Tokenised stocks are having their moment. After years in which the crypto industry tried to squeeze digital assets into the structures of traditional finance, the traffic is beginning to move in the opposite direction: conventional financial assets are being put on blockchain rails.
The numbers suggest something significant is happening. The numbers suggest something significant is happening. RWA.xyz recorded roughly 851,000 holders of tokenised stocks at the end of July, up almost 94% in 30 days, while distributed value stood at around $1.79 billion. While platoforms such as Ondo have reported rapid growth in the value of tokenised equities distributed to investors.
But beneath those headline numbers sits a much more basic question. If you buy a tokenised share of Apple, Nvidia or Tesla, do you actually own a share of Apple, Nvidia or Tesla?
The answer is: not necessarily. And that distinction may matter considerably more to investors than whether their asset lives on a blockchain.
One label, very different products
“Tokenised stock” sounds straightforward: take a conventional share and represent it as a digital token that can be held and transferred on a blockchain.
Legally, however, products carrying that label can be very different.
Matthias Hauser, Head of Product at Bermuda Institutional Privacy Protocol, says the terminology risks obscuring precisely the distinction investors most need to understand.
“A token representing legal ownership, a collateralised note and a synthetic price tracker can look identical in a wallet while giving investors completely different rights,” he says.
Some tokenised securities can represent ownership or a beneficial interest carrying shareholder rights. Others provide only economic exposure to the underlying security.
Hauser points to Ondo’s tokenised stocks as an example. According to his description of their structure, the products are notes issued by a bankruptcy-remote British Virgin Islands entity and backed by securities and cash in transit. The backing matters, but so does what it does not give the token holder.
“A token can track the economics of a share without making its holder a shareholder,” Hauser says.
In that structure, he says, investors do not receive direct title to the underlying stock, voting rights or statutory information rights. Instead, they hold a claim against the issuer and redemption rights governed by the product terms.
Nick Anderson, co-founder of Altcoin Pro and owner of Bullrunners, makes the same distinction more starkly.
“Depends who you buy from, and that’s the problem.”
Anderson contrasts products offering economic exposure with emerging exchange-based tokenisation models that preserve the rights attached to the underlying security.
The result is that two products can both be described as “tokenised stocks” while exposing investors to substantially different legal and counterparty risks.
Ask what you own, not what the token is called
For Andrew Tran, Director and Senior Fraud Lawyer at LegalByte, that makes the legal structure behind the token at least as important as the technology carrying it.
Tokenisation, he says, does not automatically give an investor the same protections they would receive by owning the underlying security through a conventional broker.
The questions investors need to ask include who holds the underlying asset, how it is custodied, what redemption rights exist, which jurisdiction governs the arrangement and what happens if an intermediary fails.
“A blockchain transaction may be transparent,” Tran says, while “the legal ownership structure behind the token remains considerably more complicated.”
Courtney Olujobi, Principal at Moon Pursuit Capital, reaches a similar conclusion from an investor’s perspective: look past the label and ask a simple question — what do I actually own?
Depending on the structure, he says, an investor might have direct ownership rights, exposure through a custodian or an instrument that merely tracks the economics of the underlying share.
Those distinctions become critical when dividends, voting rights, counterparty failure and enforceability enter the picture. Putting the instrument on-chain may make it easier to transfer. It does not make those legal questions disappear.
What does blockchain actually add?
The ownership question leads to another uncomfortable issue for the sector. Many of the benefits used to promote tokenised equities don’t actually require a blockchain. Fractional shares are the obvious example. Traditional brokers have offered them for years.
Nor is 24-hour trading inherently a blockchain invention. Markets can extend their operating hours without tokenising the underlying assets.
Even global access is partly a regulatory rather than technological question. A token can be distributed across borders easily, but securities laws, sanctions requirements, KYC rules and investor-eligibility restrictions don’t disappear when an asset moves on-chain.
Hauser makes an important distinction between 24-hour transferability and 24-hour liquidity.
“Twenty-four-hour transfer is not the same thing as twenty-four-hour liquidity.”
A token might move between wallets while the underlying stock exchange is closed, but that does not guarantee deep liquidity or reliable price discovery. Someone still has to make a market, and the ability to arbitrage the token against the underlying security matters.
Mike McCluskey, CEO of tx and RWA marketplace, similarly argues that fractional ownership is one of tokenisation’s least differentiated benefits because conventional brokers already provide it.
Where blockchain becomes more interesting, he says, is in programmable settlement and composability: allowing a tokenised security to interact with other on-chain financial applications rather than remaining trapped inside a broker’s database.
Instant settlement isn’t always what it sounds like
Settlement is perhaps the strongest technological argument for tokenisation — but even here the language requires care. A blockchain can transfer a token within seconds. That does not necessarily mean the underlying economic transaction has settled just as quickly.
If the share backing the token remains with a conventional broker, custodian or clearing system, the blockchain leg and the traditional securities leg can operate on different timetables.
“Instant token settlement does not mean the entire economic transaction has settled on-chain,” Hauser says.
The bigger potential emerges when both sides of a transaction can operate on compatible digital rails — a tokenised security on one side and a stablecoin or tokenised deposit on the other.
That could allow atomic delivery-versus-payment: the asset and payment changing hands as part of the same transaction rather than separate institutions subsequently reconciling their records. This is where the blockchain argument becomes considerably stronger.
Varun Choudhary, co-founder of Oro, argues that traditional finance remains fragmented across national regulatory systems, clearing houses and banking networks. Blockchain’s opportunity, in his view, is to reduce the number of intermediaries needed to distribute and settle assets internationally.
But even advocates acknowledge that blockchain is not responsible for every benefit attached to tokenisation.
The more interesting proposition is what happens when the asset can do something a conventional share held inside a brokerage account generally cannot.
From owning a stock to using one
That brings the discussion to composability.
A tokenised security can potentially move between compatible wallets and applications, settle against stablecoins, interact with lending markets, serve as collateral or carry programmable compliance rules.
Hauser describes this as blockchain’s genuinely distinctive contribution:
“Blockchain matters most when an asset needs to leave a broker’s closed database and interact with a wider financial ecosystem.”
That is a rather different proposition from simply being able to buy $10 worth of Apple at midnight.
And it may explain why the most important question surrounding tokenised stocks is whether putting securities on programmable rails creates useful functions that the existing system cannot provide efficiently.
The risks move with the asset
That potential comes with a new collection of risks.
Investors may face not only normal equity-market risk but issuer and custodian exposure, smart-contract vulnerabilities, wallet and bridge risk, thin secondary liquidity and uncertainty about which jurisdiction ultimately governs their claim.
McCluskey warns that secondary-market liquidity remains thin across many tokenised-equity products, with wider bid-ask spreads than investors are accustomed to on major traditional exchanges.
Transferability can also be more complicated than the promise of an always-open blockchain suggests. A token subject to securities restrictions may not be transferable to every wallet or venue, and an investor who acquires a token on a secondary market may not necessarily have the same redemption access as somebody who has completed the issuer’s onboarding process.
For Tran, these complications will become more significant as real-world assets move on-chain.
Custody, identity, sanctions, fraud, smart-contract security, ownership records and regulatory jurisdiction do not cease to matter. In some cases, tokenisation simply gives those old financial questions a new technological layer.
So what are investors buying?
There is no single answer — and that may be the most important lesson of the tokenised-stock boom.
A tokenised stock can be a digitally represented security carrying recognisable shareholder rights. It can also be a contractual claim backed by shares held elsewhere, or an instrument designed primarily to reproduce the economics of a stock.
Those things may look remarkably similar inside a digital wallet but they are not the same investment.
The industry’s challenge, therefore, isn’t simply persuading investors that putting stocks on a blockchain is useful. It is making clear what rights sit behind the token — and demonstrating that the new infrastructure adds something substantial beyond features conventional finance can already provide.
Fractional shares are not the revolution. Nor, by itself, is trading at midnight. The more consequential possibility is a financial asset that can move between applications, settle against digital cash and operate as part of a programmable financial system.
But before asking what a tokenised stock can do, investors would be wise to establish something more fundamental:
What, exactly, do I own?
