What Are Tokenized Stocks?

Tokenized stocks are digital representations of traditional company shares on blockchain networks – think of them as crypto versions of Tesla or Apple shares.

Key Takeaways

• Tokenized stocks bring traditional company shares to the blockchain, with xStocks on Solana as the current market leader.

• They’re backed 1:1 by real shares held in regulated custody, offering genuine exposure to stock price movements without direct ownership.

• The tokenized stock market is currently valued at $47.5 million, with major platforms like Kraken offering 50+ stocks with zero trading fees.

• Main benefits include 24/7 trading, fractional ownership, global accessibility, and instant settlement – but users sacrifice voting rights and may face regulatory uncertainties.

• Leading platforms include Kraken (self-custody enabled), Robinhood EU (200+ stocks), and DeFi integration on Solana through xStocks.

Imagine buying Tesla stock at 3 AM on a Sunday, paying just $10 to own a fraction of a share, instead of purchasing the full share at $200+, and holding it in the same wallet as your Bitcoin. This is tokenized stocks – a growing $47.5 million market that’s bringing Wall Street to the blockchain.

The global stock market is worth over $124 trillion, but accessing it traditionally involves geographical restrictions, high minimum investments, and limited trading hours. For example, investing in U.S. stocks from other continents can be challenging due to regulatory barriers and capital requirements.

Web3 projects are solving this through tokenization. On May 22, 2025, Backed Finance launched xStocks, the most prominent tokenized stock ecosystem, now representing over $41 million worth of shares from companies like Tesla, Google, Apple, and Amazon. 

Understanding Tokenized Stocks

Tokenized stocks are crypto tokens on the blockchain that track real stock prices, giving you exposure to companies like Apple or Tesla without going through traditional brokers.

Here’s how it works in simple terms: A regulated company buys real Tesla shares and locks them in secure custody. They then create digital tokens on a blockchain, usually maintaining a 1:1 ratio where one token equals one share. You can buy these tokens with cryptocurrency instead of dollars, and the token price moves with the real Tesla stock price. The key difference is you can trade these tokens 24/7 on the crypto market, unlike traditional markets.

Types of Tokenized Stocks

Equity-backed tokenized stocks are the safer option, backed 1:1 by real shares held in regulated custody. Companies like Backed Finance create tokenized stocks like xStocks that offer lower risk and regulatory compliance. 

Synthetic tokenized stocks take a different approach, tracking stock prices using oracle data and smart contracts without any actual shares backing them. While platforms like Synthetix previously offered these, they carry higher risk due to potential oracle manipulation and are less common today.

Most major platforms now use equity-backed tokens because they provide better security and regulatory compliance for users.

What Are xStocks?

xStocks represent over 80% of the market and are the most successful tokenized stocks available today, created by Swiss company Backed Finance. They represent the majority of current tokenized stock trading volume and have become the de facto standard for the industry.

These tokens are issued on the Solana blockchain, which enables fast, low-cost transactions. They also maintain 1:1 backing by real shares held in regulated custodians like Alpaca Securities in the US and InCore Bank in Switzerland. What makes xStocks special is their transparency – Chainlink provides Proof of Reserves verification so you can independently verify that tokens match actual assets.

Unlike some tokenized stock models that keep tokens locked on platforms, xStocks function as true blockchain tokens. You can withdraw them to your personal wallet, use them in DeFi protocols like Raydium and Meteora, and trade them on major exchanges including Kraken and Bybit. This flexibility is why xStocks have gained such widespread adoption in the crypto community.

How Do Tokenized Stocks Work?

The process of creating and managing tokenized stocks involves several carefully orchestrated steps to ensure security and regulatory compliance.

Issuer Licensing

Issuer licensing comes first. Companies must obtain regulatory approval before they can create tokenized stocks. For example, Backed Finance received approval from Liechtenstein’s Financial Market Authority (FMA), which specified their permissions for issuing, managing, and facilitating tokenized stock trading. 

Stock Acquisition

Once licensed, the issuer acquires and secures the underlying stocks. They purchase real company shares through traditional brokers and place them in regulated custody. These custodians maintain secure facilities for the stocks and must adhere to securities laws in their operating regions. They also provide regular audits and proof of reserves to verify token backing and enhance investor trust.

Issuance and Backing

When it comes to token issuance, the issuer mints an equal number of tokens on the blockchain as stocks held in custody, maintaining a strict 1:1 backing ratio at all times. The token value tracks the real stock price through market mechanisms and arbitrage opportunities.

Trading Mechanisms

Trading and settlement happen through both centralized exchanges like Kraken and Bybit, and decentralized exchanges on the blockchain. Smart contracts enable instant settlement, and tokens can be transferred between wallets like any cryptocurrency. This eliminates the 1 day settlement period common in traditional stock trading.

Redemption

The redemption process allows token holders to convert their tokens back to stablecoins or fiat based on the value of the underlying stock. After redemption, tokens are burned to maintain the 1:1 backing ratio. 

Benefits of Tokenized Stocks

An HSBC report estimates that up to 10% of global GDP will be stored and transacted via blockchain technology by 2027 – potentially creating a $24 trillion tokenized market. Here’s why tokenized stocks play a key role in driving this growth:

Convenience: 24/7 Trading

Traditional stock markets operate on limited schedules, typically 9:30 AM to 4:00 PM Eastern Time on weekdays. Tokenized stocks break free from these constraints entirely. You can trade anytime – whether it’s 2 AM on a Sunday or during a holiday when traditional markets are closed.

This flexibility provides significant advantages. If Tesla’s CEO makes a major announcement on the weekend, you can react immediately instead of waiting until Monday morning. Asian investors can trade U.S. stocks during their business hours, without staying up late or waking up early. The always-on nature of crypto markets extends to tokenized stocks, creating a global trading environment that’s active 24/7.

Fractional Ownership

One of the biggest barriers to stock investing is high share prices. A single Apple share costs over $180, and Berkshire Hathaway Class A shares cost over $400,000. Tokenized stocks offer a solution to the high barrier of entry by allowing fractional purchases.

Instead of needing $180 for one Apple share, you could buy $10 worth of tokenized Apple stock and still benefit from the same percentage price movements. This opens up investment opportunities to people with smaller budgets and enables better portfolio diversification. You could spread $100 across 10 different tokenized stocks instead of buying just one traditional share.

Global Accessibility

Traditional international stock investing can be complicated and expensive. Opening a U.S. brokerage account from another country often requires extensive paperwork, minimum deposits, and currency conversion fees. Some countries may even have restrictions on accessing foreign markets entirely.

Tokenized stocks eliminate these barriers, democratizing access to global markets. All you need is a crypto wallet and internet access to trade U.S. stocks from anywhere in the world. There are no traditional brokerage accounts to set up, no complex international wire transfers, and no geographical restrictions on decentralized exchanges like Raydium.

Instant Settlement

Traditional stock trades take 1-3 business days to settle through clearinghouses and intermediaries. During this time, your money is tied up and you can’t access your shares. meanwhile, tokenized stocks settle instantly through smart contracts.

When you buy tokenized Tesla stock on a decentralized exchange like Raydium, the transaction completes in seconds. Your USDT payment and the seller’s tokenized stock are exchanged automatically via smart contract, with the transaction verified and recorded immutably on the blockchain. Once confirmed, the tokenized stock appears in your wallet immediately with no waiting period.

DeFi Integration

With xStocks, available on Kraken and other supported exchanges, you can withdraw tokenized stocks to your personal wallet, giving you complete control over your assets. 

You can now use your tokenized Apple stock as collateral for a crypto loan on Kamino. You can provide liquidity on Raydium using your TSLAx to earn trading fees. These DeFi integrations are impossible with traditional stock ownership and represent a fundamental shift in how financial assets can be utilized.

Risks and Challenges of Tokenized Stocks

While tokenized stocks offer compelling benefits, investors should understand the limitations and risks involved.

Regulatory Uncertainty

The regulatory landscape for tokenized stocks is still evolving. Different countries have different approaches, and rules can change rapidly. Many platforms currently exclude U.S. users due to regulatory complexity, while others operate only in specific jurisdictions like the EU.

Future regulatory changes could impact how platforms operate, what stocks can be tokenized, or whether certain features remain available. Investors should stay informed about regulatory developments in their jurisdiction and understand that compliance costs may increase as frameworks mature.

No Voting Rights

Unlike normal company shares, tokenized stocks don’t confer voting rights or other shareholder privileges, as they are purely a financial instrument to track stock price movements. If you own tokenized stocks, you will miss out on the governance aspect of stock ownership, as you cannot vote on the company’s proposals or attend shareholder meetings. 

Counterparty Risk

Tokenized stocks rely on multiple parties – the custodian must securely hold the underlying stocks, the issuer must maintain proper backing ratios, and the platform must operate reliably. If any of these parties fail, your investment could be at risk.

While regulated platforms like xStocks use reputable custodians and provide transparency through proof of reserves, the additional complexity compared to traditional stock ownership does create more points of potential failure. Platform bankruptcy, custodian issues, or technical failures could all impact your holdings.

Technical Vulnerabilities

Smart contracts and blockchain systems can have bugs or vulnerabilities, which could potentially cause losses. Also, oracle systems that provide price data must remain accurate and tamper-proof.

When integrated with DeFi, there is another layer of technical complexity. If you’re using tokenized stocks in lending protocols or liquidity pools, you’re exposed to additional smart contract risks beyond just the tokenized stock itself.

Limited Liquidity

The tokenized stock market is still small compared to traditional markets. With a total market cap of $47.5 million across all tokenized stocks, individual stocks may have limited daily trading volume. This can lead to higher slippage for larger trades and wider bid-ask spreads.

While liquidity is growing as more platforms adopt tokenized stocks, it’s still far from the deep liquidity available in traditional stock markets. As a result, large investors may find it difficult to execute significant trades without moving prices substantially.

Top Platforms for Trading Tokenized Stocks

Here are the top platforms that offer trading services for tokenized stocks:

Kraken – Best for Self-Custody

Kraken offers 50+ tokenized U.S. stocks and ETFs through their xStocks integration, with zero trading fees for xStock purchases using USD or USDG at time of writing. The platform currently offers 24/5 trading with weekend support coming soon. 

What sets Kraken apart is full self-custody support – you can withdraw tokens to your personal wallet and use them across the Solana DeFi ecosystem. This makes Kraken ideal for experienced crypto users who want full control over their assets and plan to integrate tokenized stocks into broader DeFi strategies. 

For example, you could buy $100 worth of Tesla xStock on Kraken, withdraw it to your Phantom wallet, and then use it as collateral on a Solana lending protocol to borrow against your stock holdings.

Raydium – Best for DeFi

Raydium, one of Solana’s largest decentralized exchanges, provides direct xStock trading. As one of the launch partners for Backed Finance’s xStock, users on the Solana network can swap other supported Solana tokens for xStocks on the decentralized exchange 24/7 without geographic limitations.

The platform also enables DeFi strategies like providing liquidity for xTSLA/USDC pools to earn trading fees while maintaining stock exposure. This makes it ideal for DeFi users who want to integrate tokenized stocks into their on-chain strategies. 

Robinhood EU – Best for Beginners in EU

Robinhood launched tokenized stocks for EU users in June 2025, offering over 200 tokenized U.S. stocks and ETFs with a minimum investment of just €1. Built on Arbitrum (Ethereum Layer 2), the platform provides a familiar mobile app interface that existing Robinhood users are familiar with.

The platform is perfect for crypto newcomers who want a user-friendly trading experience without the complexity of managing private keys or interacting with DeFi protocols. However, there’s currently a significant limitation – you cannot withdraw tokens to external wallets, as the platform operates on a custodial model.

Robinhood plans to develop its own blockchain (Robinhood Chain) to enable self-custody and DeFi integration in the future, but for now, it’s best suited for simple buy-and-hold strategies.

Other Notable Platforms

Coinbase is planning to launch tokenized stocks for U.S. users as part of their “everything exchange” strategy, though no timeline has been announced. This could be significant given Coinbase’s regulatory relationships and large user base in the United States.

Bybit, Gemini, and KuCoin both offer growing selections of xStocks with USDT trading pairs, serving users in regions where other platforms may not be available, although this feature may still be locked based on your location.

Jupiter and Kamino on Solana provide additional DeFi integration options. Jupiter serves as a DEX aggregator for best execution across multiple Solana exchanges, while Kamino enables using xStocks as collateral for borrowing other cryptocurrencies.

Getting Started with Tokenized Stocks

Here’s a quick guide to getting started with tokenized stocks.

For Beginners

• Start with a user-friendly platform like Robinhood EU if you’re in Europe or consider waiting for Coinbase’s U.S. launch if you’re American. These platforms provide familiar interfaces and handle most of the technical complexity for you.

• Begin with small amounts to learn how the system works. Try investing $25-50 in a major stock like Apple or Tesla to understand the process without significant financial risk. Most platforms require identity verification for legal compliance, so complete the KYC process first.

For Users Familiar with Crypto

• Set up a Solana wallet like Phantom or Solflare for xStock compatibility and maximum flexibility. Fund it with USDC or USDT, ensuring you have enough for trading and small amounts for transaction fees.

• Explore multiple platforms to understand different custody models and fee structures. Kraken offers zero fees but requires an account, while Raydium provides permissionless trading with slightly higher costs. Consider how you plan to use your tokenized stocks – simple holding, DeFi strategies, or active trading.

• Monitor price differences between centralized and decentralized exchanges, as arbitrage opportunities sometimes exist. However, be aware that each transaction may have tax implications in your jurisdiction, so keep detailed records for reporting purposes.

Final Thoughts

Institutional adoption is accelerating as major exchanges like Coinbase plan U.S. launches and traditional financial institutions explore blockchain integration. The integration with DeFi protocols continues expanding, creating new use cases beyond simple stock trading. This could also come with cross-chain expansion, making the same stocks available on multiple blockchains, improving liquidity and offering users more options.

Meanwhile, regulatory clarity is improving in key jurisdictions, with more countries providing clear frameworks for tokenized securities. This regulatory maturation reduces uncertainty for both platforms and users, encouraging broader adoption. After all, the current $47.5 million tokenized stock market only represents the beginning, with HSBC projecting up to $24 trillion in tokenized assets by 2027, driven by increased accessibility, DeFi integration, and regulatory acceptance.

However, in spite of the potential of tokenized stocks, users are still advised to do their own research and understand the risks associated with this new asset class in crypto before investing any capital. 

Frequently Asked Questions

Do I actually own the company stock? 

No, you own a token that tracks the stock’s price. The actual shares are held in custody by the issuer, giving you economic exposure without direct ownership rights or voting privileges.

Do tokenized stocks pay dividends? 

It depends on the platform and token structure. Some automatically reinvest dividends to purchase additional shares, increasing your token balance over time. Others may distribute dividend equivalents in cash or tokens.

What happens if the platform shuts down? 

With self-custody platforms like Kraken’s xStocks, you can withdraw tokens to your personal wallet, reducing platform dependency. With custodial platforms like Robinhood EU, you rely on the platform’s procedures and any applicable insurance coverage.

Can I convert tokenized stocks back to real stocks? 

Most platforms offer cash redemption at current market value. Some may offer redemption for actual shares, but this is less common due to regulatory complexity and practical limitations.

Are tokenized stocks regulated? 

Yes, legitimate platforms operate under financial regulations in their respective jurisdictions. However, the regulatory landscape continues evolving, and compliance requirements vary by location.

Disclaimer: This article is for educational purposes only and should not be considered financial advice. Tokenized stocks involve significant risks including regulatory uncertainty, technical vulnerabilities, and potential loss of funds. Always conduct your own research and consider consulting with a financial advisor before investing.