Tokenized stocks: digital representations of traditional shares

Tokenized stocks are digital representations of traditional company shares, such as Apple or Tesla, issued as tokens on a blockchain. These assets fall under the broader category of Real World Assets (RWA), which includes commodities, bonds, and real estate brought onto distributed ledgers.

There are three primary structures for tokenized stocks: issuer-sponsored or native tokens, custodial or wrapped tokens, and synthetic or linked tokens. While they allow for fractional ownership and potential 24/7 trading, they do not always grant the same legal rights as traditional shares. Key differences often lie in shareholder rights, including voting power, dividend entitlements, and claims during liquidation or bankruptcy proceedings.

Investors must distinguish between tokens that represent direct ownership and those that merely track a stock's price. The legal claim attached to the token is the decisive factor in determining whether the holder possesses actual equity or a derivative instrument.