanding. They’re not a cure-all and they haven’t thrown the rulebook out (the stock market hasn’t gone full crypto anarchy), but they offer a glimpse of a future where investing is a more inclusive, flexible, and technologically empowered experience. And that future, dear reader, is one stock token at a time, steadily coming to fruition.