Tokenized stocks are moving from pilot programs to live trading, but the market infrastructure that makes stocks consistent (corporate activities, qualifications, reference data, payments) is not built for assets that trade continuously in multiple venues. Earlier this year, Nasdaq and the New York Stock Exchange received approval from the SEC to list tokenized versions of Russell 1000 stocks and major index ETFs, and DTCC is now beginning limited production trading with a goal of a full commercial launch in October. More than 50 companies participated in the trial, highlighting that while the technology is ready, the systems behind the public market may not yet be ready.
Two products with the same ticker
In the first pass, approved by the SEC, tokenized asset shares remain locked into the ownership structure. Tokenized stocks belong to the same Uniform Securities Identification Procedures Board as traditional stocks, trade on the same order book, and settle on the same one-business day settlement cycle. The DTCC pilot will work similarly, with underlying shares stored in a Depository Trust Company and tokens becoming a new format for recording ownership. Nothing changes regarding the legal position of shareholders.
Taking a different path under SEC scrutiny would work differently. A reported “innovation exemption” would allow cryptocurrency-native trading platforms to list tokens tied to stock prices without requiring public company approval. The SEC’s staff guidance issued in January formally drew a line between these two categories: securities tokenized by or on behalf of an issuer and tokens issued by an unrelated third party, which may or may not hold the same rights as the shares they track. The exemption was reportedly close to being lifted in May before authorities rescinded it, but the fundamental questions it raised remain. Legally, the token that tracks the price of a company and the actual ownership of that company’s stock can be two very different things.
What actually defines a stock
Minting tokens that reflect stock prices has been solved, but replicating everything else carried by real stocks beyond what the price feed captures is much more difficult and important.
For example, dividends must be calculated, properly withheld, and paid to shareholders. Shareholder votes must reach the actual owner of record, not whoever happened to be holding the tokens when the snapshot occurred. A stock split or spin-off must be applied identically across all venues where the asset is traded, or the same company will end up with two different split numbers of shares across two different ledgers. This mechanism is built around a system with defined start and end times, rather than a system that runs continuously across dozens of blockchains at once, and has maintained the consistency of public markets for decades.
Fragmentation is a real risk
Industry groups, including the Securities Industry and Financial Markets Association, have been vocal about the risk of fragmentation in tokenized markets without common standards for interconnectivity and price transparency. That concern is compounded when multiple unrelated parties issue their own versions of the same company’s stock.
Imagine multiple platforms listing tokenized stocks, each tracking the same stock with different settlement terms, rights, and reporting tapes. Price research for a single company ends up being quietly split into multiple incompatible venues.
Big changes beyond one asset class
Tokenized stocks are an example of broader changes already underway across market infrastructure as financial institutions adopt blockchain technology. Separately, Nasdaq is pushing regulators to implement near-continuous trading hours, and the New York Stock Exchange is building dedicated infrastructure to support around-the-clock trading. However, this infrastructure requires a reference data and payments layer that can accommodate a no longer stopped market. A market without a closing bell lacks the anchor that net asset value calculations, margin requirements, and index rebalancing have relied on for as long as these processes have existed.
The companies that are positioned to enable the next stage of this change are those that adapt a fragmented set of tokenized venues to behave like a single, consistent market with consistent credentials, trusted corporate practices, and settlements that investors can trust regardless of the rail of trade.
