Tokenized Stocks: Separating Ownership Rights from Investment Exposure

Tokenized stocks are gaining attention for their promise of cheaper trading and wider access to investments. However, as reported by the London Stock Exchange, there's a crucial distinction between owning shares in a company and holding tokens that follow those shares.

When you buy tokens that track the value of shares, you may not receive the same rights as shareholders. For instance, token holders may not have voting power or be entitled to dividends. This is because the underlying contract determines what rights token owners are entitled to.

The London Stock Exchange is exploring ways to bring shares onto blockchain networks while preserving shareholder rights. It has partnered with Payward to develop a structure for tokenizing shares and has announced plans to list xStocks on its LSE 24 venue in 2027, subject to regulatory approval.