Imagine being able to buy only a fraction of Apple stock as easily as you might send a WhatsApp message. That’s the promise of tokenized stocks, a new breed of digital asset that represents traditional equity shares, but lives on a blockchain. The idea sounds promising and can democratize access to high quality assets, but there are multiple factors to take in consideration, especially regarding infrastructure and security.
Tokenized stocks are digital representations of actual shares in publicly traded companies. Instead of holding a whole share through a traditional broker, investors can buy a token that mirrors the value of that particular stock. These tokens are issued on blockchain platforms and are often backed by the real shares, held by a custodian or intermediary. Tokenized equity allows investors to gain exposure to a company’s performance without directly owning the physical share, potentially reducing barriers like high fees or geographic restrictions.
When you buy a tokenized stock, a provider, typically a fintech or crypto firm, buys and holds the underlying share and issues a corresponding digital token. That token is then traded on a blockchain. Smart contracts handle settlements and compliance processes, which can cut down operational costs and friction. These tokens also trade 24/7, unlike traditional stocks limited to market hour, which is part of the appeal (especially for retail investors in regions with limited access to US markets).
Players gonna play
Some big players aren’t waiting around. Goldman Sachs has been exploring the use of blockchain to settle traditional assets faster and more securely. The bank launched a digital asset platform in 2023 and hinted at plans to offer tokenized alternatives to various securities. UBS also ran pilot projects involving tokenized bonds and equities, reporting significantly reduced settlement times and lower back-office costs.
Those interested in more flexibility, however, should access digital trading platforms and crypto companies to seek such products. Platforms like CoinMarketCap lists and track several tokenized stocks currently available through platforms like Binance, including tokens that mirror the price of big tech stocks such as Tesla, Amazon, and Google, and even pharmaceuticals like Pfizer.
Risks and regulatory issues
However, regulation is murky. In a recent analysis report, Deloitte draw attention to the lack of clear regulatory frameworks globally. According to the consulting firm, this market has still limited institutional adoption, although some jurisdictions like Switzerland and Singapore are starting to formalize guidelines.
But there’s a catch. Most of these tokens aren’t traded on regulated exchanges. That means no investor protection if the issuer fails or gets hacked. The FTX saga showed just how fragile this space can be when safeguards are weak. McKinsey has highlighted in its digital finance outlook that while tokenization holds promise, investor trust and proper governance are non-negotiable for it to scale sustainably.
What to expect
It can loose importance over time, now that 24/7 ongoing operations are being discussed by traditional players like Nasdaq. But tokenized stocks can also be a part of that, given demand, and may eventually be folded into mainstream trading platforms, under full regulatory oversight, with institutional-grade custody and insurance. The key hurdle is regulation.
For now, tokenized stocks remain a niche product with real potential. They offer democratized access, lower barriers, and faster execution. But without institutional guardrails, they’re still swimming in the shallow end of the finance pool. When, and if, the big regulators dive in, that could change fast.
