Tokenized Stocks: The Legal Trap for Crypto.com Users

Crypto.com launched a product in the European Economic Area on August 12, 2026, that looks like buying shares but is legally something else. The company calls it Tokenized Stocks, covering 1,500 US stocks and funds, including NVDA, TSLA, and AAPL, along with commodity funds like GLD and SLV. Trading runs around the clock, in fractions, with no commission during an introductory period. The underlying assets are held at Alpaca, a US-regulated broker-dealer.

The announcement contains a sentence that frames the whole thing: investors acquire no legal or beneficial ownership of the underlying assets and none of the shareholder rights attached to them. Anyone buying a tokenized stock through a crypto app is not buying a stake in a company. The position is a derivative, a claim against the issuer, not a share in the share capital of a stock corporation.

The Ownership Problem

A real share gives membership rights: a vote at the annual general meeting, a claim on the profit share, a subscription right in a capital increase. A tokenized stock is an entry on a blockchain that refers to the price of that share. The issuer promises to align the token's value with the underlying price and to redeem it at the prevailing price. In legal terms that is a derivative, a financial instrument under MiFID II, not a crypto asset under MiCA.

The interface makes it hard to see the difference. The app shows the ticker, the real-time price, and a buy button. The note on the legal nature appears only in the product description document, which you have to confirm but not read. The English original states that the tokens confer "no legal or beneficial ownership" of the underlyings. Both terms count: legal ownership means formal title, beneficial ownership the economic kind. Both levels are excluded.

In practice that means you are not entered in any share register, you are not invited to the annual general meeting, you vote on no dividend and no supervisory board, and in a capital increase no subscription right accrues to you. Anyone who understands shares as a participation rather than a pure bet on the price loses, with this class of product, precisely the part that constitutes the participation.

Counterparty Risk and Insolvency

The economically weightiest difference lies in insolvency. A share in a securities account is protected: the bank holds it for you, and the assets are segregated from the bank's estate. With a derivative that does not apply. Your position is a claim against the issuer, and if the issuer goes insolvent you queue up as a creditor. The company names this risk in its own announcement and, alongside market and liquidity risk, expressly lists counterparty risk, together with the note that investors may lose part or all of the capital they commit.

The issuer in the EEA is Foris Capital CY Limited, supervised by the Cypriot securities regulator CySEC under the MiFID II passport. The EU passport is a genuine protective mechanism, but it shifts responsibility. The home supervisor remains Cyprus, not Germany's BaFin. Complaints and out-of-court dispute resolution run through Cypriot bodies, as a rule in English.

If the company behind the underlying distributes a dividend, you receive none, because you hold no share. The announcement states that users may be eligible for "dividend equivalent adjustments", an adjustment corresponding to a dividend. The accompanying note is just as clear: such adjustments follow the respective product terms and are not guaranteed. A dividend is a claim against the stock corporation arising from a resolution of the annual general meeting; an adjustment is a contractual payment by the issuer under its own terms. US withholding tax, partly creditable where a real share sits in a securities account, does not necessarily behave the same way here either.

Among the underlying stocks are NVDA (Alpha Score 77, Strong), AAPL (57, Moderate), and TSLA (30, Weak) – but the token's value only tracks the price, with no claim on the company's equity. The AAPL stock page, NVDA stock page, and TSLA stock page detail the actual companies, not the tokens.

Taxation and the Product Description

In Germany the taxation of a token depends on its legal classification. If it securitises a claim to repayment in money against an issuer, a monetary claim is the obvious classification. The gain then falls under investment income subject to the flat-rate withholding tax, regardless of the holding period. If no such claim exists, classification as another economic asset comes into consideration, with the one-year holding period for private disposal transactions. This fork is why the ownership question is not an academic one.

Every provider makes a product description document available before trading. The points to check are: does the document state that you have no ownership rights? Who is the issuer and what is its regulatory status? What happens to your position if the issuer becomes insolvent? How are dividends treated – as guaranteed adjustments or discretionary payments? What is the spread and are there currency fees? If you find no clear statement on one of these points, that is information in itself. A product whose legal nature you cannot name after a quarter of an hour's reading does not belong in a long-term portfolio.

Crypto.com's tokenized stock launch is not a novelty – Binance and Robinhood offer similar products. The difference is that the legal structure remains a derivative, not a security. The weekend trading and fractional shares are real advantages, but they come at the cost of counterparty risk and zero shareholder rights. The company's announcement is clear about the risks. The question is whether users read it before they click buy.