Tokenized Shares: Does the Token Make You the Owner?

A token is not always a share

IN SHORT A wallet shows tokens. It doesn’t show who the law records as the owner of the share.

Most tokenised shares on the market today aren’t shares on a blockchain. They’re tokensToken An entry on a blockchain that records which wallet (an account on the blockchain) holds how many units. See the glossary linked to shares held somewhere else.

ESMA, the EU markets watchdog, put it plainly in September. In the wrapped structures it describes, a custodianCustodian A firm that holds assets, here shares, on behalf of other people. See the glossary holds the shares and legal ownership stays off-chain, outside the blockchain. So moving the token doesn’t move legal titleLegal title Ownership the law recognises: being the owner, not only holding a claim against someone who is. See the glossary to the share.

ADAM

ADAM says: A wrapped token works a bit like a cloakroom ticket: pass it on and the coat stays on the rack. Where it breaks: a ticket gives one plain right, a token gives whatever its terms say.

A wrapped token works a bit like a cloakroom ticket: pass it on and the coat stays on the rack. Where it breaks: a ticket gives one plain right, a token gives whatever its terms say.

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That isn’t a scandal. It’s a design choice. What a wrapped token gives, a claim or only economic exposure, depends on its terms and their governing law.

IN SHORT The market grew about 6.5 times in eighteen months, but it’s still tiny, and mostly wrapped.

The figures come from ESMA’s TRV Risk Monitor No. 2/2026, published on 10 September 2026. ESMA still calls the market “negligible relative to global equity markets”.

Most of the activity sits in a few big US-listed tech stocks. The market grew “predominantly” through wrapped set-ups, while native issuance “remains rare”.

?Coming up next: So what sets a wrapped token apart from a native one?

IN SHORT Wrapped keeps the share register off-chain; native aims to put it on-chain, where the law allows.

ESMA defines the two models.

IN PLAIN WORDS

WrappedWrapped A structure where a token gives a claim on, or economic exposure to, shares a trusted party holds elsewhere. See the glossary: tokens give a claim on, or economic exposure to, shares that a trusted party holds.

Native issuanceNative issuance The company issues its shares directly on a blockchain; the on-chain record is meant to be the register. See the glossary: the company puts its own shares straight onto DLT (a shared ledger, such as a blockchain). Then the share registerShare register The official list of a company’s shareholders. The law decides which list counts. See the glossary can live on-chain.

That last row explains the market: wrapping is today’s shortcut. Native can make the chain the source of truth, but only when the issuer, the law and the token contract line up.

IN SHORT In the wrapped model ESMA describes, a transfer moves only the token; the share register stays where it was.

ITEM GET

Find the register first

Before anything else, ask where the legally recognised register is. In the wrapped structures ESMA describes, it stays off-chain.

About my angle: ERC-3643 is built for permissioned registers, where only approved wallets may hold the token.

This episode reads ESMA, the ECB, a public venue notice and the ERC-3643 spec. It isn’t a legal opinion or an assessment of any product. Whether a record carries legal title depends on the structure and on the law governing the register.