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Do You Know The Difference Between Tokenized Stock vs Crypto Stock?
Intermediate
2025-08-26 | 15m
The convergence of traditional finance and crypto is reshaping the global asset landscape. Institutions like BlackRock and Franklin Templeton have launched tokenized money market funds, while exchanges like Kraken and Binance have expanded tokenized stock trading, signaling the accelerated digital transformation of financial assets. Against this backdrop, tokenized stocks and crypto stocks have become crucial innovations bridging the traditional financial and crypto ecosystems, yet they are often confused. This article will analyze both from the perspectives of concept, technical logic, market performance, regulatory environment, and trading mechanisms, revealing their unique roles and challenges in the digitalization of finance.
Concept Definition
Tokenized Stock
A tokenized stock is a blockchain-based token that represents exposure to traditional equity, such as shares in Apple (AAPL) or Tesla (TSLA). These tokens are typically designed to mirror the price of the underlying asset, meaning if the real stock price goes up or down, the value of the token is designed to follow suit.
Many issuers of these tokens will acquire the real shares in question, lock them in custody, and then mint equivalent tokens on a smart-contract compatible network such as Ethereum or Solana. Tokenized stocks are part of a broader trend known as real-world asset (RWA) tokenization, bringing traditional assets like stocks, bonds and even real estate onchain.
Typically, each token corresponds to one share (or fraction of a share) in the underlying entity. Not all tokenized stocks represent direct legal ownership in the company; some may offer only price exposure or synthetic replication through derivatives. In some cases, tokenized stocks may also include rights like dividends, depending on the structure and platform. Custody of these tokens is managed by the platform, rather than the token holder themselves.
Crypto Stock
Crypto stocks refer to shares of publicly-traded companies whose business operations are primarily focused on cryptocurrency and blockchain technology. These are traditional equity securities that trade on regulated stock exchanges, not blockchain-based tokens. Examples include Coinbase (COIN), a cryptocurrency exchange; MicroStrategy (MSTR), a business intelligence company known for its substantial Bitcoin treasury; and Marathon Digital (MARA), a Bitcoin mining company. These companies are incorporated entities subject to corporate governance requirements, and their stocks represent ownership in the company itself. Unlike tokenized stocks, crypto stocks trade through traditional settlement systems (e.g., T+2 settlement in the U.S.) and provide shareholders with voting rights, dividends, and other corporate benefits standards for equity ownership.
Technical Logic
The Technical Architecture of Tokenized Stocks
Tokenized stocks adopt a hybrid model of "centralized custody + decentralized trading", and the key links require the participation of compliant intermediaries. First, a regulatory-approved custodian institution holds the underlying stocks, such as Binance's cooperation with a German investment company to manage the underlying securities portfolio. Next, the issuer creates tokens based on standards such as ERC-20. Each token contains a smart contract code that defines rules such as dividend distribution and voting rights execution. Finally, the exchange conducts an on-chain audit of the tokens to ensure that the number of custodial stocks is consistent with the total number of tokens in circulation. Taking Jamstockex's securities custody process as an example, the issuance of tokenized stocks must be verified by the registrar for stock validity, and then deposited into the depository and generate a unique International Securities Identification Number (ISIN) for on-chain tracking. This architecture balances blockchain efficiency and financial compliance, relying on the credit of custodian and smart contract automation.
The Technical Foundations of Crypto Stocks
Crypto stocks operate entirely within traditional financial infrastructure without utilizing blockchain technology for their issuance or settlement. These securities are issued through conventional public offerings and listed on registered stock exchanges such as NASDAQ or NYSE. Trading occurs through established brokerage networks and clearing systems (e.g., DTCC in the United States), following standard T+2 settlement cycles. Share ownership is recorded in centralized registries maintained by transfer agents rather than on distributed ledgers. While some crypto companies may incorporate blockchain technology into their business operations, their equity shares themselves remain traditional securities that do not provide direct exposure to blockchain functionality or benefits.
Core Differences Between Tokenized Stock and Crypto Stock
Underlying Assets and Equity Attributes
Tokenized stocks are strictly tied to traditional stocks, representing equity in publicly listed companies like Apple and Tesla. Tokenized stocks offer the same rights and benefits as traditional shareholders, including dividends and voting rights. The realization of these rights relies on legal agreements and smart contracts between the custodian and the issuer. Crypto stocks, on the other hand, represent direct ownership in companies focused on cryptocurrency businesses. Shareholders enjoy full corporate rights including voting rights and dividends determined by the company's board of directors. These stocks represent claims on the entire business operations and assets of the company, not just crypto holdings.
Regulatory Compliance Status
Tokenized stocks are subject to the traditional securities regulatory framework. Since they represent traditional stock interests, they must comply with the securities laws of the place of issuance and trading. In the United States, they must comply with the Securities Act of 1933, and issuance and trading must be registered with the SEC or exempted. The European Union has included them in the Crypto-Asset Market Regulation Act (MiCA), requiring issuers to disclose information about underlying assets and custody arrangements. Crypto stocks are regulated exclusively under traditional securities regulations. They must comply with all standard reporting requirements including quarterly earnings disclosures, SEC filings, and corporate governance standards. Their regulatory status is well-established and identical to other publicly-traded companies in their jurisdiction.
Value drivers
The value of tokenized stocks is entirely determined by the underlying stock price, with fluctuations similar to those of traditional stock markets, influenced by factors such as company earnings and the macroeconomy. Blockchain technology only impacts transaction efficiency and does not alter the underlying value. The value of crypto stocks is driven by both traditional equity valuation metrics (earnings, revenue growth, market position) and cryptocurrency market dynamics. Their stock prices may correlate with crypto asset prices but are ultimately determined by company-specific financial performance and market sentiment toward their business model.
Market Analysis
Market Performance of Tokenized Stocks
Top Tokenized Stocks By Market Cap. Source: CoinGecko
The tokenized stock market has grown steadily in recent years. By 2025, Kraken's "X Stocks" series covered over 60 large-cap stocks, and Robinhood launched trading of over 200 US stocks and ETF tokens in the EU. While its daily trading volume is lower than that of the traditional stock market, it is on an upward trend. Binance's Tesla token has an average daily trading volume of millions of dollars. Liquidity is primarily concentrated on leading platforms, and prices are synchronized with traditional stocks in real time, with minimal premiums or discounts. Arbitrage mechanisms and custodial backing limit price deviations. Investors include traditional investors and crypto natives, the former taking advantage of its 24/7 trading capabilities, while the latter seek exposure to traditional assets. Demand is driven by emerging markets (e.g., Southeast Asia, Latin America) where access to U.S. equities are limited. The tokenized asset market is projected to reach $18.9 trillion by 2033.
Crypto Stock Market Dynamics
The crypto stock market consists of established public companies with a total market capitalization exceeding $500 billion in 2025. These stocks trade on major traditional exchanges with high liquidity - for example, Coinbase (COIN) typically trades over $50 million worth of shares daily. Unlike tokenized stocks, crypto stocks exhibit volatility characteristics of growth technology stocks rather than stable tracking instruments. Their performance is influenced by both traditional equity market conditions and cryptocurrency sector developments. Institutional ownership represents a significant portion of these stocks, with major investment funds and ETFs holding substantial positions. Trading follows conventional market hours and settlement procedures without the 24/7 trading capability of tokenized assets.
Policy Trends
The US's Regulatory Approach
The United States regulates tokenized stocks under traditional securities regulations, requiring issuers to register and disclose information about the underlying assets. The SEC emphasizes the qualifications of custodian institutions, prohibits unregistered platforms from providing trading services, and has previously penalized tokenized stock issuers for non-compliance. Crypto stocks are regulated identically to all other public companies under existing securities laws. They must comply with SEC reporting requirements, GAAP accounting standards, and all corporate governance regulations applicable to publicly-traded entities.
EU's Attempt at Framework Regulation
The EU, through MiCA, provides a legal framework for tokenized assets, clarifying that tokenized stocks are "financial instrument tokens" subject to the EU's Markets in Financial Instruments Directive (MiFID II), requiring issuers and trading platforms to obtain licenses to ensure investor protection and market integrity. Crypto stocks in the EU are regulated under existing financial instruments directives (MiFID II) and are subject to the same requirements as other publicly-traded companies, including transparency directives and market abuse regulations.
Exploratory Attitude in Emerging Markets
Emerging markets like Singapore and the UAE are open to tokenized stocks, allowing testing of compliant platforms through sandbox mechanisms. The Monetary Authority of Singapore has approved some institutions to offer tokenized stock trading, requiring strict Know Your Customer (KYC)/AML (anti-money laundering) processes and custodial arrangements. For crypto stocks, these markets apply standard securities regulations adapted from international best practices. Companies must meet conventional listing requirements and ongoing disclosure obligations regardless of their focus on cryptocurrency businesses.
How to Trade Tokenized Stock and Crypto Stock?
Tokenized Stock Trading Process
Tokenized stock trading requires a compliant platform. After completing KYC verification, users can purchase with fiat currency or stablecoins. Trade execution is similar to traditional stocks, but settlement is completed on the blockchain, reducing transaction times from T+2 to minutes. For example, when trading X Stocks on Kraken, tokens are instantly transferred to the user's wallet after the order is matched, and dividends are automatically paid to an on-chain address. Transaction costs include platform commissions (usually zero or low) and blockchain gas fees. Market and limit orders are supported. Some platforms offer leveraged trading, but this is subject to regulatory restrictions.
Crypto Stock Trading Mechanics
Crypto stocks are traded exclusively through traditional brokerage accounts and stock exchanges. Investors must open accounts with licensed brokers, fund them with fiat currency, and execute trades during market hours. Settlement follows standard procedures (T+2 in most markets) through central clearinghouses. Ownership is recorded in electronic form with transfer agents rather than in digital wallets. Trading costs include brokerage commissions and regulatory fees, but no gas fees. Investors receive standard corporate benefits, including voting rights through proxy materials and dividend payments through conventional banking channels.
What's The Risk Between Tokenized Stock and Crypto Stock?
The Risk Matrix of Tokenized Equities
Risks are concentrated in the areas of custody and regulation. If the custodian defaults or experiences a security incident, the token could become decoupled from the underlying stock. Regulatory policy changes could also impact trading, such as a sudden ban on tokenized securities trading in a country, which could lead to a liquidity shortage. Furthermore, while prices are pegged to the underlying stock, arbitrage failures could occur under extreme market conditions, resulting in premiums or discounts.
The Risk Spectrum of Crypto Stocks
Crypto stocks face conventional public market risks rather than blockchain-specific threats. Primary risks include business execution risk, cryptocurrency market volatility impacting company performance, regulatory changes affecting crypto businesses, and general equity market conditions. Unlike tokenized stocks, they don't face smart contract risk or custody risk, but instead face traditional corporate governance risks and market competition challenges. Their regulatory status is well-defined and stable compared to the evolving framework governing tokenized assets.
Future Trends: The Possibility of Differentiation and Integration
Tokenized stocks may become the primary way for traditional financial institutions to enter the crypto market. With clearer regulations and increased institutional participation, their scale may continue to expand, becoming a highly effective tool for cross-border asset allocation. Crypto stocks will likely continue developing as conventional equity investments while maintaining correlation with cryptocurrency market trends. The convergence may occur through traditional companies issuing tokenized versions of their shares, creating parallel trading venues that combine traditional market integrity with blockchain efficiency.
Conclusion
Tokenized stocks and crypto stocks represent fundamentally different approaches to cryptocurrency investment exposure. Tokenized stocks represent an innovation in financial infrastructure, creating blockchain-based proxies for traditional equities. Crypto stocks provide traditional equity exposure to companies operating in the cryptocurrency sector. While both offer crypto-related investment opportunities, they differ significantly in their technical implementation, regulatory treatment, and risk profiles. As both markets mature, they will likely develop complementary roles in investor portfolios rather than directly competing functions, together providing comprehensive exposure to the digital asset ecosystem through both traditional and innovative financial instruments.
Reference:
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Tron Powers Next-Gen Stock Trading with Kraken’s Tokenized xStocks Expansion.
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Royal, J. (2025).
Tokenized stock trading: The huge risks in moving stocks to blockchain. Bankrate.
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HTX Ventures. (2025).
HTX Ventures Latest Research Report | Is Stock Tokenization a Pie or a Trap? Understand it in One Article.
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Cointelegraph. (2025).
Kraken, Backed expand tokenized stocks to Tron ecosystem amid RWA push.
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The Rise of Tokenized Equities: How TRON’s Integration with xStocks is Reshaping Global Access to Traditional Markets.
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Which of the three driving forces of tokenized US stocks will come out on top?
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Japan’s SBI Teams Up with Soneium Co-Developer to Launch Platform for Tokenized Stocks, RWAs.
https://thedefiant.io/news/tradfi-and-fintech/japan-s-sbi-teams-up-with-soneium-co-developer-to-launch-platform-for-tokenized-stocks-rwas
CoinCatch Team
Disclaimer:
Digital asset prices carry high market risk and price volatility. You should carefully consider your investment experience, financial situation, investment objectives, and risk tolerance. CoinCatch is not responsible for any losses that may occur. This article should not be considered financial advice.
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