Tokenized Stocks: What Investors Actually Own

Tokenized stocks have become increasingly popular in recent years, allowing investors to buy and sell shares on blockchain platforms. However, according to Chan Ahn, founder of Tessera PE, there is a catch - investors may not actually own the underlying shares.

Ahn explains that tokenized stocks can take three different forms: issuer-sponsored securities, custodial products, or synthetic contracts. In an issuer-sponsored structure, the company supports the tokenization and presents the token as the security itself, giving holders voting, dividend, and information rights similar to conventional share ownership.

However, Ahn notes that even if a token can move between blockchain addresses, issuer approvals, securities laws, and contractual lock-ups can prevent the related ownership or economic interest from changing hands. Closely held companies may impose board-approval requirements, rights of first refusal, and limits written into shareholder agreements.

The issue has become more relevant as tokenized shares move into decentralized markets. Coinbase recently added six tokenized stocks on Base after its first four products generated $227.7 million in decentralized exchange volume in about 30 days.