Tokenised Shares: What Do You Actually Own?

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Tokenisation is often presented as the next major evolution in financial-market infrastructure. But when an investor acquires a tokenised share, what do they actually own? A stock token could represent a legally recognised security, a debt claim against an intermediary, or a derivative that simply tracks the value of an underlying share. Although these products may appear similar, they can provide very different ownership rights, protections and risks. In this episode of Unlocking Liquidity, we explore tokenised shares from a private-market perspective, including the importance of issuer participation, recognised ownership records, custody arrangements and legally effective transfers.

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The language of tokenisation is moving rapidly into mainstream finance. Shares, funds, bonds and other assets can now be represented on blockchain- based systems, promising faster administration, easier transferability and more efficient settlement. For private markets, where ownership records, transfer approvals and settlement processes can be complex, the technology has obvious appeal. Yet the term “tokenised share” can conceal a critical distinction. A digital token may represent the share itself. It may represent a contractual claim against an intermediary that owns or hedges the share. It may instead be a derivative whose value follows the share price without giving the holder any ownership interest at all. Those structures may produce similar-looking price exposure, but they are not legally or economically equivalent. They can give investors different rights to dividends, voting, information, transfer and recourse. They also create different risks if the issuer of the token, the custodian or another intermediary fails. For investors considering tokenised exposure to public or private companies, the most important question is therefore not simply what technology is being used. It is: what do I legally own?

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At its simplest, tokenisation involves creating a digital representation of an asset or interest and recording transactions involving that representation on distributed-ledger infrastructure. The token can potentially be divided into smaller units, transferred between approved participants, programmed with compliance rules and integrated with other financial systems. These features may improve the infrastructure surrounding an investment. They do not, by themselves, determine the investor’s legal rights. Those rights continue to depend on the terms of issue, the governing law, the recognised ownership register, custody arrangements and the contracts connecting the token to the underlying asset. This distinction is already visible in overseas markets. Nasdaq’s approved US model is designed so that eligible securities may trade in tokenised or --- conventional form while retaining the same ticker, identifier and shareholder rights. In that structure, blockchain technology changes how an existing security entitlement is recorded and transferred. It does not create a separate instrument that merely tracks the share. Other products carrying the “stock token” label work differently. Robinhood has described one wallet-based product as tokenised debt securities issued by an affiliate and backed by corresponding public shares. The holder receives economic exposure, but not legal or beneficial rights against the company whose shares are referenced. Robinhood’s European Classic Stock Tokens are described as derivative contracts. They track underlying shares or exchange- traded products but do not make the customer an owner of those securities. The same label therefore encompasses at least three possibilities: a recognised security or security entitlement recorded using blockchain; a debt claim against a token issuer; and a derivative contract providing synthetic exposure. The technology may be similar, while the legal claim is fundamentally different.

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An investor holding a conventional share generally participates through a recognised legal and custodial structure. Depending on the jurisdiction and form of holding, the investor may be registered directly or may hold a beneficial interest through a broker, custodian or nominee. In either case, the legal framework determines how voting instructions, dividends, corporate actions and insolvency protections operate. A synthetic token can reproduce some financial outcomes without reproducing that ownership relationship. The token issuer may promise to pay an amount linked to the value of a share and may hold the underlying shares as a hedge. However, the investor’s primary claim may remain against the token issuer rather than against the underlying company or the custodian holding its shares. That difference becomes particularly important when something goes wrong. If the token issuer becomes insolvent, holders may need to establish whether the underlying assets are segregated, held on trust or available to the issuer’s general creditors. If a custodian fails, the outcome may depend on the custody agreement and the way client assets were recorded. If the token is only a --- derivative, the investor may be an unsecured contractual claimant rather than an owner with rights attached to the referenced share. Dividends and voting rights also require close attention. A product may make cash adjustments intended to reflect dividends without passing through the legal dividend itself. It may provide no voting rights, or offer only a discretionary mechanism through which the token issuer may choose to act. Corporate actions, takeovers, stock splits and compulsory acquisitions can also be treated differently under a contractual product from the way they would affect a direct shareholder. The practical lesson is straightforward: price exposure answers only one part of the ownership question. Investors must also understand who owes them the obligation, where the underlying asset is held, whether they appear on or are recognised through the official ownership record, and what rights survive the failure of an intermediary.

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The distinction becomes sharper in private markets because unlisted companies typically impose transfer restrictions and maintain controlled ownership records. A company’s constitution, shareholders’ agreement and transaction documents may require board approval, pre-emptive procedures, rights of first refusal or verification that a buyer is eligible to invest. A third party can create a contract or token whose value references a private company. That does not mean the company has issued the token, approved a transfer or recognised the token holder as a shareholder. The holder may obtain economic exposure through a special-purpose vehicle, fund, note, derivative or chain of contractual arrangements without ever appearing on the company’s register. The OpenAI and SpaceX promotional tokens offered by Robinhood in Europe in 2025 illustrated the issue. The terms described derivative contracts hedged through interests in special-purpose vehicles. Holders did not receive rights to the companies’ shares or to the assets used as hedges. OpenAI publicly stated that it had not endorsed the product and that transfers of its equity required its approval. For private companies, issuer participation is not a minor administrative detail. It is central to whether a transfer is legally effective. If a token is --- intended to function as the share itself, the company or its authorised administrator must be able to recognise the holder, apply transfer restrictions, maintain the official record and process the rights attached to ownership. This also affects pricing. A token might trade frequently even when the underlying private shares trade rarely. The token price may reflect demand, liquidity and counterparty risk in the token product rather than an executable price for the underlying shares. Tokenisation can create more price signals, but it does not automatically make those signals reliable evidence of the value at which the actual shares could be transferred.

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In Australia, the regulatory treatment of a digital asset depends on its features and the rights attached to it, not simply on whether it is called a token. ASIC’s current guidance takes a functional approach. A digital asset may be a share, an interest in a managed investment scheme, a derivative, a debenture, a non- cash payment facility or another financial product depending on its structure. ASIC has stated that tokenised securities will generally fall within the existing securities regulatory framework. This is an important principle: placing an asset or entitlement on a blockchain does not remove the licensing, disclosure, conduct, custody or market obligations that would otherwise apply to the financial product or service. The Australian framework is also continuing to develop. ASIC has updated its digital-asset guidance, and reforms are bringing digital asset platforms and tokenised custody platforms within the financial-services licensing regime. These reforms reinforce the need to examine the actual service being provided, the assets held for clients and the legal protections supporting the platform. For a token said to represent equity in an Australian private company, relevant questions may include whether the holder has legally acquired a share, whether the company’s register has been updated, whether applicable transfer restrictions have been satisfied, and whether the platform, issuer, custodian or intermediary requires an Australian financial services licence or other authorisation. If the token instead provides contractual exposure, its classification and disclosure obligations will turn on the terms and economic substance of that arrangement. --- These matters are highly fact-specific. Tokenisation is not a single product category, and the presence of sophisticated technology does not eliminate the need for conventional legal analysis.

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Before investing, an investor should be able to identify the precise instrument being acquired. The starting point is the issuer: is the token issued by the company whose shares it references, by an authorised intermediary, by a special-purpose vehicle or by an unrelated third party? The answer determines where the investor’s legal claim begins. The next issue is the recognised ownership record. If the token is claimed to be a genuine share, transferring it should result in a legally effective transfer of the security and an appropriate update to the company’s register or recognised intermediated holding system. If that connection is absent, the token may be a wrapper around the asset rather than the asset itself. Investors should also examine custody and asset segregation, including who holds any backing shares and whether they are protected from claims against the token issuer. The governing documents should explain redemption, transfers, distributions, voting, corporate actions, fees, valuation and the consequences of insolvency or technology failure. Liquidity claims deserve equal scrutiny. Blockchain infrastructure may make a token technically transferable at any time, but technical transferability is not the same as market liquidity. A liquid market requires willing buyers and sellers, reliable information, compliant access, credible price discovery and a legally effective settlement process. The ability to move a token between wallets does not guarantee that it can be sold at a fair or executable price.

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None of these distinctions diminishes the potential value of tokenisation. Used within a properly designed legal and operational structure, distributed-ledger technology could improve investor onboarding, automate eligibility controls, simplify reconciliations, support smaller investment units and make ownership and transaction histories easier to administer. It could also help connect capital raising, registry, custody and secondary transfers within a more integrated system. For private companies, this may --- reduce friction while preserving the controls needed to determine who can invest and when a transfer can occur. The strongest models are likely to be those in which the legal and digital records are deliberately aligned. The issuer is involved, the instrument is clearly defined, investors understand their rights, transfers comply with the company’s rules, and the official ownership record remains authoritative. Technology then improves the process instead of introducing another layer between the investor and the asset. This is particularly relevant to the development of controlled facilities for unlisted securities. Private-market liquidity does not depend solely on making an instrument continuously tradable. It depends on combining eligible participants, company-approved processes, appropriate disclosure, reliable ownership records and orderly settlement. Tokenisation may strengthen that infrastructure, but it cannot substitute for it.

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As tokenisation develops, investors will encounter more products described as tokenised equities, digital shares or stock tokens. Those terms may sound interchangeable, but the underlying rights can vary significantly. A genuine tokenised security can use new infrastructure while preserving the legal substance of the existing asset. A tokenised debt instrument may give the investor a claim against an intermediary backed by shares. A derivative may provide price exposure without ownership of the referenced company at all. Each structure may have a legitimate purpose, but each must be understood on its own terms. For private markets, the decisive test is whether the technology is connected to the company, its governing documents and its recognised ownership record. If transferring the token does not legally transfer the share, the investor does not own the share merely because the token carries the company’s name. Tokenisation may ultimately become an important part of private-market infrastructure. Its credibility, however, will rest on clarity. Investors need to know what they own, who is responsible for their rights and what happens when the contractual or technological chain is tested. In private markets, better plumbing is valuable—but legal ownership remains the foundation. ---

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As private markets continue to evolve, investors and companies are increasingly seeking greater access, transparency and liquidity. PrimaryMarkets is an Australian-based platform that helps facilitate capital raising and secondary trading opportunities in private companies, managed funds and other unlisted investments. Through its capital raising and trading solutions, PrimaryMarkets connects sophisticated and wholesale investors with a diverse range of private market opportunities across sectors including technology, healthcare, energy, resources, property and alternative assets. The platform also assists companies and fund managers to access growth capital while providing existing shareholders and unitholders with potential liquidity pathways. By combining technology with market expertise, PrimaryMarkets is helping to modernise private capital markets, making it easier for investors to discover opportunities and for companies to connect with capital. As the private market ecosystem continues to mature, platforms such as PrimaryMarkets are playing an increasingly important role in improving access, facilitating transactions and supporting the efficient flow of capital.

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Editorial attribution: This article was inspired by Paul Smalera’s analysis, “A Stock Token Can Be Three Different Things,” published by Augment on 20 August 2026. The PrimaryMarkets article is independently written and considers the subject from an Australian private-market perspective.

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And that brings us to the end of this episode of Unlocking Liquidity. Thanks for spending your time with us, we hope today’s conversation gave you a fresh perspective on private markets and how liquidity is evolving. If you enjoyed the episode, please follow or subscribe wherever you listen, and feel free to share it with someone who’d get value from it. For more insights, opportunities and episodes, visit PrimaryMarkets.com. Until next time, thanks for listening, and we’ll see you in the next conversation.