Are tokenized stocks real shares or synthetic exposure?

It depends on the product, and both exist under similar names. Some are real shares in tokenized form issued by the company itself; Securitize offers issuer-sponsored tokens of its own NYSE-listed equity. Some are entitlements to shares a custodian holds, as with Dinari's US dShares, which record positions in a brokerage account. Many sold outside the US are synthetic: Backed's xStocks are tracker certificates issued by a Jersey SPV, and Ondo Global Markets' tokens are structured notes of a BVI SPV. Read what the token is legally, not what it is called.

If the issuer holds the real shares one-for-one, isn't that direct exposure?

Not necessarily. A one-for-one hedge describes what the token issuer owns; it does not give you those shares. In a synthetic structure the issuer owns the shares and owes you a payment tied to their price. If the issuer becomes insolvent, you are its creditor, and your recovery depends on the security arrangements and on what ranks ahead of you. In a custodial structure the shares are held for you as an entitlement holder, and Article 8 of the UCC keeps them out of the intermediary's general estate.

Do synthetic token holders get dividends and votes?

Dividends are usually replicated economically, either paid out or reinvested by adjusting the token balance (Backed uses an on-chain rebasing multiplier); votes in the referenced company are usually not available, because the holder is not a shareholder. Custodial holders typically receive dividends and can direct votes through the intermediary, depending on its procedures. Issuer-sponsored shareholders have whatever rights their share class carries.

Why are most synthetic stock tokens not sold to US investors?

Because many of them are security-based swaps or securities that would need US registration. SEC staff note that a third party may not offer or sell a security-based swap to persons who are not eligible contract participants unless a registration statement is effective and the transactions occur on a national securities exchange. Issuers such as Backed, Dinari (for its non-US product) and Ondo Global Markets therefore sell offshore under Regulation S and exclude US persons.

Is synthetic exposure always worse than direct exposure?

Not always, but it adds a counterparty. A well-capitalized, audited issuer with a perfected security interest over the hedge assets and a reputable custodian can be a reasonable credit; a thinly capitalized offshore SPV with no published attestation is not. Synthetic structures can also offer things direct ones cannot, such as fractional amounts of non-US-listed shares or 24-hour transfer. The point is to price the extra layer, not to ignore it.

Can a synthetic token trade away from the stock price?

Yes. Its on-chain price is set by whoever trades it on decentralized and centralized venues, which can be thin. AltStreet's Backed review found on-chain prices set by thin DEX and CEX liquidity rather than the exchange's close. A synthetic token's value to you is its redemption or repurchase value from the issuer, if you are eligible to use it, or the next buyer's bid.

Direct vs Synthetic Exposure

Tokenized Real-World Assets

Definition

Direct exposure means the holder owns the asset itself, or a security entitlement to it held through an intermediary, and so has the asset's legal rights: dividends, votes, the right to receive it or its proceeds. Synthetic exposure means the holder owns a different instrument, issued by someone else, whose value is designed to follow the asset's price; the holder has rights only against that instrument's issuer. For tokenized stocks and funds, SEC staff draw the line between custodial tokenized securities, where 'the underlying security is held in custody, and the crypto asset evidences the holder's ownership interest (whether direct or indirect) in the underlying security', and synthetic tokenized securities, where a third party issues 'its own security that provides synthetic exposure to the underlying security, such as a tokenized linked security or a tokenized security-based swap' (Statement on Tokenized Securities, January 28, 2026). Holding the shares one-for-one behind a synthetic token does not make it direct: what matters is whether the holder has a claim to those shares or only a claim on the token issuer.

Why it matters

Tokenized stocks are marketed with the ticker of the company they track, which makes it easy to assume they are the company's shares. Some are; many are not. The difference decides who owes you money. In AltStreet's Dinari review the same 'dShares' brand covers a US product, where shares sit in a brokerage account carried by Alpaca and the token records the position, and a non-US product, a separate contract whose terms say the holder's repurchase is 'a contractual put right' with no 'equity, redemption, or ownership interest' in the shares. A US Dinari customer's protection is the broker-dealer framework; a non-US holder's is Dinari, Inc.'s ability to honor its contract. Backed's xStocks, issued by a Jersey SPV, and Ondo Global Markets' structured notes, issued by a BVI SPV described as bankruptcy-remote, are synthetic in the same sense: the holder depends on the SPV, its custodian arrangements and its security documents. Synthetic exposure is not inherently unsafe, but it adds a credit, legal and operational layer that the price chart does not show.

Common misconceptions

•'Backed one-for-one' does not mean you own the shares. It means the token issuer says it holds them; your claim depends on whether the structure is custodial or synthetic.
•A synthetic token is not a share with extra steps. It is a different instrument with a different issuer, often governed by non-US law, with rights defined only by its own terms.
•Direct exposure is not risk-free. A custodial token still depends on the intermediary's records and procedures, and an issuer-sponsored share still carries the company's risk; what direct exposure removes is the extra issuer between you and the asset.
•Synthetic tokens do not automatically track the stock. Their on-chain price is set by trading in the token; redemption at the reference price is a right of eligible holders, on the issuer's terms.
•Selling offshore under Regulation S is not a loophole for US buyers. US persons excluded by the terms who acquire such tokens through a third-party venue may have no enforceable right to redeem.

Technical details

Side by side: issuer-native, custodial and synthetic

Issuer-native (issuer-sponsored): the company or fund issues the security in tokenized form on its own register. Holder's claim: the security itself, against the issuer. Bankruptcy exposure: the issuer only. Rights: those of the share class. Example: Securitize's issuer-sponsored tokens of its own NYSE-listed equity (review of January 1, 2026, updated through October 2026).

Custodial (third-party entitlement): a third party holds the security at a custodian and issues a token representing an entitlement. Holder's claim: a security entitlement against the intermediary, with a pro rata property interest in the securities held for holders (UCC 8-503). Bankruptcy exposure: the issuer of the security, plus intermediary operational risk; in a US broker-dealer, SIPA protection. Example: Dinari's US dShares since August 4, 2026, positions in a brokerage account carried by Alpaca.

Synthetic (linked security or security-based swap): a third party issues its own instrument paying the referenced security's value. Holder's claim: against the token issuer under its terms. Bankruptcy exposure: the token issuer, its custodian and its security arrangements, plus the referenced company. Rights: economic only, as set by the terms. Examples: Backed's xStocks (Jersey SPV tracker certificates), Dinari's non-US dShares (contractual repurchase right), Ondo Global Markets (BVI SPV structured notes).

Worked comparison: $10,000 of one stock three ways

Issuer token: you hold 100 tokenized shares on the company's register. If the company pays a $1 dividend, you receive $100 from the company; you vote at its meetings; if your key is lost, the transfer agent can reissue under its procedures.

Custodial token: an intermediary holds 100 shares for you and you hold tokens recording the entitlement. The dividend reaches you through the intermediary; voting depends on its pass-through process. If the intermediary fails, the shares held for entitlement holders are not its property; if there is a shortfall, holders share pro rata, and for a US broker-dealer SIPA may cover up to $500,000 per customer (including $250,000 cash).

Synthetic token: an SPV holds (or does not hold) 100 shares and owes you their value. The $100 dividend may be reinvested by increasing your token balance. You do not vote. If the SPV fails, you claim against it; if its hedge shares are subject to a perfected security interest for holders, you have a secured claim on them, and if not, you are an unsecured creditor alongside its other creditors.

The share price and the dividend are the same in all three; the counterparty and the recovery path are not.

How to tell which one you are buying

Read the issuer's name on the token terms. If it is the company or fund, it is issuer-sponsored. If it is a broker-dealer, custodian or trust that says it holds the security for you, it is likely custodial. If it is an SPV issuing 'certificates', 'notes', 'tracker' or 'linked' instruments, it is synthetic.

Look for the words 'security entitlement', 'held in custody for', or 'beneficial interest' (custodial) versus 'debt instrument', 'structured note', 'contractual right' or 'payment obligation' (synthetic).

Check eligibility: a product sold only to non-US persons under Regulation S is very often synthetic.

Check rights: if the terms say no voting rights and no ownership interest in the underlying, it is synthetic whatever the backing.

Check redemption: custodial products may allow transfer of the underlying shares to your brokerage account; synthetic products redeem for cash or stablecoin at the issuer's price, often only for onboarded holders.

Regulatory treatment

All three are securities when the underlying is a security (SEC staff statement, January 28, 2026; interpretive release 33-11412, March 17, 2026).

A synthetic token that is a security-based swap may be offered to non-eligible contract participants only with an effective registration statement and only for trading on a national securities exchange (Securities Act Section 5(e); Exchange Act Section 6(l)).

A linked security that is a note (a structured note) is excluded from the swap definition and is regulated as a security, needing registration or an exemption for any US offering.

A third party issuing synthetic tokens may, depending on the facts, be an investment company under the Investment Company Act (staff statement, footnote 12).

Custodial models need the intermediary to hold the registrations its activity requires, such as broker-dealer registration for carrying customer accounts in the US.

Risk checklist for synthetic tokens

Issuer capital and audit: does the SPV publish audited statements and an attestation of the hedge assets?

Security package: is there a collateral or security agent holding a perfected security interest for holders, and what ranks ahead of it?

Custodian: who holds the hedge shares, in whose name, and is that custodian regulated?

Redemption: who may redeem, minimum size, fee, timing, and what happens if markets are closed or the reference stock is halted.

Corporate actions: how splits, mergers, spin-offs and delistings are handled; a synthetic token can be terminated early on such events.

Frequently asked questions

Are tokenized stocks real shares or synthetic exposure?: It depends on the product, and both exist under similar names. Some are real shares in tokenized form issued by the company itself; Securitize offers issuer-sponsored tokens of its own NYSE-listed equity. Some are entitlements to shares a custodian holds, as with Dinari's US dShares, which record positions in a brokerage account. Many sold outside the US are synthetic: Backed's xStocks are tracker certificates issued by a Jersey SPV, and Ondo Global Markets' tokens are structured notes of a BVI SPV. Read what the token is legally, not what it is called.
If the issuer holds the real shares one-for-one, isn't that direct exposure?: Not necessarily. A one-for-one hedge describes what the token issuer owns; it does not give you those shares. In a synthetic structure the issuer owns the shares and owes you a payment tied to their price. If the issuer becomes insolvent, you are its creditor, and your recovery depends on the security arrangements and on what ranks ahead of you. In a custodial structure the shares are held for you as an entitlement holder, and Article 8 of the UCC keeps them out of the intermediary's general estate.
Do synthetic token holders get dividends and votes?: Dividends are usually replicated economically, either paid out or reinvested by adjusting the token balance (Backed uses an on-chain rebasing multiplier); votes in the referenced company are usually not available, because the holder is not a shareholder. Custodial holders typically receive dividends and can direct votes through the intermediary, depending on its procedures. Issuer-sponsored shareholders have whatever rights their share class carries.
Why are most synthetic stock tokens not sold to US investors?: Because many of them are security-based swaps or securities that would need US registration. SEC staff note that a third party may not offer or sell a security-based swap to persons who are not eligible contract participants unless a registration statement is effective and the transactions occur on a national securities exchange. Issuers such as Backed, Dinari (for its non-US product) and Ondo Global Markets therefore sell offshore under Regulation S and exclude US persons.
Is synthetic exposure always worse than direct exposure?: Not always, but it adds a counterparty. A well-capitalized, audited issuer with a perfected security interest over the hedge assets and a reputable custodian can be a reasonable credit; a thinly capitalized offshore SPV with no published attestation is not. Synthetic structures can also offer things direct ones cannot, such as fractional amounts of non-US-listed shares or 24-hour transfer. The point is to price the extra layer, not to ignore it.
Can a synthetic token trade away from the stock price?: Yes. Its on-chain price is set by whoever trades it on decentralized and centralized venues, which can be thin. AltStreet's Backed review found on-chain prices set by thin DEX and CEX liquidity rather than the exchange's close. A synthetic token's value to you is its redemption or repurchase value from the issuer, if you are eligible to use it, or the next buyer's bid.