How Tokenized Stocks Work

The basic model

In the most common structure, a company (the issuer) buys or hedges real shares and issues tokens on a blockchain that are intended to track those shares' value. A custodian — often a regulated bank or broker — holds the underlying assets.

The token's value depends on the issuer keeping that promise. That is why legal structure, regulation and custody arrangements matter more than the technology.

Common legal structures

• Tokenized securities: the token itself is a regulated security, such as a certificate or note referencing the underlying share.
• Fully backed claims: each token is meant to be matched by one share (or a fraction) held by a custodian.
• Synthetic or derivative exposure: the token tracks a price through contracts rather than holding shares.
• Price-tracking crypto assets: tokens with no legal claim to shares at all, whose price is maintained by market mechanisms.

Minting and redemption

New tokens are usually created (minted) when an eligible participant pays the issuer, and destroyed (burned) when they are redeemed. Redemption is often limited to approved institutions; retail holders may only be able to sell on a secondary market.

Rights you may — or may not — have

Shareholder rights such as voting, attending meetings or receiving dividends belong to the registered owner of the shares. With many tokenized products, that is the custodian or issuer, not you. Check the documentation for exactly what is passed through.