Key takeaways
- A tokenized stock is a blockchain token linked to a listed share. The link is a legal arrangement, and it differs by provider.
- Three models share the name: an entitlement to the share recorded by an intermediary, a claim on an issuer that holds shares in custody, and a contract that only tracks the price.
- Dividends, votes and a transfer to another broker exist only where the model provides them.
- On 28 January 2026 SEC staff said that the format of a security does not change how US securities law applies to it.
- Backpack's live pages describe its stocks as security entitlements under New York UCC Article 8 and list 1:1 conversion into tokenized securities on Solana since June 2026.
For information only. Not investment advice. The value of shares can fall as well as rise, and you may get back less than you invest.
Tokenized stocks in one paragraph
Tokenized stocks are blockchain tokens that stand for shares of listed companies, and the token is only the record: a legal arrangement between the holder and the token's creator decides what it records. The token can mark a right to the share itself on an intermediary's books, a claim on an issuer that owns the shares, or a contract that follows the price and nothing more. Dividends, votes and the ability to move the holding to another broker depend on which of the three it is.
Staff of the US Securities and Exchange Commission (SEC) gave a working definition in their statement on tokenized securities of 28 January 2026: a security formatted as, or represented by, a crypto asset, with the record of ownership kept wholly or partly on a crypto network. The statement adds that the models in use differ in structure and in the rights they give holders.
This guide covers the three models, their effect on dividends, voting and trading hours, the regulatory position in the EU and the US, and Backpack's own stock product. The other explainers are listed under all Backpack Learn guides.
The token is the record. The legal model decides what the record means.
Three legal models behind one name
One name covers three legal positions, and the holder's rights follow from the position, not from the blockchain. SEC staff sort tokens by who creates them: the company that issued the share, or an unrelated third party. Third-party tokens are either custodial, where the share is held in custody and the token evidences an interest in it, or synthetic, where the third party issues its own instrument linked to the share's value.
An entitlement to the share recorded by an intermediary
Legal nature: a security entitlement, meaning the holder's rights and property interest in a share that an intermediary holds for them. This is the position of an investor with shares in an ordinary US brokerage account; the blockchain is an extra or alternative ledger for it. SEC staff call it a tokenized security entitlement. The intermediary keeps its record of entitlement holders on the blockchain, so that the token represents the holder's indirect interest in the underlying share, or keeps the record off-chain and uses the token to update it. In the staff's view the format does not change how federal securities law applies.
A token backed by shares held by a custodian or vehicle
Legal nature: a claim on the token's issuer, which owns the shares and keeps them with a custodian; the holder owns the issuer's instrument, not the shares. The issuer may be a special-purpose vehicle, a company set up only for this task. What the holder can demand, such as redemption in cash, delivery of a share or a pass-through of dividends, is written in the token's terms and nowhere else. SEC staff note that a third-party token's rights may or may not match those of the underlying share, and that its holders can be exposed to the third party's bankruptcy in a way a shareholder would not necessarily be. Backing does not settle the label: where the token is the third party's own security linked to the share's value, the staff call it a linked security.
A token that only tracks the price
Legal nature: a contract with the issuer or a counterparty that pays by reference to the share price; no share is held for the holder and none is owed. It is a derivative in substance, whatever the product page calls it. SEC staff describe two forms. A linked security, such as a structured note, confers no rights or benefits from the company it references. A security-based swap typically conveys no equity, voting or information rights, and the staff add that it may not be offered to people who are not eligible contract participants unless it is registered and traded on a national securities exchange.
| Model | What the holder owns | Dividends | Voting | Transfer to a broker | Main risk |
|---|---|---|---|---|---|
| 1. Entitlement recorded by an intermediary | A security entitlement: rights and a property interest in the share | Obtained by the intermediary and owed to the holder | As the holder directs, through the intermediary | Possible as a share, if both firms support it | The intermediary's records and solvency |
| 2. Token backed by shares in custody | A claim on the issuer, which owns the shares | Only as the token's terms provide | Only if the terms pass it on | Not as a share: sale or redemption only | The issuer's and custodian's solvency, and terms that can change |
| 3. Token that only tracks the price | A contract on the price; no share is held | None from the company | None | None: there is no share to move | Whether the counterparty can and must pay |
Rows 1 and 3 follow UCC Article 8 and the SEC staff statement; row 2 summarises what a token's terms decide. A product's own terms prevail.
A fourth case sits outside the table. When a company keeps its own shareholder register on a blockchain, which SEC staff call issuer-sponsored tokenization, a transfer of the token is a transfer of the share on that register, and the token holder is the holder of record.
How ordinary share ownership already works
Many investors never appear on a company's share register: they hold shares through an intermediary. An investor bulletin on holding securities from the SEC's Office of Investor Education and Advocacy and FINRA, dated 12 July 2023, calls this holding in "street name": the shares are registered in the name of an intermediary, and the broker's records show the investor as the beneficial owner. Often the registered owner is Cede & Co., the nominee of The Depository Trust Company.
US commercial law names each part. Under section 8-102 of the Uniform Commercial Code (UCC) the investor is an entitlement holder, the broker a securities intermediary, and the holding a security entitlement. Part 5 of UCC Article 8 adds, in section 8-503, that shares an intermediary holds to cover its clients' entitlements are not its property and are not open to its creditors' claims, apart from the exceptions in section 8-511.
Terms used in this guide
- Securities intermediary
- A clearing corporation, or a bank, broker or other person that maintains securities accounts for others in the ordinary course of its business (UCC section 8-102(a)(14)).
- Entitlement holder
- The person identified in an intermediary's records as having a security entitlement against it (UCC section 8-102(a)(7)).
- Security entitlement
- The rights and property interest of an entitlement holder in a financial asset (UCC section 8-102(a)(17)).
- Custodian
- A firm that holds assets for someone else and keeps them apart from its own.
- Special-purpose vehicle
- A company set up for one task, here to own shares and issue tokens against them.
- Linked security
- A security issued by a third party that gives synthetic exposure to another company's security and confers no rights from that company (SEC staff).
- Security-based swap
- A derivative that gives synthetic exposure to a security, typically without equity, voting or information rights (SEC staff).
This is why "real shares" and "tokenized" are not opposites. A share at a broker is already a book entry one step removed from the company's register. A token that records the same entitlement changes the ledger, not the right; a token that records a claim on a vehicle or a price contract is a different asset, even under the same ticker. Short definitions are under security entitlement and tokenized stock in the glossary.
The wording used here is the uniform text of the UCC as published by Cornell Law School's Legal Information Institute. Each state enacts its own version, so where a provider cites New York law, New York's text governs.
Do tokenized stocks pay dividends?
Tokenized stocks pay dividends only where the legal model passes the dividend through to the token holder. A company pays the shareholders on its register, so the question is who stands between that register and the holder, and what they owe.
- Entitlement. The intermediary must act to obtain a payment made by the company and is obligated to its entitlement holder for what it receives (UCC section 8-505). The SEC and FINRA bulletin notes that some brokers pass payments on only weekly, every two weeks or monthly, so a short delay is normal.
- Backed token. The issuer receives the dividend as the shareholder, and its terms decide what follows: cash, extra tokens, a higher token value, or nothing.
- Price tracker. There is no dividend to receive, because a linked security confers no benefits from the referenced company (SEC staff). The contract may adjust for dividends or ignore them.
| Model | Who the company pays | What reaches the holder |
|---|---|---|
| 1. Entitlement | The registered owner, for the intermediary's clients | 10.00 dollars credited, before any tax withheld |
| 2. Backed token | The issuer or its custodian | As the terms set: 10.00 dollars in cash, the same value in tokens, or 0.00 |
| 3. Price tracker | Nobody on the holder's behalf | 0.00 from the company; a contractual adjustment at most |
Voting follows the same logic. An intermediary must exercise the rights attached to a share as its entitlement holder directs, or let the holder exercise them directly (UCC section 8-506). Holders of a backed token vote only if its terms pass the vote on, and a security-based swap typically carries no voting rights (SEC staff).
Trading hours: why a token can trade when the exchange is closed
A token can change hands at any hour because blockchains and crypto trading venues do not close, while the stock exchange that sets a share's reference price runs fixed weekday sessions. Outside those sessions the token trades without that reference: fewer buyers and sellers are active, the gap between buying and selling prices widens, and the token can drift from the last exchange price until the exchange reopens.
Illustrative figures: a share closes at 100.00 on Friday, its token trades at 97.00 on Saturday after bad news, and the share opens at 98.50 on Monday. The Saturday seller received less than Monday's opening price. Backpack's live stocks page states 24-hour weekday trading through traditional US markets and a weekend session from Friday 8 PM to Sunday 8 PM ET on its own market: see trading hours, funding and the broker for US stocks on Backpack.
Are tokenized stocks legal? Regulation in brief
No single rule makes tokenized stocks legal or illegal: the law that applies depends on the legal model and on where the buyer and the provider are. EU and US regulators start from the same point, that putting a security on a blockchain does not take it out of securities law. Whether a product may be offered to you is a question about its provider's authorisation.
European Union
In the EU a token that qualifies as a financial instrument falls under MiFID II, the rulebook for investment services, and not under the Markets in Crypto-Assets Regulation (MiCA). The European Securities and Markets Authority (ESMA) describes MiCA as covering crypto-assets not already regulated by existing financial services legislation. The DLT Pilot Regime, in application since 23 March 2023, is the framework for trading and settling crypto-assets that qualify as financial instruments under MiFID II. On that reading a tokenized share, or a derivative on one, is offered in the EU as an investment service, and an authorisation as a crypto-asset service provider does not cover it.
Backpack's footer draws the same line for its own companies: stock brokerage is not provided under its CySEC, MiCA or VARA licences. The About page shows which Backpack company provides which service.
United States
In the US a tokenized share is still a security. The SEC staff statement of 28 January 2026 says the format in which a security is issued, or the way its holders are recorded, does not affect the application of the federal securities laws, so every offer and sale must be registered or exempt. The statement is a staff view: by its own terms it is not a rule and has no legal force. State law matters too, because the UCC rules on security entitlements are state law.
Other markets
Elsewhere the classification depends on the legal model and on local securities law; no regulator page for other markets was read for this guide. Do not assume that a crypto licence covers securities, or that a licence in one country covers another: look up the company and the service in the regulator's register. Backpack's Dubai company is an example. Trek Labs Ltd FZE is licensed by VARA for Exchange Services, spot trading only, licence no. VL/23/07/001, which does not extend to stock brokerage.
Risks specific to tokenized stocks
A tokenized stock carries the market risk of the share plus risks created by the token itself: who issued it, who holds the shares and where it trades.
- Issuer and custodian risk. A third-party token exposes the holder to that third party, including its bankruptcy (SEC staff). Ask who holds the shares and whether they are kept apart from the provider's own assets.
- Legal-title risk. If the terms are vague about what the holder owns, the claim in a dispute or an insolvency is vague too. A product page is not the contract.
- Price deviation. Outside exchange hours the token can trade away from the last exchange price, and an order may fill at a worse price than expected.
- Liquidity. A token may have few buyers, and one listed on a single venue can be sold only there, so a large sale can move the price.
- Smart-contract and chain risk. A token in a self-custody wallet depends on the blockchain, the token's code and the holder's keys. A software fault, a halted network or a lost key can block access.
- Regional restrictions. Providers exclude residents of some countries and can withdraw a product from a country. Check eligibility before funding an account.
Cost is a separate question. Backpack's live site advertises stock trading with 0% fees, but the gap between the buying and the selling price is a cost as well. See Backpack fees for trading and funding and the risk disclosure for stocks and tokenized securities.
Tokenized stocks, stock perpetual futures and ordinary shares compared
The dividing line runs between owning and price exposure. An ordinary share and an entitlement-based token are two records of owning a share; a price-tracking token and a stock perpetual future only follow its price; a backed token sits between, because its holder owns a claim on an issuer.
| Instrument | Owning or price exposure | What the holder has | Dividends | Running payments and forced closure |
|---|---|---|---|---|
| Ordinary share at a broker | Owning | A share, as an entitlement on the broker's books | Credited by the broker | None, unless bought on margin or pledged |
| Entitlement-based tokenized stock | Owning | The same entitlement, recorded or mirrored on a blockchain | Passed on by the intermediary | None, unless used as collateral |
| Token backed by shares in custody | A claim on the issuer | The issuer's instrument, backed by its shares | As the terms provide | As the terms provide |
| Price-tracking token | Price exposure | A contract with an issuer or counterparty | None from the company | As the contract provides |
| Stock perpetual future | Price exposure | A margined derivative with no expiry date | None: no share is bought | Funding payments; liquidation if margin falls too low |
A perpetual future is a derivative with no expiry date, traded on margin: long and short holders exchange funding payments, and a position can be liquidated if its margin falls too low. No share is bought, so there is no dividend and no vote. Backpack's markets page lists equity perpetuals including NVDA-PERP, TSLA-PERP, AAPL-PERP, SPY-PERP and QQQ-PERP; they are derivatives, separate from the stock product even where the ticker matches. The companion guide explains what a perpetual future is.
Worked example: how Backpack structures stock ownership
Backpack's live stocks page describes its US stocks and ETFs as security entitlements under New York UCC Article 8, the first model in this guide. The points below were read from Backpack's own pages on 12 October 2026; where those pages are silent, this guide says so.
- What the holder has. A security entitlement governed by New York UCC Article 8. The stocks page says holders receive cash dividends and the rights that come with their shares, and can transfer holdings to other brokerages. It gives no dividend currency, tax treatment, voting process or transfer cost.
- Who stands in between. The live stock pages name Trek Brokerage Services Limited, described there as licensed by the Anjouan Offshore Finance Authority and acting as intermediary broker, in the text served to an EU IP address. No licence number is shown and no custodian is named.
- Where the token comes in. The About page timeline lists a partnership with Superstate on tokenized public equities in October 2025 and, for June 2026, Backpack Tokenized Securities on Solana with 1:1 conversion between security entitlements and tokenized securities kept in self-custody. Which tickers convert, who issues the token and what the holder's legal position is after conversion are not stated.
- When it trades. Around the clock on weekdays through traditional US markets, and from Friday 8 PM to Sunday 8 PM ET and on US market holidays on Backpack's own market.
Illustrative run-through, not real data
A holder buys 5 shares, and the account shows an entitlement to 5 shares. The company pays 0.40 dollars per share, so on the stated terms 2.00 dollars reaches the account in cash, before any tax withheld. The holder converts 2 shares. At the stated 1:1 ratio that leaves an entitlement to 3 shares in the account and 2 tokenized securities in a wallet.
The live site is not consistent about the product's name: its stocks page headlines "Real shares", while its llms.txt file describes tokenized US stocks and ETFs. The two are compatible if the token is a second record of the same entitlement, but no live page says so. This site uses one description throughout: security entitlements under New York UCC Article 8, convertible 1:1 into tokenized securities.
Stock trading on Backpack, in detail
The stocks page sets out trading hours, funding with USDC, USDT or a USD wire, the published costs and the broker named for each region.
How to check what you are really buying
Seven questions settle what a tokenized stock is. Each is answered in the product's terms or not at all, and a missing answer is itself information.
- Legal form. Is the token an entitlement to a share, a claim on an issuer or a contract on the price? Look for one sentence that says so.
- Issuer. Which company created the token, and where is it incorporated?
- Custodian. Who holds the underlying shares, and are they kept apart from the provider's own assets? An exchange's reserve report is a different document: see what proof of reserves shows.
- Dividends. Are they passed on, in what form and currency, and after what tax?
- Voting. Can the holder direct a vote, and how?
- Redemption or transfer. Can the token be redeemed for the share or for cash, or the holding moved to another broker, and at what cost?
- Regulator. Which authority supervises the provider for this product, under which number, and does the register entry cover securities?
For information only. Not investment advice. This guide describes legal structures in general terms and is not a legal opinion on any product; read the terms of the product you are considering.
Frequently asked questions
Are tokenized stocks real shares?
Only some are. A token that records a security entitlement stands for a real share that an intermediary holds for you, as in an ordinary brokerage account. A token issued by a vehicle gives you a claim on the vehicle, which owns the shares. A price-tracking token gives you a contract and no share. The product's terms say which one you are buying.
Do tokenized stocks pay dividends?
Only where the legal model passes the dividend on. An intermediary that holds a share for you under UCC Article 8 is obligated to you for the dividends it receives. The issuer of a backed token pays whatever its terms promise: cash, extra tokens or nothing. A price-tracking token pays no dividend, although its contract may adjust for one.
Can I vote with a tokenized stock?
Sometimes. With an entitlement, the intermediary must exercise the share's rights as you direct or let you exercise them yourself, so voting depends on the process your provider offers. With a backed token the issuer is the shareholder, and you vote only if its terms say so. A price-tracking token carries no vote.
Can I move a tokenized stock to another broker?
Only an entitlement-based holding can move to another broker as a share, and only if both firms support the transfer. A backed token or a price tracker cannot be delivered to a broker as a share: you can sell it, or redeem it where the terms allow. Sending a token to another wallet moves the token, not a brokerage position.
Why do tokenized stock prices differ at the weekend?
Because the exchange that sets the share's reference price is closed while the token keeps trading. With fewer buyers and sellers, the gap between buying and selling prices widens and news is priced by a thinner market. The token can trade above or below Friday's closing price, and the difference closes only when exchange trading resumes.
Sources
- Legal Information Institute, Cornell Law School, Uniform Commercial Code, section 8-102: definitions, accessed 12 October 2026.
- Legal Information Institute, Cornell Law School, Uniform Commercial Code, Article 8, Part 5: security entitlements, sections 8-503, 8-505 and 8-506, accessed 12 October 2026.
- US Securities and Exchange Commission, staff of three divisions, Statement on Tokenized Securities, 28 January 2026, accessed 12 October 2026.
- SEC Office of Investor Education and Advocacy and FINRA, Investor Bulletin: Holding Your Securities, 12 July 2023, accessed 12 October 2026.
- European Securities and Markets Authority, Markets in Crypto-Assets Regulation (MiCA), accessed 12 October 2026.
- European Securities and Markets Authority, DLT Pilot Regime, accessed 12 October 2026.
- Backpack, live stocks page at
backpack.exchange/stocks/about: product description, trading hours and broker disclosure, accessed 12 October 2026. - Backpack, About page of the live site: timeline entries for October 2025 and June 2026, accessed 12 October 2026.