A Broken Legacy System Meets a Blockchain Solution
A recent development shows that under current U.S. securities rules, you might not legally own your stock holdings the way you think but a new blockchain-based solution on Solana and Ethereum could change that.
What the Loophole Is
Traditionally, most people who buy stocks through brokers don’t hold the shares directly in their name. Instead, brokers hold them “in street name” via a central clearinghouse (like the DTCC).
This means legal ownership lies with the broker/clearing system, and your account is essentially a claim against them not direct ownership on record.
A recent regulatory interpretation highlights this gap, showing that many investors don’t technically own their shares on the official cap table.
The Blockchain “Fix”
A company called Superstate has launched a tokenized share issuance system where registered securities can be issued directly on blockchains like Solana and Ethereum.
These tokenized shares are still SEC-registered and maintain all the legal rights of stock ownership (including voting rights and dividends), but instead of being held in the broker’s omnibus account, they’re tied to wallets recorded on-chain.
How It Works
Issuers can sell tokenized stock directly to investors, with settlement in stablecoins and the blockchain acting as the authoritative ownership ledger.
Galaxy Digital’s stock has already been tokenized this way on Solana, creating the first real-world example.
Why It Matters
This approach could shift part of the equity issuance and ownership tracking process off legacy infrastructure (like DTCC) and onto public blockchains, while still remaining compliant with SEC rules.
The potential benefits include faster settlement, greater transparency, and direct control for investors with compliant wallets.
Notes
This isn’t a bypass of regulation the system still works under existing securities law and requires compliance (e.g., KYC, transfer agent oversight).
Secondary trading and full integration with traditional markets still face regulatory and technical hurdles.
