In 2026, tokenized stocks are capturing the attention of crypto investors at an unprecedented pace. According to Token Terminal, the total market capitalization of on-chain tokenized stocks has surpassed $1.6 billion, marking a new all-time high. On May 18, 2026, daily trading volume for tokenized stocks soared to $3.57 billion.
Yet behind these impressive numbers lies an unsettling truth: what you’re buying may not be a stock, but merely a "price promise." What are the real limitations of stock tokens?
Regulatory Risk: Uncertainty in the Policy "Sandbox"
Regulatory risk is widely recognized as one of the most critical challenges in the evolution of tokenized stocks.
In May 2026, the U.S. Securities and Exchange Commission (SEC) introduced an "innovation exemption" framework, allowing third parties to tokenize U.S. equities like Apple and Tesla without direct authorization from the listed companies. However, this framework is essentially a 12- to 36-month regulatory sandbox, not a permanent rule change.
Former SEC attorneys note that such exemptions lack the force of formal regulation; if there’s a change in administration, the policy could be overturned at any time. Meanwhile, global regulatory standards remain inconsistent—identical tokenized stock products may face entirely different compliance requirements across markets.
It’s important to note that stock trading is strictly regulated worldwide, leaving little room for gray areas. If regulation tightens, many tokenized stock products could face delisting or even forced liquidation.
Missing Rights: You’re Buying Exposure, Not Ownership
This is the fundamental limitation of stock tokens.
The most contentious issue with stock tokens is that investors do not become registered shareholders of the underlying companies. The CEO of the World Federation of Exchanges (WFE) has made it clear: these products are marketed as stock tokens, but investors do not receive dividends, voting rights, or other core shareholder benefits.
This reality became evident during the SpaceX IPO frenzy in June 2026. Products like Bitget preSPAX and Bybit tokenized shares do not grant legal shareholder rights; all documentation clearly states that users do not enjoy dividend rights, voting rights, or liquidation priority claims. Users can only trade price fluctuations and cannot connect to the actual company.
A more extreme case comes from Anthropic. On May 12, 2026, Anthropic issued a formal warning stating that unauthorized share transfers—including tokenized tools—are invalid. Within a month, its tokenized stock price plunged by about 28.6%, falling to approximately $697 as of June 15.
You’re getting the price outcome, not the asset itself. The risk lies not in the stock, but in the platform’s credibility.
Liquidity Risk: Fragmented Markets and Widening Spreads
Insufficient liquidity is a structural challenge across the tokenized stock market.
Traditional stock markets benefit from a large number of institutional investors, market makers, and mature trading systems, maintaining high market depth. Tokenized stock markets are much smaller, with fewer participants. When buyers and sellers are limited, it becomes harder to execute trades, and bid-ask spreads widen.
A bigger issue is "liquidity fragmentation": when the same stock is tokenized across multiple blockchains and decentralized platforms, trading volume and order flow that would have been concentrated on NYSE or NASDAQ are scattered across various venues. This results in price discrepancies, increased slippage for large orders, and reduced overall market efficiency.
Tiger Research reports that traditional finance views this fragmentation as a structural threat. Citadel Securities, in its letter to the SEC, also warned that tokenized stocks "fragment liquidity and weaken core investor protections."
Custody Risk: Every Link in the Chain Can Break
Tokenized stocks do not rely solely on blockchain; they require ongoing maintenance by real-world operators.
Most tokenized stocks use a "real stock custody + on-chain token issuance" structure. The underlying stocks are held by professional custodians, while investors own corresponding digital certificates. This means the market depends heavily on custodians to actually hold the assets and ensure the number of assets matches the number of on-chain tokens.
If disclosures are insufficient or audit mechanisms are lacking, investors may not be able to accurately verify the asset backing for the tokens. If the issuing entity faces operational issues, asset management errors, or legal disputes, the connection between tokenized stocks and their underlying assets is directly affected.
This structure concentrates risk in centralized points: counterparty risk, platform bankruptcy risk, lack of transparency in custody, and risks of regulatory freezes or forced redemption suspensions.
Technical and Operational Risk: Smart Contracts Aren’t a Cure-All
Tokenized stocks operate on blockchain networks and face their own technical risks.
Smart contracts manage token issuance, transfers, and some settlement processes. If a smart contract has vulnerabilities, it can impact asset management and trade execution. When underlying stocks undergo complex actions like splits or mergers, smart contracts may struggle to handle these automatically, and improper oracle operations can trigger mass liquidations of related products.
Additionally, 24/7 trading may seem convenient but hides risks. The International Monetary Fund (IMF) has long warned that unregulated round-the-clock trading can amplify financial contagion risks. Traditional markets have circuit breakers as a safety net, but on-chain markets have no pause button—your assets could evaporate overnight, with no recourse.
Industry Trend: From Tokenization to Real Trading
Faced with these limitations, the industry is searching for new solutions. On June 1, 2026, Gate officially launched real stock trading services, supporting USDT settlement, fractional shares, pre-market and after-hours trading, and direct IPO access. The platform now offers over 11,500 real stocks and ETFs, covering both U.S. and Hong Kong markets.
Compared to tokenized stocks, real stocks offer clear advantages in shareholder rights and cross-platform liquidity. This trend suggests the industry is shifting from "synthetic exposure" to "actual holdings"—investors no longer have to choose between price tracking and asset ownership.
Conclusion
The limitations of stock tokens can be summarized across five core dimensions: regulatory uncertainty, lack of substantive shareholder rights, fragmented and insufficient market liquidity, vulnerability in custody chains, and technical risks from smart contracts and round-the-clock trading.
As of June 2026, tokenized stocks have surpassed $1.6 billion in market cap, but remain insignificant compared to the roughly $150 trillion global stock and ETF market. As SEC Commissioner Hester Peirce said, blockchain technology cannot change the legal nature of underlying assets—tokenized stocks are still securities, but they are not equivalent to owning the company itself.
For investors, before participating in any stock token transaction, it’s essential to clarify: Are you buying "price exposure" or "asset ownership"? Does the platform provide real stock custody and proof of reserves? If a dispute arises, where is your legal recourse?
In investing, longevity matters more than quick gains. Before diving into this seemingly shimmering "new waters," make sure you’ve spotted the hidden reefs below the surface.
