2026.08.03 2026.08.03
What Is a Tokenized Stock? From Fractionalized Shares to Perpetual Contracts

Maxim Tkachenkohttps://www.litefinance.org/blog/authors/maxim-tkachenko/

Imagine buying a fraction of a Tesla share for the price of a cup of coffee and trading it at 3 a.m. while stock exchanges are closed. Sounds impossible? At first glance, yes. However, a technology combining blockchain and traditional finance has made it possible.

Welcome to the world of tokenized stocks, where the boundaries between traditional equity markets and the cryptocurrency market are disappearing. The tokenization of real-world assets (RWAs) is one of the few trends with the potential to reshape financial markets.

In this article, you’ll learn what tokenized stocks are, how they work, and explore the different types available.

Major Takeaways

• Tokenized stocks are blockchain-based digital tokens that track the value of traditional shares, such as Apple, Tesla, or Procter & Gamble.
• Most tokenized stocks are backed 1:1 by real shares held by a regulated custodian.
• Unlike traditional exchanges with fixed trading hours and weekends, tokenized stocks can be traded 24/7/365.
• Fractional ownership allows investors to buy part of a share for as little as $10, even if a full share costs $1,000.
• There are three main types of tokenized stocks: spot-backed tokens, synthetic tokens, and perpetual contracts (perpetual futures, or perps).
• Dividend payments and voting rights are not guaranteed. In most cases, investors receive only price exposure to the underlying asset.
• The regulatory environment, particularly in the United States, remains the main source of uncertainty.

What Is a Tokenized Stock?

Tokenized stocks are digital representations of traditional shares issued on a blockchain. Simply put, a share of a company such as Apple is “wrapped” into a digital token and issued on a blockchain network. Once issued, it can be bought, sold, and transferred just like a cryptocurrency.

Traditional shares are essentially records maintained by brokers and central securities depositories. They can only be traded during specific market hours, require intermediaries, and are often inaccessible to investors in many countries. Tokenized securities are designed to address these limitations.

As a rule, each tokenized asset is backed 1:1 by a real share. That share is held by a regulated custodian, such as a specialized bank or brokerage firm. When an investor purchases a token, the corresponding share is reserved by the custodian.

However, it is important to understand that tokenized stocks are not the shares themselves. They are digital assets that provide price exposure to the underlying physical asset. Their holders gain exposure to changes in the value of the underlying share, but they do not necessarily receive dividend payments or voting rights.

How Do Tokenized Stocks Work?

The mechanics of tokenized stocks are relatively straightforward, although they rely on a sophisticated underlying infrastructure.

1. Purchase of the underlying shares. The token issuer purchases real shares on a traditional stock exchange.
2. Custody. The shares are transferred to a regulated custodian for safekeeping. The custodian verifies that the underlying shares are held in reserve and back the issued tokens on a 1:1 basis.
3. Token issuance. Digital tokens are issued through smart contracts based on these shares. Each token represents a specific fraction of a share.
4. Trading. The tokens are listed on cryptocurrency exchanges. Investors can buy and sell tokenized stocks 24/7 using a crypto wallet instead of a brokerage account.
5. Redemption. Some issuers allow token holders to redeem their tokens for the underlying shares. In practice, however, this option is relatively uncommon.

The entire process offers a high degree of transparency. The blockchain makes it possible to verify how many tokens have been issued and which custodian address backs them. Transactions on the blockchain are settled almost instantly.

Tokenized Stocks vs Traditional Stocks

Below are the key differences between tokenized stocks and traditional shares. This comparison will help you understand who may benefit from stock tokenization, what challenges it addresses, and what opportunities it creates for traditional financial markets.

As the table shows, traditional stocks provide full ownership rights. Investors own a stake in a company, have voting rights, and may receive dividend payments. However, they are limited by stock exchange trading hours and the minimum trading lot established by the exchange.

Tokenized stocks, on the other hand, are designed to provide price exposure. Investors gain exposure to changes in the value of the underlying asset, but not to all the rights of a shareholder. At the same time, these instruments can be traded 24/7, from anywhere in the world, and on virtually any device.

The choice between the two depends on an investor’s objectives. If dividend income and voting rights are the priority, buying traditional stocks through a stock exchange is the more suitable option. If flexibility and round-the-clock market access are more important, tokenized stocks may be the better choice.

Types of Tokenized Assets: Spot, Synthetic and Perpetual Contracts

Not all tokenized assets are structured in the same way. There are three main types: spot tokens, synthetic assets, and perpetual contracts. They differ in how they work, their level of risk, and their intended users.

Equity-Backed (Spot) Tokens

These are considered the gold standard of tokenized stocks. Each token is backed 1:1 by a real share. The issuer purchases the underlying share, places it with a custodian for safekeeping, and issues a corresponding token.

Advantages:

• Transparency — the token’s backing can be verified.
• The token’s price closely tracks the price of the underlying share.
• The possibility of redeeming the token for the underlying share (subject to the issuer’s terms).

Examples: Binance bTokens, Backed Finance xStocks.

Best suited for: Investors seeking the closest possible price exposure to traditional stocks.

Synthetic Tokens

Synthetic tokens are digital securities that are not backed by real shares. Instead, they track the price of the underlying asset using derivatives, oracles, and other mechanisms implemented through smart contracts.

In other words, the issuer does not purchase Apple shares. Instead, it issues a token whose value is linked to the price of Apple stock.

Advantages:

• No need to purchase real shares, making token issuance simpler and less expensive.
• Tokens can be created for stocks that are otherwise difficult or impossible to access.

Risks:

• The absence of real asset backing increases counterparty risk.
• During periods of low liquidity, the token’s price may deviate significantly from that of the underlying asset.
• In some jurisdictions, these tokens may be classified as unbacked derivatives, creating additional regulatory risks.

Examples: Synthetic tokens on the Injective platform (iAssets).

Best suited for: Traders focused on short-term and speculative strategies.

Perpetual Contracts (Stock Perps)

In the case of stock perpetual contracts, investors do not trade the token itself but rather a derivative instrument that provides price exposure to the underlying asset, including through the use of leverage.

How it works:

• The trader deposits collateral in stablecoins or other digital assets.
• They open a long or short leveraged position.
• The contract has no expiration date and can be held indefinitely.
• At regular intervals (typically every eight hours), the funding rate is calculated to help keep the contract price close to the price of the underlying asset.

Advantages:

• The ability to use leverage and gain greater market exposure with less capital.
• The ability to open short positions and profit from falling prices.
• 24/7 trading without weekends.

Risks:

• Leverage increases not only potential profits but also potential losses.
• When positions are held for an extended period, funding payments can significantly reduce overall returns.
• No entitlement to dividend payments or voting rights.

Examples: Ondo Perps offers perpetual contracts on stocks such as Tesla, Nvidia, and other companies. Hyperliquid launched perpetual contracts on SpaceX stock even before the company went public.

Best suited for: Experienced traders and active market participants who use leverage for short-term trading and are prepared to accept a higher level of risk.

Benefits and Risks of Tokenized Stocks

Tokenized shares offer investors new opportunities by making the stock market more accessible and flexible. However, they also involve risks related to regulation, liquidity, and platform reliability.

Key Benefits

1. 24/7 trading. Unlike traditional stock exchanges, which operate during fixed trading hours, tokenized stocks can be traded around the clock, seven days a week.
2. Fractional shares. Investors can buy smaller units of a share, even if a full share costs hundreds or thousands of dollars. This makes investing more accessible.
3. Global accessibility. In most cases, all you need to buy tokenized stocks is a crypto wallet and access to a cryptocurrency exchange. There is usually no need to open a brokerage account in another country.
4. Fast settlement. Blockchain technology enables much faster settlement than traditional stock markets, where transactions typically take up to two business days.
5. Transparency. Information about issued crypto tokens and transactions is stored on the blockchain, allowing anyone to verify token issuance and circulation at any time.

Key Risks

1. Regulatory uncertainty. The legal framework for tokenized stocks is still evolving. Although the current US administration has taken a more favorable stance toward the crypto industry, regulators may introduce stricter requirements or new restrictions at any time. Regulation also remains uncertain in many other jurisdictions.
2. No shareholder rights. In most cases, holders of tokenized stocks do not receive voting rights and cannot rely on dividend payments.
3. Counterparty risk. If the custodian experiences financial difficulties or the issuer stops supporting the tokens, recovering funds or obtaining the underlying asset may become difficult.
4. Liquidity risk. Trading volumes remain low on some platforms, which can cause token prices to deviate from the value of the underlying asset. In addition, the market occasionally experiences sharp price squeezes.
5. Technical risks. Smart contract vulnerabilities, cryptocurrency exchange hacks, and loss of access to a crypto wallet remain real risks for investors.

Where and How to Buy Tokenized Stocks

Buying tokenized stocks is much like trading cryptocurrencies. All you need to do is register on a supported platform, fund your account, and purchase the desired token.

• Binance offers bTokens — fully backed tokens representing shares of Tesla, Apple, Nvidia, and other companies.
• Kraken supports xStocks, offering more than 100 tokenized stocks and ETFs.
• Bitget provides access to spot trading in tokenized stocks.
• Bybit also supports trading in xStocks tokens.

How to Buy Tokenized Stocks:

• Register on a centralized exchange that supports tokenized stocks.
• Fund your account, typically with USDT or another stablecoin.
• Find the desired token (for example, xTSLA or another token tracking Tesla stock).
• Place a market or limit buy order.
• Once the order is executed, the tokens will appear in your account balance. Depending on the platform, you can keep them on the exchange or withdraw them to a compatible digital wallet.

Important! Before buying, make sure the product is available in your jurisdiction. You should also check who issued the token and review the features of the specific instrument. Some platforms restrict access to tokenized stocks for residents of the United States and certain other countries.

Regulatory Landscape

The legal status of tokenized stocks remains uncertain. The US Securities and Exchange Commission (SEC) has not yet adopted final rules for this market segment. According to SEC Chair Paul Atkins, the regulatory framework could be established in the near future.

At the same time, SEC Commissioner Hester Peirce believes the market, rather than regulators, should determine which tokenization models prove viable and achieve widespread adoption.

In Europe, the regulatory framework is more developed. The Markets in Crypto-Assets (MiCA) Regulation provides a legal framework for digital assets. However, its application to tokenized securities continues to raise legal and regulatory questions.

In Asia, several jurisdictions, including Singapore and Hong Kong, actively support tokenization by creating regulatory sandboxes to test new financial products.

The main regulatory risk is that new requirements or restrictions may be introduced quickly, making regulatory compliance more complex for issuers and trading platforms. As a result, some tokenized assets could lose liquidity or even become prohibited in certain jurisdictions.

Conclusion

Tokenized stocks bridge traditional finance and the cryptocurrency market, with the potential to bring these two ecosystems much closer together over time. They provide access to fractional ownership, 24/7 trading, and investments in shares of some of the world’s largest companies. However, they are not a full replacement for traditional stocks. They differ in terms of investor rights, risk profile, and regulatory framework.

If you value flexibility, around-the-clock trading, and quick market access, tokenized stocks may be a suitable option. If your focus is long-term investing, dividend income, and shareholder rights, traditional stocks remain the more appropriate choice.

The market for tokenized assets is still in its early stages. Its future will largely depend on regulation, technological progress, and adoption by major financial institutions. Even so, tokenization is already emerging as one of the key trends shaping the future of global financial markets. And this is likely only the beginning.