In the previous article we looked at US Treasury tokenization. This time I want to keep going with a direction more likely to interest ordinary crypto users: tokenized stocks.
These days, buying and selling US stocks no longer has to go through traditional brokerage software. Some Web3 trading platforms have started turning shares of listed companies such as Apple, NVIDIA, and Tesla, along with ETFs that track US stocks, into tokens that can be held and traded on a blockchain.
It sounds convenient: we used to trade BTC and ETH onchain, and now even US stocks seem able to fit into our wallets.
But there are several questions worth studying seriously:
Once a stock is onchain, what exactly am I buying? Does holding a stock token onchain amount to actually owning the company's shares? How is it different from a traditional brokerage account?
I looked into some materials and decided to start from the most basic concepts and untangle what stock tokenization really is.
1. What exactly is stock tokenization?
Stock tokenization, put simply, means using digital tokens on a blockchain to represent the shares themselves, or specific economic rights related to those shares.
Here is an example.
Suppose you want to buy 1 share of NVIDIA.
In traditional financial markets, you would usually place an order through a securities account, the trade would follow stock market rules, and your holdings would be managed by the corresponding securities registration and custody systems.
Under a stock tokenization model, an institution can use legal and custody structures to express the rights attached to shares as tokens on a blockchain.
In this way, eligible users can hold and transfer these tokens with a crypto wallet and gain economic exposure to the corresponding shares through a particular platform.
For example, a platform might offer a token pegged to NVIDIA's share price, with the token price moving with the market price of the underlying stock.
If NVIDIA's stock price rises, the token price usually rises with it; if the stock price falls, token holders may take losses too.
But one point must be emphasized:
Stock tokenization is more than writing a ticker symbol into a smart contract. What really matters is what rights the token represents.
Different products can have completely different legal structures. Some represent ownership of real securities; some represent indirect interests arising from holding securities through a custodian; and others merely provide synthetic investment exposure linked to a stock's price.
They may look very similar, but what investors actually own is not necessarily the same.
2. How do stocks get moved onto a blockchain?
We can understand the whole process with a simple example.
Suppose an institution wants to launch an onchain token corresponding to Apple shares.
First, the institution needs to settle the product's legal structure and exactly what rights token holders will receive.
Second, according to the product design, the issuer or a relevant custodian buys Apple shares through traditional securities markets, or puts in place another arrangement over securities interests that meets legal requirements.
Third, it issues the corresponding onchain tokens through a smart contract, establishing the mapping between the tokens and the underlying securities interests.
Fourth, eligible investors subscribe for tokens through the designated platform. After that, tokens can be transferred or traded within permitted limits according to the product rules.
Fifth, when investors want to exit, they can sell tokens on a secondary market or, where the product supports it, apply to the platform to redeem them.
Note that stock tokenization does not always follow the same process.
Some products are issued directly on a blockchain by the securities issuer itself; some involve a third party holding traditional shares and then issuing tokens representing the related interests; and still others give investors stock price exposure through derivatives or other contractual arrangements.
So when you research a stock token, don't just look at which company it tracks. Look at who issues it, who holds the underlying securities, who is responsible for custody, and what legal rights token holders have.
3. What are the main models of stock tokenization?
I consider this the most important part of researching real-world assets (RWA) in the stock category.
Many products advertise themselves as Tokenized Stocks, but their structures can differ substantially.
1. Direct tokenization by the issuer
Under this model, the securities issuer or its agent issues securities directly on a blockchain.
For example, a company issues its eligible shares in token form, and the blockchain becomes part of the record of ownership of its securities.
In this structure, token holders receive the corresponding rights under the legal terms of the underlying securities.
If the token represents shares carrying voting and dividend rights, holders can exercise those rights according to the rules of that security.
In practice, however, not all listed companies have adopted this issuance approach, and the relevant laws, securities registration, and trading rules must also meet the requirements.
2. Third-party custody model
This model is easier to understand.
Suppose an institution first buys Apple shares in traditional securities markets, then issues onchain tokens representing the related securities interests through compliant custody and legal structures.
An investor holding the tokens may, in effect, hold the interests in the underlying shares indirectly through the custody system.
The key point here is: between the token holder and the underlying shares there may sit the issuing institution, the custodian, and other legal arrangements.
Even when a product claims to be backed by real shares, you still need to research:
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Who keeps custody of the underlying shares?
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Are the assets segregated from the issuer's own assets?
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Do token holders enjoy dividends and voting rights?
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If the issuing institution goes bankrupt, how do holders assert their claims?
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Can investors redeem for the corresponding securities, or only for cash?
These questions matter more than whether the token can be freely transferred on a blockchain.
3. Synthetic stock exposure
The third model differs clearly from the first two.
Some products do not give investors direct ownership of the corresponding shares at all. Instead, they use derivatives or other contractual arrangements to make the token price track a particular stock.
For example, a token may be designed to track Tesla's share price.
If Tesla's stock goes up, the token may go up; if Tesla's stock goes down, the token may fall as well.
But that does not mean token holders actually own Tesla shares.
The investor's rights depend on the contractual arrangements provided by the token issuer, rather than automatically conferring shareholder status in the underlying company.
So even if two tokens track the same stock, they can differ greatly in dividends, voting, redemption, and issuer credit risk.
These three models are a practical framework for understanding stock tokenization, but the legal classification of any specific product must still be based on its actual issuance documents and the applicable law.
4. Which stock tokenization projects are worth watching today?
With the basic structures understood, let's look at real cases.
1. Ondo Stocks
Ondo Finance is one of the projects worth watching in the RWA space.
When I researched Treasury tokenization earlier, I came across its USDY and OUSG. In researching stock tokenization this time, I went on to look at its Ondo Stocks.
According to the official introduction, Ondo Stocks provides eligible investors outside the United States with onchain investment exposure to US-listed stocks and ETFs.
For example, the related products include tokens corresponding to shares of NVIDIA, Tesla, and Apple, as well as ETF products tracking the US stock market.
Ondo states that its related tokens are supported by the corresponding stocks or ETFs and by cash in the settlement process, with custody and security arrangements providing holders with corresponding protections.
But note: this does not mean every token holder automatically becomes a direct registered shareholder of the underlying company. The specific rights still depend on the legal structure and issuance terms of the product.
One feature of Ondo Stocks is its attempt to combine the liquidity of traditional securities markets with the token transfer capability of blockchains.
For supported products and trading arrangements, users can gain economic exposure to the relevant stocks through onchain wallets without having to operate entirely the way traditional brokerage software works.
However, the services come with geographic and investor eligibility restrictions, so they cannot be simplistically understood as freely purchasable by anyone in the world.
2. Securitize Stocks
Another case worth watching is Securitize.
Securitize has long been involved in issuing and managing tokenized securities and funds, and it is also expanding onchain stock-related services.
Its stock product page emphasizes that the related tokens are backed by real underlying shares and connected to the corresponding securities through arrangements such as segregated accounts.
For products like these, the research focus is on how securities holding, custody, and shareholder rights are linked together through legal and technical structures.
For stock tokenization, the real challenge is not just turning shares into tokens, but making sure investors' rights can still be properly handled after the tokens move.
For example, if a company declares a dividend, how does the product calculate and handle the related proceeds? If a shareholder vote is involved, can token holders participate? If the custodian runs into problems, how are investors' interests protected?
These are all questions that need further verification against the product documents.
5. Does buying a stock token mean actually owning the shares?
This is the most important question in the whole article.
The answer is: not necessarily.
We can break it into four aspects.
First, stock ownership.
If the product represents ownership of real shares, the investor may receive the corresponding shareholder rights; if the product is only synthetic exposure, the investor may have no direct rights against the underlying company.
Second, dividend distribution.
Traditional shares may pay cash dividends, but how a tokenized stock product handles dividends depends on its specific rules. Some products may pass the related proceeds through to holders, others may use different price or yield handling mechanisms, and taxes and fees may also be involved.
Third, voting rights.
Holding a stock token does not necessarily mean you can directly vote at the company's shareholder meetings. Voting rights may be exercised on your behalf by the custodian, or may be limited by the product terms.
Fourth, legal protection.
Even if the product is backed by real shares, you need to know exactly what rights token holders have in law. If the issuer or the custodian goes bankrupt, whether holders can directly claim the underlying securities interests depends on the actual structure and the applicable law.
So you cannot take a project's marketing claim of "1:1 backing" as proof that you have exactly the same rights as a shareholder in a traditional brokerage account.
Asset backing, legal ownership, and economic exposure are three concepts that need to be verified separately.
6. How does stock tokenization differ from a traditional brokerage account?
One of the biggest appeals of stock tokenization is that it connects traditional securities with blockchain infrastructure.
But it is not a simple replacement for traditional brokerage accounts.
Traditional brokerage accounts sit on mature systems for trading, clearing, custody, and investor protection. Investors trade shares according to securities market rules and obtain the corresponding rights based on how they hold.
Stock tokenization, by contrast, attempts to have some securities interests recorded and transferred on a blockchain.
It may bring some new ways of use.
For example, in supported products, investors can hold tokens in crypto wallets, use stablecoins to take part in trading, and transfer tokens to other wallets or applications within the permitted scope.
But trading on a blockchain does not mean the underlying stock market becomes an all-day market.
Even if a token can keep moving onchain, the pricing, trading, clearing, and redemption of the underlying shares remain affected by traditional market hours and product rules.
When the stock market is closed, the onchain trading price may also diverge from the price after the traditional market next opens.
So what stock tokenization brings is not simple "liberation of stock trading", but a new way of connecting traditional securities interests with blockchain infrastructure.
7. What value does stock tokenization offer?
Having studied it, I see three directions worth attention in stock tokenization.
First, lowering the usage barrier for some investment products.
Traditional brokerage accounts can involve account opening, trading channels, fund transfers, and regional restrictions. Eligible onchain products may offer another way to access traditional securities markets.
But whether you can actually buy, what the minimum investment is, and which restrictions apply still depend on the specific product.
Second, making it easier for traditional securities to combine with onchain finance.
If stock tokens have a proper legal structure and transferability, they could in the future connect with wallets, trading platforms, and some DeFi applications.
However, not all stock tokens can freely enter DeFi, and not all lending protocols will accept them as collateral.
Third, exploring new ways of asset transfer and settlement.
Blockchains can provide open, programmable records of assets and may improve transfer and settlement efficiency in certain steps.
But whether they really lower costs and raise efficiency still needs to be compared against specific products and traditional financial infrastructure.
These potential values are worth studying, but they should not be treated as industry achievements that have already been fully realized.
8. What are the risks of stock tokenization?
Stock tokenization does not remove the risks of traditional stock investing; it may add some new ones.
First is the market risk of the stocks themselves. The prices of Apple, NVIDIA, and Tesla will still rise and fall; tokenization does not change that.
Second is issuer and custody risk. Even if the product is backed by real shares, investors still need to understand who holds the assets, whether they are segregated, and how they are handled in a bankruptcy.
Third is legal rights risk. Token holders may have different rights from traditional shareholders, and particular attention is needed on dividends, voting, redemption, and recourse mechanisms.
Fourth is liquidity risk. Tokens being tradeable onchain does not mean they can be filled at a reasonable price at any time. Price gaps can also open between the underlying stock market and onchain trading.
Fifth is smart contract and wallet risk. Token transfers and custody depend on the underlying technical infrastructure, and contract bugs, lost private keys, and cross-chain bridge problems can all cause losses.
Finally there are regulation and regional restrictions. Stocks are regulated financial assets, and tokenization does not automatically free them from securities law.
So stock tokenization does not eliminate the risks of traditional stocks; on top of the existing market risks, it adds technical, custody, and legal structures that investors need to understand.
9. My view on stock tokenization
I am very optimistic about stock tokenization; I even believe that in the future almost everything will move onchain.
What truly matters in stock tokenization has never been the technology, but compliance.
If a product merely turns a stock price into a token without clear asset backing, legal rights, and redemption mechanisms, it is more like a new form of trading wrapper than a genuinely large piece of financial innovation.
Conversely, if a product can clearly explain who holds the underlying shares, what rights the token represents, how dividends are handled, how redemption works, and how investors are protected if the issuer goes bankrupt, then it is far more worthy of deep research.
I also think the value of stock tokenization and the value of a project's governance token need to be analyzed separately.
The fact that a platform offers many stock tokens does not mean the platform token it issues necessarily benefits. You still need to study how the platform charges fees, who the business revenue belongs to, and whether the relevant token carries real economic rights.
This article remains my personal research notes on learning about RWA. If anything is understood incorrectly, corrections from readers are welcome.
This article is for learning and research discussion only and does not constitute investment advice.