Tokenized stocks promised no middlemen — so why does one broker sit behind most of them?

Tokenized stocks let you hold something that tracks a company like Apple or Nvidia inside a crypto wallet and trade it around the clock, and the pitch has always been that they cut out the middlemen. Follow the market back to where it connects to real shares, though, and it converges on a single, little-known California broker called Alpaca.

First, what a tokenized stock is. It is a token on a blockchain that is meant to stand in for a real share, so it can trade on crypto exchanges at any hour, in fractional amounts, from almost anywhere in the world. Platforms including Kraken's xStocks, Dinari and Ondo issue these products, and they have grown into hundreds of tokenized assets.

But for a token to mean anything, someone with a brokerage license has to actually buy and hold the real share behind it. Alpaca says it clears or custodies roughly 94 percent of tokenized US stocks and holds more than 1.5 billion US dollars of the underlying shares. So a market sold on the idea of removing intermediaries has, in practice, produced one very large intermediary.

The part that matters most to a newcomer is what the token actually gives you. In a January statement, US regulators warned that a token issued by a third party — the kind that dominates today's market — may give the holder only economic exposure to the price, not the legal rights of the share itself. Many of these products carry no voting rights and no direct claim on dividends, and if the intermediary in the middle fails, that is a risk you would not face holding the real stock.

One episode made the fragility concrete. In June, more than 1 billion dollars of tokenized access to a hotly anticipated SpaceX listing was sold across major exchanges, with about 557 million on Binance alone. The shares never arrived, the campaigns were canceled, and buyers were refunded. It showed that a token is ultimately a promise about inventory that depends on a chain of intermediaries the buyer cannot see.

This is information, not advice. The takeaway is simple and worth carrying into any shiny new product: before assuming a token is the same as the thing it names, check what it actually entitles you to — real ownership, or just exposure to the price.