Jul 9, 2025

Turning stocks into tokens? Why it’s cool, but complicated

The crypto world is constantly evolving, and one of the most exciting new ideas is tokenization. In simple terms, tokenization means turning real-world assets (RWAs), like gold, real estate, or stocks, into digital tokens that live on a blockchain.

One hot trend is tokenized equities or stocks, where company shares become tokens you can trade anytime, anywhere. It promises easier, faster, and more flexible investing.

But the concept is still new, and there are hurdles. Let’s break down how tokenization of stocks works and what challenges it faces.

Here’s how tokenization of stocks works

Each token is created on a blockchain and backed 1:1 by the actual share it represents. That means for every token, there’s a real share stored securely by a regulated custodian.

It’s similar to how stablecoins work. Just as a stablecoin mirrors the value of a currency like the US dollar, a tokenized equity mirrors the price of a real company share. If the share price goes up or down, the token value changes in the same way.

You can buy even a small piece of a share, trade anytime, and invest globally, without needing banks or brokers in the middle.

Why it matters for investors

Tokenized equities aim to make investing easier and more inclusive. By turning assets like company shares into digital tokens, people can access investments that were once out of reach due to a lack of access.

This is a game-changer for investors in emerging markets or those without easy access to big financial centers. With just a few dollars and no need for a traditional broker, they can now invest in global markets.

Robinhood joins the party

Last week, Robinhood announced that it’s stepping into the tokenization space. In Europe, the platform will let users trade tokenized shares of private companies - OpenAI and SpaceX - on Ethereum Layer-2 networks, Arbitrum.

These tokenized assets can be traded commission-free, with instant settlement, and for as little as €1, even during US off-hours. All of this will operate under Europe’s MiFID II rules, which are designed to keep investors safe and informed.

… But here’s the catch

Tokenization is an exciting concept, but it faces real challenges. For instance, Robinhood's recent token launch associated with OpenAI and SpaceX occurred without the approval of either company. OpenAI denied any involvement, and Elon Musk labeled it as "fake equity."

The issue? These tokens didn’t give real ownership or rights. In fact, legal experts say they might break US securities laws. Most tokenized stocks today are just price trackers, not real shares. Investors don’t get voting power or dividends unless clearly stated.

So for now, they’re more like replicas than true innovation.

Conclusion

Tokenized stocks are part of a bigger shift where traditional finance meets blockchain. The idea is to make markets faster, cheaper, and more accessible.

But we’re still in the early days. As the tech improves, more big players get involved and clearer rules are set, tokenized equities could one day become a part of global investing.

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This report has been prepared and issued by 21Shares AG for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Crypto asset trading involves a high degree of risk. The crypto asset market is new to many and unproven and may have the potential to not grow as expected.

Currently, there is relatively small use of crypto assets in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect an investment in crypto assets. In order to participate in the trading of crypto assets, you should be capable of evaluating the merits and risks of the investment and be able to bear the economic risk of losing your entire investment.

Nothing in this report does or should be considered as an offer by 21Shares AG and/or its affiliates to sell or solicitation by 21Shares AG or its parent of any offer to buy bitcoin or other crypto assets or derivatives. This report is provided for information and research purposes only and should not be construed or presented as an offer or solicitation for any investment. The information provided does not constitute a prospectus or any offering and does not contain or constitute an offer to sell or solicit an offer to invest in any jurisdiction.

Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax, or other advice and users are cautioned against basing investment decisions or other decisions solely on the content hereof.

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