Tokenized Stocks

Tokenized stocks are digital representations of traditional equities issued and recorded on a blockchain. They bridge traditional capital markets and decentralized finance (DeFi), allowing shares of companies to be bought, sold, and transferred with the speed and programmability of crypto assets.

Understanding how they function requires looking at their legal structures, operational mechanics, benefits, and inherent risks.

1. The Three Legal Models of Tokenized Stocks

A tokenized stock ticker can represent vastly different legal and financial realities depending on how it is structured:

• The Registered Share (Native Digital Security): The token represents direct legal ownership of a security recorded natively on a blockchain serving as the official book of record. Regulatory frameworks like Switzerland’s SIX Digital Exchange (SDX) support this model. Holders retain full underlying shareholder rights.
• The Custodial Entitlement (1:1 Backed): This is the most common retail-facing model. A licensed financial custodian or special-purpose entity holds the real shares in traditional markets, and a 1:1 digital token is issued against that pool. Platforms like Backed Finance (issuing tokens like $bNVDA$) and offerings by brokerages like Robinhood in certain jurisdictions follow this route. Holders possess a claim on the custodial pool rather than a direct entry on the company’s corporate cap table.
• The Synthetic Derivative: These…