It’s time for tokenization to get to work

Q. Not all tokenized equity products are the same. What is the most important distinction to understand?

The central question is what the token actually represents. In the strongest model, the token is the share itself, meaning ownership, voting rights and dividends travel with it. In a synthetic wrapper, the investor owns a contractual claim against another entity, not the underlying share, introducing counterparty risk, tracking risk and the possibility that corporate actions do not pass through correctly.

Two tokens with the same ticker can represent very different instruments. The SEC’s January 2026 staff statement drew this distinction explicitly. For advisors evaluating these products, the structure is not a technical detail. It determines what rights the holder actually has.

Q. How developed is the regulatory framework at this point?

More developed than most people realize, but with gaps remaining. In the past eight months, the SEC issued a no-action letter for DTC tokenization services, published a staff statement establishing ownership taxonomy and approved Nasdaq’s proposal to trade tokenized securities alongside conventional shares. DTCC completed its first live production transactions this month.

Despite the progress, uncertainty still exists. Tokenized equities remain largely restricted to non-U.S. or accredited investors, the CLARITY Act has not been enacted, and third-party synthetic models carry more legal uncertainty than issuer-sponsored structures. The framework is building in a clear direction, but there is still much to accomplish to drive confidence and adoption.