Lester Pereira, founder and CEO of TraderPal.
In the ever-evolving world of finance, tokenization is no longer a theoretical concept. It’s becoming a practical reality. While the spotlight on blockchain has long focused on cryptocurrencies, a new wave of innovation is transforming equity markets: tokenized stocks. This trend is breaking down traditional barriers to stock ownership and offering a future where financial assets are more liquid, accessible and programmable.
Tokenized Stocks Defined
Tokenized stocks are digital representations of traditional shares issued on a blockchain. Instead of holding a share through a brokerage, investors own a cryptographic token that represents a share (or fraction of a share) in a publicly traded company. These tokens are typically backed 1:1 by real stocks held in custody by a licensed entity. Some platforms offer synthetic versions that mimic price movements without being backed by an underlying asset.
The appeal is clear: Tokenized stocks can be traded 24/7 on blockchain-based platforms, settled instantly and accessed globally without the friction of time zones, national exchanges or multiple intermediaries.
A New Value Proposition For Investors
Tokenized stocks promise democratization. Traditionally, retail investors outside the U.S. and Europe have faced multiple obstacles: foreign exchange controls, high investment minimums and a lack of brokerage access. Tokenized stocks remove many of these barriers by enabling fractional ownership and cross-border accessibility.
A 2024 World Economic Forum report noted that tokenization could unlock trillions in previously illiquid assets and bring financial inclusion to millions who are currently underbanked. Tokenized stocks are uniquely positioned to bridge decentralized finance (DeFi) and traditional markets, especially in emerging economies.
As someone who works in this space firsthand, I’ve seen these benefits in action. At TraderPal, we recently began offering tokenized real estate assets in Latin America. We’ve conducted multiple focus groups, and the feedback is consistent: there’s a high level of hesitation, largely due to limited regional regulation around tokenized assets. Without a clear legal framework, users don’t feel fully protected, which makes them less confident when considering these types of investments.
Only a few jurisdictions, like El Salvador with its Digital Assets Law and, to some extent, Chile, have made progress in creating legal frameworks. In many cases, platforms look to Europe—Estonia and Lithuania in particular—where digital asset regulations are more developed. These countries provide licenses that allow platforms to operate internationally. However, this approach still leaves gaps, especially regarding local investor protection.
Behind-The-Scenes Complexity
Licensing in Europe doesn’t mean companies can onboard users from Latin America without issue. Local regulations around data privacy, advertising and identity verification still apply. Building a compliant cross-border solution takes careful planning and legal expertise. But when done right, it can unlock access to financial products for people historically excluded from investing.
One major barrier is education. Many users still find blockchain and smart contracts confusing or overly technical. We realized early on that in addition to building infrastructure, we had to close this knowledge gap. Until there is more regulatory clarity and better public understanding, adoption will likely remain slow.
Still, demand exists. There is a niche market in Latin America, similar to what we saw with cryptocurrency adoption eight years ago, that wants these products. The technology behind tokenized assets brings real advantages: instant settlement, global access and increased transparency.
If you’re offering these assets to users in a specific country, it’s critical to know whether that jurisdiction has any legal framework to protect the end user or recognize the asset formally.
The Surprising Truth
When I first began working with tokenized assets, I was surprised by how powerful and accessible they could be. By turning a U.S. stock into a blockchain-based token, suddenly, anyone with a smartphone and a few dollars could invest. There was no need for a traditional brokerage or large sums of money.
In Latin America, where many people have limited access to formal financial institutions, this model offers a path to real financial inclusion. Instead of saving money in cash or relying on remittances, users can invest in global assets from their phones and start building long-term wealth.
Regulatory Outlook
Despite the promise, regulation remains a work in progress. The U.S. SEC clarified that tokens representing shares are securities and must comply with existing laws. Some jurisdictions, like Switzerland and Singapore, have also developed frameworks for tokenized assets, but much of the world still lags behind.
Major players are beginning to move. Robinhood CEO Vladimir Tenev hinted at exploring tokenized assets when he said, “Tokenization is the most important innovation in financial markets in the last decade.” With its mobile-first platform and wide reach, Robinhood could accelerate adoption dramatically.
Tokenized Vs. Traditional Stocks
While both represent ownership, tokenized stocks differ significantly in form and function. Traditional stocks are held by brokerages and traded on centralized exchanges with limited hours. Settlement can take days, and fractional ownership isn’t guaranteed. Tokenized stocks, on the other hand, exist on blockchains, can settle instantly and allow for native fractional ownership.
That said, not all tokenized assets confer actual legal ownership. Some are synthetic and only mimic price movements. Legal recourse and investor protections may also vary depending on the platform and jurisdiction.
Challenges To Overcome
There are real risks. Smart contracts must be carefully coded, as exploits can lead to major losses. Custodial mismanagement is another concern. And without deep liquidity, prices on tokenized stock platforms may be more volatile.
Still, institutional interest is growing. Deutsche Börse’s D7 platform and Franklin Templeton’s tokenized funds are paving the way. These developments signal that asset tokenization is gaining traction not just with retail investors but also with major financial players.
A New Era Of Ownership
Tokenized stocks aren’t just a fintech trend; they’re a fundamental shift in how we think about equity and access. For developing economies, the ability to invest globally, instantly and affordably could redefine what financial inclusion looks like. While still nascent, the trend is gaining credibility and traction, particularly among younger, mobile-first investors and underserved markets.
With the right safeguards and continued innovation, tokenized assets could usher in a more inclusive, transparent and efficient financial system.
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