How are stock tokens different from actual stocks?

What are stock tokens?

Products issued as tokens linked to real-world assets such as stocks, ETFs, bonds, and real estate are also called real-world assets, or RWAs.

Stock tokens are a type of RWA designed to track the economic performance of stocks, ETFs, and funds, including price movements, dividends, and interest.

However, whether economic performance beyond price movements is reflected and how it is distributed vary by token issuer.

What is a token issuer?

• A token issuer is a company that issues and burns stock tokens.
• It manages the actual stocks and ETFs supporting the token’s value through brokerage firms and custodians.
• It is responsible for product operations such as redemptions and using dividends to buy more of the underlying asset.

Differences between stock tokens and actual stocks

1. Different assets enter your account or wallet

This is the most important distinction.

Actual stocks are traded through a brokerage firm and managed in a brokerage account. The user decides when to trade, while custody and transfers are processed through the systems of brokerage firms and custodians.

Stock tokens traded through Dollarparking are held in a personal wallet such as MetaMask. Users can view and transfer the tokens in their wallets without separate approval from a brokerage firm.

※ This does not mean users directly own or manage the actual underlying stocks.

※ Managing the actual stocks is the issuer’s responsibility.

Before trading, check the product structure and the rights disclosed by the issuer.

2. Shareholder rights are different

Actual stockholders may exercise shareholder rights such as voting rights.

Stock token holders are not directly registered in the underlying company’s shareholder register.

Therefore, voting rights and other rights equivalent to those of actual stockholders are not automatically provided. Some features may be available on a limited basis depending on the issuer and region.

3. Dividends are reflected differently

Dividends from actual stocks are generally paid as cash into a brokerage account.

Depending on the issuer and product structure, stock tokens may reflect dividends or interest payments in the following ways:

• Paid separately in dollar-pegged tokens
• Automatically used to buy more of the same stock or ETF
• Reflected in the token quantity or the value of each token (the method used by Dollarparking products)

Therefore, even for tokens linked to the same product, the timing and method of dividend treatment may vary by issuer.

Taxes and product-specific fees may be deducted, so check how dividends and distributions are handled before trading.

4. Token and stock prices are not always identical

Stock tokens move based on the price of the underlying stock, but the two prices are not exactly the same at every moment.

They may differ slightly due to factors such as volatility, order timing, and order quantity. Price differences may be wider or orders may expire, especially on weekends or outside regular market hours.