Type

Tokenization Models

Compliance

Ownership

Composability (DeFi-­friendly?)

Typical Examples / Platforms

Direct(native)

Issuer/Transfer Agent

Fully Compliant - for both issuer and transfer agents

Represents direct ownership of the securities and claim against the issuer

Moderate – limited DeFi composability. However, can leverage wrapped tokens to make it composable.

Securitize

Intermediated  

Custodian

Compliant

Represents claims against the custodian, i.e. securities entitlement

No live product yet. The actual securities are offchain under third-party custody, transfer is not peer-to-peer, but intermediated instead; wall gardened system with little composability

DTCC, etc

Collateral-backed Stock Tokens

Regulated custodian holds the shares and mints new financial products as tokens.

Users have ownership of a financial product that gives price exposure, but do not own the underlying stock.

Great – tokens can enter DEX pools or lending markets once minted.

xStocks

Legal-wrapper

Compliant - A third-party issuer creates a new product (e.g. deposit receipt, single-stock ETF, security swap, etc.) that tracks the value of underlying securities 

Represents ownership of the new/separate securities

Moderate – may stay walled-off from open DeFi until exemptions mature.

Robinhood, etc

Synthetic

Synthetic DeFi Stock Tokens

Relatively harder – viewed as swaps / CFDs; stricter derivatives rules.

Users never own the stock, chances of true ownership are small, and no legal claim to price exposure.

Great – fully on-chain synthetics plug into any DEX, lending, yield protocol.

Synthetix (sAAPL, sTSLA), Mirror Protocol, Ostium

Pillar

What “full” means

Why it matters

What breaks when you maximize it

1. Compliance

(KYC · securities registration · on-chain transfer controls)

Every jurisdictional rule is met; only whitelisted wallets can mint, redeem, or receive tokens.

Fully regulated and enables CEX listings or institutional inflows.

Tight KYC gates or transfer hooks restrict how—and where—tokens can move, limiting DeFi utility.

2. Ownership

(redemption, dividends, voting rights)

Token legally represents the underlying share; holders can redeem, receive dividends, and vote.

Delivers the same economic & governance rights as legacy shares.

Legal wrappers and corporate-action pipelines add cost and slow settlement; KYC is usually mandatory, curbing composability.

3. Composability

(permissionless liquidity, DeFi integrations)

Token flows freely across DEXs, lending pools, structured-yield protocols, bridges, and DAOs.

Unlocks 24/7 trading, collateral use, and on-chain financial engineering.

Wide transferability clashes with strict KYC; regulators balk, so most projects strip out voting/dividends or rely on synthetics.

Whitelisting Model

How It Works

Strengths

Trade-offs

Smart-Contract Registry(on-chain)

• Each time someone calls transfer() or mintTo(), the token contract pings an Identity Registry.

• If either wallet lacks a valid credential, the transaction reverts. 

• On EVM chains this pattern is formalised in ERC-3643.

• Entire permission set lives on-chain; 

• no central key can override it; 

• portable across dApps.

• Adds gas / compute; 

• Devs must deploy and maintain the registry; 

• UX friction (wallets must obtain credentials).

Custodial Control(off-chain gate)

• A single regulated entity controls the mint/burn keys. 

• Only KYC’d customers can deposit fiat (or shares) and receive tokens from the custodian’s treasury wallet. 

• Once minted, tokens may—or may not—circulate freely.

• Simpler compliance checklist; 

• No extra on-chain logic; 

• Fast to iterate.

• Creates a choke-point; users depend on the custodian’s uptime and legal domicile; 

Layer

Role

Detail

Real-Asset Layer

Asset Reserve

Alpaca Securities LLC holds real Circle shares 1 : 1.

Chainlink oracles publish live proof-of-reserve.

Legal-Wrapping Layer

Issuer Entity

Backed Assets (JE) Ltd. – a Jersey SPV – legally owns the shares and issues tracker certificates.

Tokenization Layer

On-Chain Financial Product

Backed Finance AG mints CRCLx (SPL) on Solana - the token is the tracker certificate. Token creator ID: S7vYFFWH6B…VwsJuRaS (view on Solscan).

Phase

Who Must KYC?

Where Tokens Can Go

Primary (Mint / Redeem)

Only pre-approved institutions or professional investors. 

Tokens minted/burned inside Backed custody.

Secondary (DEX Trading)

Freely transferable tokens. Anyone can LP or trade once CRCLx hits the pool.

Easily used across DeFi.