Two tokenized stocks can track the same share price while offering very different legal rights, custody protections, and redemption access. Even 1:1 backing doesn't guarantee holders own the underlying shares or can redeem them on demand. So what actually separates these products? Let's break it down. — ● The Infrastructure Behind Tokenized Stocks Four layers connect traditional equities to onchain markets: Traditional stock market -> Broker and custodian -> Issuer and legal structure -> Onchain token Each layer serves a different purpose, making three distinctions important: • Backing: Are the underlying shares actually held? • Ownership: What legal rights does the token holder receive? • Redemption: Can holders exchange tokens for cash or underlying shares? A token can be fully backed without granting direct shareholder rights or unrestricted redemption. Understanding this distinction starts with how shares become tradable tokens. — ● How Tokenized Stocks Move From Shares to Redemption The process generally follows four steps: 1. Acquire: The issuer or broker purchases and custodies the underlying shares. 2. Mint: Eligible participants complete KYC/AML checks before tokens are issued. 3. Trade: Tokens trade across supported CEXs or DEXs, depending on liquidity and restrictions. 4. Redeem: Eligible holders exchange tokens for cash, stablecoins or securities under the product's terms. Importantly, holders have two potential exit routes: • Secondary sale: Sell tokens to another buyer at the prevailing market price. • Direct redemption: Return tokens to the issuer through its approved redemption process. The distinction matters because selling requires market liquidity, while redemption requires issuer access. — ● Tradable Doesn't Mean Redeemable A token can remain freely tradable even when direct redemption is restricted by KYC/AML requirements, jurisdiction or wallet whitelisting. Holders without redemption access must depend on secondary-market buyers to exit. This creates another problem of limited arbitrage. When eligible participants cannot freely mint or redeem, token prices can diverge from the underlying shares despite continued trading. The result is that two products tracking the same stock can behave differently under market stress. — ● Same Asset Exposure, Different Rights Tokenized-stock providers use different legal and redemption structures. • @xStocksFi: Supports cash redemption and an in-kind redemption route through xPort, subject to eligibility. • @Ondo : Uses structured notes issued through a BVI SPV, with redemption governed by product terms. • @RobinhoodApp: Offers Jersey-issued debt securities providing economic exposure rather than direct shareholder rights. • @DinariGlobal: Redemption reportedly involves selling custodied shares and distributing proceeds to eligible holders. • @MEXC: Lists third-party tokenized stocks alongside its separate RealStocks offering, without necessarily acting as issuer or custodian. Although these products provide similar market exposure, their ownership claims, custody arrangements and redemption rights differ. Current product terms remain essential for accurate comparisons. — ● The Hidden Risk: Custody Concentration Different issuers do not necessarily mean different custody arrangements. Multiple tokenized-stock providers may depend on the same underlying broker or custodian. This creates concentrated intermediary exposure, where holding several different tokens may provide less diversification than investors assume. The next question is whether custody protections adequately address that risk. — ● What Custody Protections Actually Cover Several mechanisms aim to protect underlying assets, but they serve different purposes. • Segregated accounts: Separate designated assets from others, subject to legal and insolvency rules. • Security agents: May enforce collateral rights or liquidate assets under specified conditions. • Proof of reserves: Verifies assets held at a particular moment, but doesn't establish unencumbered ownership or redemption rights. None of these protections independently guarantees asset recovery if an issuer fails. Their effectiveness ultimately depends on enforceable legal claims and the underlying custody structure. — ● Redemption Access in Numbers Reported industry data highlights the gap between token issuance and actual redemption access. • ~880 tokenized-stock deployments reportedly existed as of August 2026. • ~31 reportedly supported open issuer redemption, according to OnChain Benchmark. • ~94% of tokenized US equity custody or clearing was reportedly linked to Alpaca Securities. These figures require source verification, but they highlight two important questions: how widely redemption is available and how concentrated the underlying infrastructure has become. — ● Where Stablecoins Fit Into the Picture Stablecoins increasingly provide a settlement layer for tokenized financial assets, but their legal obligations remain distinct. The GENIUS Act establishes rules covering payment stablecoin reserves, redemption and custody, with @USOCC involved in implementation. While stablecoins can facilitate tokenized-stock settlement, stablecoin redemption rights do not extend automatically to the underlying equity tokens. The reported January 18, 2027 effective date also requires confirmation against official OCC documentation before publication. — Tokenization makes equity exposure transferable onchain, but it doesn't eliminate the legal, custody and redemption structures supporting it. As tokenized equities scale, adoption will depend on more than trading access or 1:1 backing. The real test is whether holders can understand, exercise and enforce their rights when liquidity disappears or intermediaries fail.