# How Issuers Back Their Tokens and Which Tokens Spout Accepts

> Spout does not issue tokenized stocks. It works with tokens issued by approved third party issuers. It buys the share through a broker.

Canonical: https://spout.finance/docs/issuers-and-eligibility/

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Spout does not issue tokenized stocks. It works with tokens issued by approved third party issuers.

## How backing works

- The issuer buys the share It buys the share through a broker.
- A custodian holds it The share sits in an account for the issuer.

- The issuer creates tokens It creates tokens on Solana for the shares bought, and sends them to the buyer.
- Redemption works in reverse The token is destroyed and the share is sold, or delivered, under the issuer's terms.

## What Spout checks before accepting a token

A token can sit in a Spout pool only if its design lets the pool hold it safely. Spout's program checks a token's design before accepting it, and refuses tokens with any of these features:

| Feature Spout refuses | Why |
| --- | --- |
| A fee charged on every transfer | The pool would receive less than was deposited |
| Tokens that cannot be transferred | They could not move into or out of the pool |
| Interest that changes balances automatically | The pool's accounting would drift |
| An issuer power to move tokens out of any wallet | It could take collateral out of the pool |
| New accounts frozen by default | The pool could not receive deposits |

On top of the technical checks, each asset needs a reliable price feed, a deep listed options market for the underlying stock, and an approved issuer. Only assets that pass all of these appear in Supported Assets.