On January 28, 2026, the U.S. Securities and Exchange Commission’s (SEC) Division of Corporation Finance, Division of Investment Management, and Division of Trading and Markets published a joint statement on tokenized securities, a significant step toward clarifying how federal securities laws apply to digital assets recorded on distributed ledgers “blockchains.”

This staff statement does not create new legal requirements, but it explains how securities laws already in force apply when traditional financial instruments are tokenized on crypto networks. It aims to help issuers, third-party developers, and market participants better understand compliance obligations and prepare appropriate filings.

What Is a Tokenized Security?

Under the SEC’s statement:

• A tokenized security is a financial instrument that meets the legal definition of a security under federal law such as a stock, bond, note, or investment contract  and is formatted as or represented by a crypto asset where ownership records are maintained, in whole or in part, on one or more crypto networks.
  
  

• Importantly, the technological format on-chain vs. off-chain does not change the fundamental legal status of the instrument. Whether the ownership data is stored traditionally or on a blockchain, the underlying obligations of securities law still apply.

Two Main Tokenization Models

The statement highlights two broad categories of tokenized securities:

1. Issuer-Sponsored Tokenized Securities

• These arise when the issuer or its agent directly integrates distributed ledger technology (DLT) into its ownership records sometimes called the master securityholder file.
  
  

• A transfer of the token on the blockchain results in a corresponding update of the official ownership record.
  
  

• The only real difference from traditional securities is the tech used to maintain records but the legal treatment under securities laws remains the same.
  
  

• Issuers can allow holders to choose different formats (traditional vs. tokenized) or even convert between them.
  
  

2. Third Party-Sponsored Tokenized Securities

• Third parties unaffiliated with the issuer may also create tokenized versions of securities.
  
  

• These can take several forms:
  
  

  • Custodial Tokenized Securities: where a third party holds the underlying security and issues a crypto asset representing the holder’s indirect interest.
    
    

  • Synthetic Tokenized Securities: crypto assets that provide exposure to the value of a referenced security but do not convey direct rights or benefits from the original issuer.
    
    

• Holders of synthetic tokens may face additional risks e.g., the third party’s creditworthiness that traditional holders would not.

Key Legal Clarifications

Tokenization Does Not Change Legal Status

• The SEC emphasizes that placing a security on a blockchain does not change its treatment under U.S. securities laws.

• Tokenized securities must still satisfy all applicable registration, disclosure, and investor protection requirements unless a specific exemption applies.

• For example, an issuer cannot avoid Securities Act registration simply by issuing a tokenized version of a stock or bond.

Ownership and Transfer Mechanics

• In issuer-sponsored models where the blockchain acts as the master record, a token transfer can function as a legal transfer of ownership, but only if the issuer’s official records reflect that change.
  
  

• In third-party models, the token may not directly convey legal rights, and transfer mechanics may depend on how off-chain systems update ownership records.

What This Means for Market Participants

Compliance is Still Required

• Issuers and intermediaries must treat tokenized securities as they would traditional securities under federal law, including compliance with registration, reporting, and disclosure obligations.

Greater Clarity, Not New Rules

• This SEC statement clarifies how existing law applies, but it does not create new legal obligations or change the underlying statutes.
  
  

• Market participants can use it to assess their tokenized products and determine what filings or regulatory engagements may be necessary.

Tokenization Does Not Replace Legal Substance

• Blockchain recordkeeping does not alter investor protections or compliance requirements; technology is secondary to legal substance.

Why This Matters

This statement arrives amid growing interest in the potential of tokenization to increase market efficiency, lower settlement friction, and expand access to tradable securities. Firmly placing tokenized securities under well-understood federal securities frameworks reduces legal ambiguity and encourages careful compliance planning.

By outlining the taxonomies issuer-sponsored vs. third party and reaffirming fundamental principles of securities law, the SEC is signaling that innovation must operate within existing legal boundaries, an important message for capital markets, tokenization platforms, and institutional participants alike.

Conclusion

The SEC’s January 28, 2026 statement on tokenized securities doesn’t rewrite U.S. securities law, but it clarifies how that law applies when traditional financial instruments are recorded on blockchain-based systems.
For anyone building products or services around tokenized stocks, bonds, or other securities, the takeaway is clear: tokenization does not diminish legal obligations, it layers them with technological considerations.

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