Are Tokenized Stocks Real Ownership? A Guide to What You Actually Get
When you buy a tokenized stock, do you get real ownership? This guide explains the key difference between economic and legal ownership, and why 1:1 backing matters.
Are Tokenized Stocks Real Ownership? A Guide to What You Actually Get
The question of ownership is central to investing. When you buy a tokenized stock, what do you actually get? The answer involves an important distinction between legal ownership and economic ownership. On our platform, we provide direct economic ownership of an asset, a model that offers the financial benefits of a stock combined with the unique advantages of on-chain technology.
This model is an evolution of how ownership already works in traditional finance. Most retail investors using conventional brokerages do not hold direct legal title to their shares. Instead, they have what is known as 'beneficial ownership' while the broker holds the shares in 'street name'. This means the investor has rights to the economic outcomes, like price changes and dividends, but the broker is the legally registered owner. Tokenized stocks represent a new, more transparent form of this beneficial ownership, where your claim to the underlying asset is secured cryptographically on a public blockchain. The growth of this market, which Boston Consulting Group projects could become a $16.1 trillion opportunity by 2030, highlights its increasing importance.
Economic vs. Legal Ownership: The Core Distinction
Understanding what you own begins with the difference between two key concepts. Traditional 'legal ownership' means your name is on the company’s official shareholder ledger. This form of ownership grants specific rights, including the ability to vote at shareholder meetings and receive direct communications from the company.
'Economic ownership', in contrast, means you have a right to the financial performance of the asset. This includes any increase or decrease in its market price and the right to receive dividends. As defined by regulations like the U.S. Securities and Exchange Commission's Rule 13d-3, beneficial ownership centers on having investment power (the ability to sell) and voting power. In the modern financial system, brokers hold legal title to facilitate fast, electronic trading, while investors retain the crucial economic rights as beneficial owners.
The tokenized stocks we issue on GM Markets provide you with this direct economic ownership. Your token represents a verifiable, one-to-one claim on a real share, giving you full exposure to its financial performance in a way that is transparent and globally accessible.
How Tokenized Stocks Differ from CFDs
It is important to distinguish fully-backed tokenized stocks from other synthetic instruments that offer similar price exposure, such as Contracts for Difference (CFDs). While both allow you to speculate on an asset's price without direct legal ownership, their underlying structure, risk profile, and transparency are fundamentally different. A CFD is a private contract with a broker to exchange the difference in an asset's price between the opening and closing of the position. No real asset is ever owned.
The differences are critical for investors to understand.
| Feature | GM Markets Tokenized Stocks | Contracts for Difference (CFDs) |
|---|---|---|
| Underlying Asset | Backed 1:1 by a real share held at a regulated custodian. | No underlying asset. A synthetic derivative contract with a broker. |
| Ownership Claim | Verifiable on-chain claim to a real, segregated asset. | A contractual claim against the CFD provider’s balance sheet. |
| Counterparty Risk | Minimized. Assets are separate from GM Markets. Risk is with the third-party regulated custodian. | High. The broker is the direct counterparty. Your gain is their loss, creating a conflict of interest. |
| Transparency | Public and real-time via on-chain Proof of Reserves. | Opaque. The broker’s hedging activities and financial position are not public. |
| Composability | High. Standard ERC-20 tokens usable across the DeFi ecosystem. | None. Locked within the broker’s proprietary platform. Cannot be withdrawn or used elsewhere. |
| Settlement | On-chain, with near-instant settlement. | Settled on the broker's internal ledger, subject to their terms. |
This comparison highlights why the 1:1 backing model is a significant structural improvement. It replaces the opaque, high-risk model of a CFD with a transparent, verifiable system where your asset's value is tied to a real-world share held independently of the platform operator. This provides a more robust foundation for investment.
How We Ensure Your Token Represents Real-World Value
Trust in a tokenized asset depends entirely on the integrity of its backing. We built our platform on a foundation of verifiable proof and institutional-grade custody to ensure every token represents real, tangible value.
- 1:1 Backing: Every tokenized stock on our platform is fully backed, one-to-one, by a corresponding real-world share. If we issue 100 tokenized AAPL, it means there are 100 actual shares of Apple Inc. held in a secure, segregated account.
- Regulated Custody: We do not hold these shares ourselves. They are held in segregated customer accounts at regulated U.S. broker-dealers, including Interactive Brokers and Alpaca Markets. These firms are subject to strict regulations like SEC Rule 15c3-3, which mandates that customer assets must be kept separate from the firm’s own assets. This protects your assets from being used to satisfy the obligations of the broker.
- On-Chain Proof of Reserves: We provide a system for real-time, on-chain verification. In partnership with the third-party attestation service Accountable, we publish the amount of shares held in custody directly to the blockchain. You can visit our Proof of Reserves page at any time to see the live data and confirm that the total supply of our tokens matches the number of shares held in custody.
- A Structure Built for Continuity: Your assets are protected even in the unlikely event that GM Markets ceases to operate. A designated security agent has the legal authority to work directly with our custodians to redeem all outstanding tokens for the underlying shares. This process is enforced by on-chain smart contracts and is independent of our company’s operations, ensuring there is always a clear path to redeem your assets. You can learn more about our comprehensive approach on our Security page.
What You Get: The Rights and Benefits of Tokenized Stocks
Holding a tokenized stock on our platform gives you all the economic benefits of the underlying share, plus powerful new capabilities that are only possible with on-chain assets.
- Full Price Exposure: The value of your token directly tracks the market price of the corresponding stock. When the stock price goes up or down, the value of your token does as well.
- Dividend Rights via Total Return: You receive the full economic benefit of dividends. We operate on a total-return model. When a company pays a dividend, we use the proceeds to purchase more of the underlying shares. This increases the total value of the assets backing the tokens, which is reflected as an increase in each token’s net asset value (NAV). You see the dividend reflected in the price of your token rather than as a separate cash payment. You can read more about how our tokenized stocks work in our learning center.
- Self-Custody and Global Access: You hold your assets in your own wallet, giving you direct control. This model enables permissionless access for users around the world to invest in U.S. equities with as little as $1. Please note that our platform is not offered to users in the United States or other restricted jurisdictions. Our transparent pricing model ensures there are no hidden fees for deposits, withdrawals, or custody.
Crypto Composability: This is a key advantage over traditional brokerage accounts. Because our tokens are standard ERC-20 assets, they can be used across the decentralized finance (DeFi) ecosystem. Your asset is not locked in one place; it becomes productive capital.
Earning Yield Through Lending
By depositing your tokenized NVDA into a lending protocol like Aave or Morpho, you add it to a liquidity pool. Other users can then borrow from this pool, and you earn a variable interest rate on your deposited assets, paid out in real time. Your capital works for you, generating passive yield while you still maintain full exposure to NVDA's price movements.
Accessing Liquidity with Collateralized Borrows
You can also use your tokenized SPY as collateral. By locking it in a protocol, you can borrow stablecoins (like USDC) against its value. This allows you to access liquidity without selling your equity position, which can be useful for managing cash flow or taking advantage of other investment opportunities without creating a taxable event from the sale of the asset.
Generating Fees as a Liquidity Provider
For more active users, you could pair your tokenized TSLA with a stablecoin in a decentralized exchange liquidity pool, such as on Uniswap or Curve. By doing so, you facilitate trading for other users and earn a share of the trading fees generated by that pool. This turns your static holding into an active, fee-generating asset.
Understanding the Trade-offs: What You Don't Get
To provide a complete picture, it is important to be clear about the rights you do not receive with this model of economic ownership. Honesty about these trade-offs is crucial for making informed decisions.
- Shareholder Voting Rights: Because the shares are held in custody by our broker partners to back the tokens, you do not receive the right to vote in corporate shareholder meetings. This is a clear distinction from being a direct legal owner of a stock. This distinction is a key focus for regulators. In a speech on September 1, 2025, Natasha Cazenave, the Executive Director of the European Securities and Markets Authority (ESMA), stated that while these instruments offer benefits like fractionalization, they "typically do not confer shareholder rights." ESMA's concern is the "specific risk of investor misunderstanding," highlighting the need for clear communication about what investors are actually buying. This regulatory scrutiny underscores that the economic ownership model prioritizes financial access over corporate governance participation.
- Direct Shareholder Communications: You will not receive direct communications from the company, such as annual reports or proxy voting materials.
- Jurisdictional Limitations: As mentioned, our services are not available to individuals in the United States or other restricted jurisdictions. We are committed to complying with all applicable regulations.
- Inherent Risks: All investments and technologies carry risk. Tokenized stocks involve smart contract risk, the risk of software vulnerabilities, and counterparty risk related to the custodians and other partners in the ecosystem. We encourage you to read our risk and legal disclosures to fully understand these factors.
Frequently Asked Questions
What happens to my assets if GM Markets fails?
Your assets are protected by our legal and technical structure. The underlying shares are held in segregated accounts at regulated broker-dealers, not on our balance sheet. A designated security agent has the authority to work with the custodian to redeem your tokens for the real shares, a process enforced by our on-chain contracts.
Can I vote in shareholder meetings with my tokenized stock?
No. Our tokens provide you with economic ownership, which includes rights to the asset’s price performance and dividends. They do not, however, grant the legal ownership rights required for shareholder voting.
How do corporate actions like stock splits work?
Corporate actions are automatically reflected in your token. In the case of a stock split, for example, the supply of the underlying shares held in custody changes, and the net asset value of each token is adjusted accordingly. Your economic position remains the same, tracking the value of the underlying asset seamlessly.
How can I verify that my tokens are actually backed by real shares?
You can verify our holdings in real time through our on-chain Proof of Reserves system. We provide a public dashboard that shows the total supply of each token alongside the attested number of shares held in custody by our broker partners. This data is updated continuously and verified by a third party.
Trading Tokenized Stocks on GM Markets
Tokenized stocks represent a new form of asset ownership, one that prioritizes economic benefit, transparency, and the powerful capabilities of on-chain finance. While this model trades traditional voting rights for global access and composability, it is built on a verifiable foundation of one-to-one backing and institutional custody. It offers a clear and straightforward way to gain exposure to the performance of global equities from your own digital wallet.
We believe this model of transparent, verifiable economic ownership is a significant step forward for investors everywhere. As with any investment, it is important to understand both the benefits and the risks. We encourage you to explore the assets available for trading on our platform.
