Tokenized Stocks Offer 24/7 Trading, Fractional Ownership, But Face Regulatory Hurdles

Tokenized stocks are digital representations of company equities recorded on a blockchain. They are designed to track the value of real-world shares, such as those of Apple or Netflix, while offering added flexibility through digital platforms. This article explains what tokenized stocks are, how they function, why they are drawing interest, and the potential advantages and limitations. It also outlines how investors can access and evaluate these emerging and captivating financial instruments.

By linking real-world equities to blockchain-based tokens, a new form of digital asset has emerged that reflects the value of publicly traded company shares. Often backed one-to-one by stocks held in regulated custody, these tokens allow for faster settlement, transparent ownership records, and, in some cases, continuous trading. While they offer exposure similar to traditional equities, they may not include shareholder rights such as voting or dividends. Not all tokenized models follow this structure. Some, like those introduced by Robinhood on June 30, 2025, offer exposure to private companies without holding actual shares. Instead, they rely on structured contracts that track company performance, offering economic exposure without conferring legal ownership. Understanding these distinctions is key for informed investing.

The structure of equity markets is evolving as blockchain technology introduces new methods for issuing and trading traditional financial assets. Tokenized equities offer features such as faster settlement, continuous trading and fractional ownership, which may improve access and efficiency compared to conventional systems. Several platforms, including Kraken and Coinbase, are working to offer tokenized stock products, awaiting regulatory approval in some jurisdictions. As legal frameworks mature, tokenization is likely to expand, broadening investor participation globally.

Each digital token typically reflects a real share held by a regulated custodian and is governed by smart contracts that automate ownership, transfers and compliance. Blockchain networks provide a transparent, tamper-resistant ledger, while oracles supply real-time market pricing. Custodians manage the underlying assets off-chain, and platforms must meet regulatory standards. As adoption expands, this model is being applied to a broader range of assets, including real estate and investment funds.

Digitizing traditional equities through blockchain is changing how investors access and interact with markets. These assets allow for fractional ownership, enabling participation with smaller capital amounts. They can be traded globally at any time, bypassing standard market hours. The underlying infrastructure also supports faster settlement and fewer intermediaries, which may reduce costs and increase efficiency. The sections below highlight the main benefits including increased accessibility, continuous trading and enhanced liquidity.

Investing becomes more accessible with digital representations of equities that allow for fractional ownership, allowing investors to purchase a fraction of a share rather than a full stock. This lowers the minimum capital needed to enter the market, making it easier for newer and smaller investors to gain exposure to high-value assets. By reducing financial barriers, these digital instruments can reach a wider audience, including those without access to traditional brokerage services or large investment portfolios.

Digital equity assets can be traded at any time, providing a level of flexibility not available in traditional markets with fixed operating hours. This continuous access enables investors across different time zones to participate without being limited by local exchange schedules. It also provides faster responses to global news and economic events that occur outside regular trading sessions. For both retail and institutional investors, the ability to buy and sell on evenings, weekends and holidays can enhance liquidity and support a more responsive and inclusive investment environment.

Tokenization enhances liquidity by making traditionally hard-to-trade assets more accessible and easier to exchange. With ownership recorded on-chain and transactions processed through smart contracts, settlement becomes faster and less reliant on intermediaries. This increases efficiency, reduces costs and supports real-time trading. As digital and traditional systems continue to converge, tokenized assets could help unlock idle capital and improve overall market responsiveness.

Despite their potential advantages, tokenized stocks come with several risks. Regulatory uncertainty is a significant barrier, as laws governing digital assets differ widely and are actively transitioning. Market volatility, both in blockchain-based platforms and underlying equities, can affect price stability. Security concerns, including smart contract vulnerabilities and custody of real-world assets, also require careful consideration. The following sections examine these key issues in more detail, including regulation, volatility and asset protection.

Uncertainty around legal frameworks remains a major barrier to the adoption of tokenized assets. Key issues include unclear on-chain ownership rights, asset classification and settlement finality. Inconsistent regulations and a lack of standard protocols across jurisdictions add complexity and may slow integration with traditional markets. Addressing these challenges will require coordination among regulators, financial institutions and technology providers to establish clear guidelines and support responsible innovation.

Volatility is an important factor to consider when evaluating tokenized assets. Although these instruments are designed to reflect the value of their underlying stocks, prices can diverge, particularly when traditional markets are closed and redemption mechanisms are temporarily inactive. Blockchain-based trading platforms may also experience more frequent short-term price fluctuations due to lower liquidity or limited market depth.

While blockchain networks offer transparency and tamper-resistant records, risks remain around smart contract vulnerabilities, platform breaches and improper account management. In addition, the safe custody of the underlying real-world assets, such as shares held by custodians, must be clearly defined and properly regulated.

Anyone interested in tokenized stocks can begin by identifying platforms that offer access to digital equities. Currently, these products are only available to users in select jurisdictions outside the U.S. Tokenized stocks are not yet approved for public trading in the U.S., but several firms, including Kraken and Coinbase, are actively pursuing regulatory approval. Legislative efforts are also underway to clarify the legal framework for offering tokenized assets domestically. To open an account, most platforms require users to complete identity verification in compliance with Know Your Customer regulations. Once verified, accounts can be funded using fiat currency or cryptocurrency. A digital wallet, either provided by the platform or managed separately, is used to store and trade tokenized assets. Before investing, it is important to review the platform’s regulatory status, security features and transaction costs.

The growth of tokenized equities reflects a broader shift in how equity markets are accessed and managed. As regulatory frameworks evolve and blockchain infrastructure matures, these assets are expected to become more integrated with traditional financial systems. This could lead to increased institutional adoption, stronger compliance measures and broader participation from retail investors. The ability to tokenize a wider range of assets may also expand access to investment opportunities on a global scale.

An increasingly inevitable shift in equity investing is taking shape through the digital representation of traditional stocks. By enabling features like fractional ownership, 24/7 trading and faster settlement, tokenized equities have the potential to make markets more accessible, efficient, and flexible for a wider range of investors. At the same time, several challenges need to be addressed. Regulatory uncertainty, market volatility and security concerns remain key considerations. As policies evolve and infrastructure improves, tokenized stocks may become a more established part of the global financial system. Understanding both the benefits and the limitations is essential for anyone evaluating this emerging asset class.