Why does blockchain have a valid case for "tracking stocks"? We've been doing that for decades. Blockchain is a step backwards in many areas. So what positive benefits does it offer to compensate for its weaknesses?
Basically you can't force everyone to do transactions on chain. The benefit you mentioned only exists if everyone is on chain.
You can create derivatives of whatever you want, it does not matter how the underlying is delivered or settled.
And the settlement price could not be faked but you need an exchange that offers bid/ask prices and that matches the transactions and that could clearly be faked.
A blockchain solution can make settlements faster, final and prevent the current issues. It also means you no longer need a broker to hold your stocks/assets. More sophisticated users can run their own "wallet".
No wonder exchanges and consultancy firms are getting away with baffling the public and businesses with bullshit.
how blockchain would block theft without blocking valid transfer? This requires checking real-world data so all blockchain stuff does not help at all.
(the same transfer may be considered as valid or as a theft by different groups of people! See various stories about evacuated gold reserves of countries that were taken over.)