A legal analysis republished by WuBlockchain says investors who spend $100 on an on-chain token labeled "SpaceX" may not be buying any SpaceX equity at all, even if the token’s price tracks the company’s shares.
The article, written by Liu Lei’s legal team, says the tokenized stock market grew nearly fivefold over the past year, from $327 million to $1.5 billion. It argues that a basic misunderstanding now sits at the center of the market: products that look similar on-chain can represent very different legal rights.
What tokenized stocks are supposed to represent
The piece defines tokenized stocks as digital assets on a blockchain that map either corporate equity itself or the economic rights tied to that equity. These tokens can move between wallets, trade around the clock and be used as collateral for borrowing. Their mechanisms may also embed economic features linked to stocks, including share-price performance and dividends.
It also points to growing interest from traditional financial infrastructure. According to the article, the Depository Trust & Clearing Corporation, or DTCC, has said it will launch a tokenized securities pilot in 2026, while the New York Stock Exchange is exploring a 24-hour tokenized stock trading system. In the authors’ view, that suggests tokenization is no longer limited to a niche crypto audience.
Three legal structures behind the same stock label
Model one: the buyer is a real shareholder
In the first model, the token is backed 1:1 by actual shares, and the blockchain record is tied to formal equity registration. The article says the holder’s wallet address is entered into the company’s official shareholder register, similar in legal effect to being listed through a traditional brokerage account.
It names Superstate as an example. The piece says Superstate is registered with the U.S. Securities and Exchange Commission as a transfer agent and records equity directly on the Solana blockchain. Under that structure, holders are entered into the company’s official register and receive voting rights, dividend rights and formal shareholder status.
The analysis describes this as the most compliant and most traditional version of tokenized equities, though it also comes with the strongest regulatory constraints. Investors get recognized ownership, but must go through strict KYC and AML checks, and the tokens cannot circulate freely on a decentralized secondary market. In the article’s framing, this is still a traditional security, only upgraded with blockchain rails.
Model two: an on-chain claim against an offshore SPV
The second model is described as the most common and most actively traded form of tokenized U.S. equities in the spot market today. The article places secured tokens issued by xStocks, Kraken, Backed Finance and Ondo in this category. Their structure relies on offshore holding entities and on-chain trust-based arrangements rather than direct stock ownership.
As presented in the piece, the issuer typically sets up an offshore special purpose vehicle in places such as the Cayman Islands or Switzerland. That SPV opens an account with a traditional broker, buys and custodies SpaceX shares on a 1:1 basis with real cash, and the project then issues tokens on-chain. What the buyer receives is not the share itself, but a claim on the offshore entity that holds it.
That distinction matters. The article says buyers under this structure are not shareholders of the underlying company. They are creditors of the SPV. If the offshore vehicle runs into trouble — for example if management disappears, funds are misused, regulators impose penalties or the brokerage account is frozen — token holders are left pursuing a claim against that entity, and recovery depends on whatever assets remain.
The piece goes further and warns that without strong supervision, the idea of 1:1 backing can become little more than a slogan. It cites a past example in which a project allegedly tried to support on-chain derivative tokens valued at $1.3 trillion with only $23 million in real stock reserves. In the authors’ telling, leverage on that scale leaves little room for survival once redemptions or a run on the product begin.
Model three: a pure price bet with no equity link
The third model, the article says, generates the highest trading volume on-chain and is the most active segment. Here, the token labeled "SpaceX" has no relationship to SpaceX as a company, no real shares behind it and no custodial SPV. The price is held near the reference asset through market design tools such as funding rates and oracles.
The analysis places perpetual contracts in this category. A position opened on an exchange platform does not correspond to any actual stock, does not involve an offshore holder and does not create a place on a shareholder register. It is simply a bet between longs and shorts. The platform charges funding every eight hours based on spot prices to keep the derivative aligned. If the trader guesses wrong, the trader loses; if the trader guesses right, the trader profits.
The article says this structure severs any legal tie to real-world equity, but that is also why it avoids the complications of cross-border securities custody and the costs of asset acquisition. It supports high leverage, trades 24 hours a day and, on some platforms, allows users to short with no identity verification. Liquidity in this segment, the piece says, is far deeper than in the first two models, while the main risks lie in smart contract security and the stability of liquidation mechanisms.
Why the market still buys these products
The commentary argues that investors keep trading these instruments even when they do not hold real equity because the products solve access and settlement problems that traditional markets do not. For global investors who cannot directly open U.S. brokerage accounts, tokenized stocks remove geographic and capital-control barriers.
It also points to the structure of blockchain-based settlement itself. Traditional U.S. equity trading still works around T+1 or T+2 settlement, market hours and cross-border currency transfer friction. Tokenized stocks, by contrast, can offer instant settlement on a 24/7 basis, which the article says removes the liquidity premium created by time delays.
Once they enter DeFi, these tokens also become highly composable. The article says holders can seek returns not only from changes in stock prices but also by using the tokens as collateral, lending them out for interest or combining them with other strategies. In that setting, the market may accept the loss of legal shareholder status because the practical utility of the token can outweigh the value of having a name on a traditional register.
Three risks flagged for mainland China users
The article says users in mainland China who move funds in and out in renminbi face three specific issues no matter which tokenized-stock model they buy.
- First, soliciting others in China to purchase these tokens could touch the red line in China’s Securities Law that requires approval to operate securities-related business. The piece says individual investors may not immediately face consequences, but if disputes arise, they should not expect domestic regulators to step in on their behalf.
- Second, using U for deposits and withdrawals and then earning profits may raise foreign exchange compliance issues as well as tax questions tied to offshore investment gains.
- Third, cross-border disputes are expensive to pursue. If the offshore shell company is in the Cayman Islands, the broker is in the United States and the relevant oversight sits in an offshore financial jurisdiction, legal fees may exceed the original investment loss.
The article’s conclusion
Liu Lei’s legal team says the three categories line up with three types of demand: long-term institutional capital seeking full shareholder rights, on-chain users focused on DeFi collateral and liquidity, and short-term speculators drawn to high leverage and nonstop trading. The piece closes by arguing that in a more digital and global financial system, the central question may be less about who formally owns the stock and more about who can provide safer and more efficient liquidity allocation.