Tokenized stocks are moving from limited pilots toward live trading, but the infrastructure that underpins traditional equity markets has not fully been built for assets that can trade across venues and around the clock.
In a commentary written by Douro Labs Chief Executive Officer Mike Cahill and translated by Foresight News, the pressure points are not at the level of token issuance alone. They sit in the core systems that keep public markets consistent: corporate actions processing, rights distribution, reference data maintenance and settlement.
Earlier this year, Nasdaq and the New York Stock Exchange won approval from the U.S. Securities and Exchange Commission to list tokenized versions of Russell 1000 index constituents and major index ETFs. At the same time, the Depository Trust & Clearing Corporation, or DTCC, has already begun limited production trading and is planning a full commercial rollout in October. More than 50 institutions joined the trial, a sign that the underlying technology is nearing readiness. Whether long-standing market systems can keep up is still an open question.
One stock could end up with two very different tokenized products
Under the main path currently approved by the SEC, tokenized assets remain tightly tied to the existing ownership structure. Tokenized shares use the same Committee on Uniform Securities Identification Procedures, or CUSIP, code as conventional shares, trade in the same order book and follow the same T+1 settlement cycle. DTCC’s pilot follows a similar model: the underlying real shares remain in custody at the Depository Trust Company, while the token becomes a new representation of ownership records. The legal rights and status of shareholders do not materially change.
A separate path under SEC review looks very different. According to media reports cited in the piece, a proposed “innovation exemption” could let crypto-native trading platforms list tokens linked to stock prices without approval from the listed companies themselves. Guidance issued by SEC staff in January drew a line between two categories: tokenized securities issued by the issuer, or on the issuer’s behalf, and tokens issued by unaffiliated third parties. The latter may carry rights that match the underlying shares, or may differ from them.
The exemption was said to be close to a release window in May, but regulators ultimately held back. The central issue did not go away. From a legal standpoint, the article argues, a token that merely tracks a company’s stock price may be fundamentally different from an instrument that represents ownership of that company’s shares.
That may sound technical, but it goes straight to investor protection and market fairness. If third-party tokens do not fully replicate the rights attached to native shares, disputes and opacity risks could rise sharply.
A stock is defined by more than its price
Creating a token that mirrors a share price in real time is no longer the hard part. Replicating the full set of rights and operational details attached to a real stock is much more difficult, and much more important.
Dividends are one example. They have to be calculated accurately, taxed correctly and paid on time to the ultimate beneficial holders. Shareholder votes must reach the actual owners on record, not simply whoever held the token at a snapshot moment. Stock splits, distributions and spin-offs also need to be executed accurately and in sync across every venue. If that does not happen, the same company could end up with conflicting capital structures across different ledgers.
These systems have kept global public markets highly consistent and predictable for decades, but they were designed around centralized market structures with fixed opening and closing times. Tokenized assets, by contrast, could trade 24/7 across time zones and across dozens of blockchains. That creates a level of stress the existing infrastructure has never had to absorb before.
Fragmentation stands out as the most immediate systemic risk
The piece says industry groups, including the Securities Industry and Financial Markets Association, or SIFMA, have already raised concerns in public. Without unified interoperability standards and transparent pricing mechanisms, tokenized markets could easily splinter. If multiple unrelated third parties issue tokenized versions of the same listed company, that risk could multiply.
In that scenario, several independent platforms might each launch a token tied to the same stock while using different settlement rules, rights structures and trade reporting systems. Price discovery for that company would then be spread across separate and incompatible islands of liquidity. Investors could be left dealing with information asymmetry, distorted arbitrage opportunities and fragmented liquidity, undermining market efficiency and confidence.
The shift reaches well beyond a single asset class
Tokenized equities are only one expression of a broader infrastructure transition now taking shape as finance absorbs blockchain technology. Nasdaq is separately pushing regulators to loosen limits on trading hours and move toward near round-the-clock trading. The New York Stock Exchange is also building infrastructure specifically designed for 24/7 operations.
Yet longer trading hours do not remove the need for a reference data layer and a settlement layer that can keep pace. Without a traditional closing bell, key processes such as net asset value calculations, margin requirements and index rebalancing lose the benchmark they have long relied on.
The next leaders in this market, Cahill argues, will be the institutions and companies capable of integrating fragmented tokenized trading venues into a single and coherent market structure. No matter which rail a trade settles on, investors would need consistent rights protection, dependable handling of corporate actions and settlement they can trust.
In that view, technology providers, traditional market participants and regulators will need to work in close coordination. The task is to build a market architecture that can capture blockchain-driven efficiency while holding the line on investor protection. The arrival of tokenized stocks, the article says, is not only a test of technical maturity. It is a test of how well the broader financial system can adapt to the market structure of the future.