What is tokenized stock? How do stock tokens work?

Tokenized stocks are the process of transforming traditional stocks into digital tokens through blockchain technology, allowing stocks to be traded and transferred like cryptocurrencies. This innovative approach not only improves the efficiency of stock trading, but also lowers entry barriers, making it easier for global investors to participate in stock market investments. This article will explore the concept, operating mechanism and application of tokenized stocks on blockchain. It will also analyze the safety and potential risks of this emerging asset to help investors better understand this financial innovation and make rational investment decisions.

The essence of stock tokens: penetrating the conceptual fog

1. Definition core

Stock tokens are financial instruments that transform traditional listed company stocks (such as Apple, Tesla) or unlisted company stocks (such as SpaceX) into digital tokens through blockchain technology. Its essence is the application of real-world asset tokenization (RWA) in the securities field. Each token represents partial ownership of the underlying asset and is anchored 1:1 to the underlying asset value.

2. Essential differences from traditional tools

Compared with traditional stock trading, tokenized stocks have achieved three major breakthroughs:

■ Time barrier collapse: Support 7×24-hour trading, breaking the limit of fixed trading hours on the New York Stock Exchange or Nasdaq;

■ Space boundaries melt: Latin American users hold U.S. stocks directly through digital wallets without the need for cross-border brokerage accounts;

■ Asset interoperability upgrade: Tokens can be transferred to personal wallets as collateral for DeFi loans, achieving liquidity integration across asset classes.

The case confirms that in June 2025, the China Securities Exchange launched the \"Smart Sky Global Coin\", attracting 3 million new users in Asia, Africa and Latin America within 24 hours, 60% of whom were exposed to U.S. stock investment for the first time.

Mechanism: The architecture behind tokens

The charm of tokenized stocks lies in their robust trust-based mechanism that connects on-chain tokens with off-chain assets. The process is not alchemy, but a carefully planned financial and technical process. The whole system is based on the 1:1 asset support principle: for every token in circulation, a real share must be held.

However, the implementation of this principle may vary. Two mainstream models have emerged, each with its own structure, advantages and challenges.

Model 1: Issuer-platform separation model

This is the most common and open model, characterized by clear responsibilities between the issuer and the trading platform. This structure is designed to effectively allocate risk and regulatory responsibilities. For example, Phemex offers tokenized stocks based on this model.

The operation path is as follows:

● Acquisition of assets by regulated issuers: The process begins with a regulated professional financial institution. Backed Finance is a typical example of this type of issuer, which holds a Swiss or European Union regulatory license. The issuer uses a prime broker channel (e.g. Interactive Brokers (IBKR)) to purchase real shares (e.g. NVDA ) on the U.S. stock market.

● Independent custody: Shares purchased are not held by the issuer or exchange. Instead, they are placed in a separate account with a strictly regulated independent custodian (such as Clearstream) or a master broker. This ensures that assets are protected from bankruptcy risks and are protected from issuer or exchange-level issues.

● 1:1 casting on the public chain: Once the shares are confirmed in custody, the issuer will cast the corresponding number of tokens on the public chain such as Solana or Ethereum (for example, NVDax purchased from a provider such as xStocks is issued as ERC-20 tokens). The 1:1 ratio is strictly maintained and can be publicly audited.

● Issuance and trading: These newly minted tokens will then be launched on cryptocurrency trading platforms such as Phemex. These platforms provide secondary markets that provide global investors with liquidity, orderbook matching and a user-friendly interface.

The key feature of this model is that the issuer is the entity primarily responsible for compliance. They are responsible for regulatory licensing, asset custody and transparency disclosures. Trading platforms act as front-end \"distributors\" or access points, alleviating their own regulatory burdens associated with securities issuance. This allows it to expand quickly and in compliance to markets outside the United States.

This model is not new. As we all know, FTX created a similar model around 2020. Although the service was popular, it also ceased operations after FTX collapsed. It must be noted that the framework of the model is largely sound; its failure stems from fraudulent activity within FTX\'s broader corporate structure, rather than inherent flaws in the tokenization process itself. This history highlights the absolute importance of the integrity of issuers and platforms.

Model 2: Vertically integrated broker-issuer model (Robinhood method)

In contrast, Robinhood is a typical example. Robinhood does not integrate services from third-party publishers, but uses its own authorized infrastructure to control the entire value chain.

● Internal acquisitions and custody: Robinhood\'s European subsidiary holds a Lithuania securities license and legally purchases and custody U.S. stocks and ETFs.

● Private minting and trading: They then minted the corresponding token on the blockchain (originally Arbitrum, with plans to launch a proprietary Robinhood Chain) and made it available for specialized transactions within their own applications.

● Closed-loop system: Every transaction updates on-chain status, but the entire ecosystem-from purchasing to trading and settlement-is contained within Robinhood\'s walled garden.

This model is more difficult to replicate because it requires platforms to hold their own comprehensive securities licenses. It gives operators complete control, but is inherently less open and less connected to the broader composable DeFi ecosystem.

Market restructuring effects: Three major qualitative changes in the capital order

1. Liquidity increases, fragmented tokens release long-tail capital:

■ African college students use US$5 to hold 0.02 Tesla shares;

■ OpenAI employees \'token 1% equity to attract tens of thousands of \"micro shareholders\", and employee option lock-up period has been shortened by 60%.

2. Restructuring of Global Capital Pricing Rights

When more than 30% of Tesla\'s trading volume comes from the chain, the Nasdaq opening price will refer more to the Solana overnight price. Market makers need to simultaneously monitor the depth of order books on the chain and the market conditions on traditional exchanges, and spread arbitrage becomes a new profit model.

3. Transformation of traditional financial roles

The \"super entrance\" of brokerage transformation: Futu Securities connects Bitcoin to recharge and withdraw, and Interactive Brokers Securities provides a clearing channel for the token platform. BlackRock BUIDL Fund manages US$580 million in assets by tokenizing U.S. Treasury bonds, yielding a yield 400 basis points higher than bank deposits.

Stock tokens are like a precise financial clock-the Swiss custodian\'s isolated accounts are a solid base, the smart contracts on the Solana chain are precise gears, and the digital wallets of global investors are freely rotating hands. This clock not only reports the real-time price of Apple or Tesla, but also marks a new scale for capital democratization.