Tokenized stocks and real-world assets: what you actually own, and the rules

Tokenization means taking an asset that already exists in traditional finance, such as a company’s shares, a government bond or a fund, and recording it as a token on a blockchain. SEC Commissioner Hester Peirce has said tokenization may help companies raise capital and make it easier for investors to use their assets as collateral. But a token can look like a share without giving you what a share gives.

This guide explains what tokenized securities are, the very different things a “tokenized stock” can mean, what US regulators decided in 2026 and what the UK is testing.

What tokenization means

In January 2026, three SEC divisions defined a tokenized security as a financial instrument that counts as a security under US law, formatted as or represented by a crypto asset, where the record of ownership is kept in whole or in part on one or more crypto networks.

The key message from SEC Commissioner Hester Peirce, in July 2025: blockchain technology doesn’t have magical abilities to transform the nature of the underlying asset. Tokenized securities are still securities, and the securities laws still apply.

Why tokenize at all?

In its September 2026 fact sheet, the SEC listed the potential benefits that trading venues using blockchain technology can offer:

• self-custody: holding the tokenized shares in your own wallet;
• around-the-clock trading;
• fractional ownership of shares;
• near-instantaneous settlement;
• greater efficiency and transparency.

These are potential benefits, not guarantees, and each comes with trade-offs: self-custody means you’re responsible for your keys, and round-the-clock markets can move while you sleep. See hot vs cold wallets.

Two very different kinds of token

The SEC staff divide tokenized securities into two categories, and the difference matters for what you own.

1. Issued by the company itself

An issuer can tokenize its own security, for example by keeping its register of shareholders partly on a blockchain, so that transferring the token transfers the security. In that case, the SEC staff say, the only difference from a traditional share is where the ownership records are kept. The format doesn’t change how securities law applies.

2. Issued by a third party

A third party unaffiliated with the company can also tokenize its shares. The SEC staff describe two models:

The SEC staff note that a security-based swap typically doesn’t give the holder any equity, voting, information or other rights in the company it references, and that a linked security isn’t an obligation of the company and confers no rights from it.

Commissioner Peirce also warned that buyers of third-party tokens may face unique risks, such as counterparty risk.

The September 2026 “innovation exemption”

On 17 September 2026, the SEC issued a temporary, conditional exemption allowing Tokenized Securities Venues (TSVs) to trade tokenized US-listed stocks using permissioned automated market makers and liquidity pools, without registering as exchanges. Conditions include:

• limits on the number of stocks and the volume traded;
• the venue must verify that each tokenized stock gives holders the same rights and privileges as the traditional shares of an equivalent class;
• for stocks tokenized by an unaffiliated third party, the venue must notify the company and give it a chance to object;
• the smart contracts must be auditable, public and on a public, permissionless blockchain;
• trading must stop whenever trading in the underlying stock stops on its main exchange;
• the venue must publish information about its operations and trading.

A few more details from the SEC’s fact sheet:

• Synthetic tokens are excluded. The exemption covers stocks tokenized by the company or by an unaffiliated third party holding the shares. It doesn’t cover a third party’s own security that only gives synthetic exposure, such as a tokenized linked security or security-based swap.
• Advance notice. At least 30 calendar days before operating, a venue must publish a notice on its website and then tell the SEC it intends to use the exemption.
• Liquidity providers that supply tokenized stock to the pools get a matching, conditional exemption from registering as dealers, as long as their securities business is limited to that activity.

The exemptions are set to expire five years after publication, and the SEC asked for public comment on next steps. See what is a smart contract?

The UK’s Digital Securities Sandbox

The UK’s approach runs through the Digital Securities Sandbox (DSS), operated by the Bank of England and the FCA. The Bank describes it as a regulated live environment where firms can use new technology, such as distributed ledgers, to issue, record, settle and trade securities:

• Firms can carry out the roles of notary, maintenance and settlement for securities, alone or together with running a trading venue.
• Some legal rules are modified for the sandbox’s duration, to remove obstacles to using the new technology.
• It uses a “glidepath”: firms move through gates, getting higher limits as they show they meet the regulatory requirements.
• The intention is that, if the technology is successfully adopted, participants can move into a new permanent regime at the end.

The UK’s digital gilt

In the UK, HM Treasury is piloting the Digital Gilt Instrument (DIGIT), described as an entirely new, digitally native UK government debt instrument. According to the government:

• it will be short dated and issued onto a blockchain-based platform within the Digital Securities Sandbox, with on-chain settlement;
• in February 2026 the government announced that HSBC would provide the blockchain platform;
• the government expects to list DIGIT on the London Stock Exchange’s main market as part of the pilot.

Risks and questions to ask

Before buying anything described as a tokenized stock, bond or “real-world asset”:

1. Who issued the token? The company itself, or a third party?
2. What exactly do you own? The security, an entitlement to it, or only price exposure?
3. What rights do you get? Dividends, voting, information, redemption for the underlying asset?
4. Who holds the underlying asset, and what happens if that firm fails? See what happens if an exchange goes bust.
5. Is the platform allowed to sell it to you where you live? See how to check a crypto exchange is registered.
6. Can you sell or redeem it easily, and at what cost?

Also remember that tokenization is a popular buzzword. Fraudsters use the latest technology to make pitches sound credible. See crypto Ponzi schemes and AI crypto trading bot scams.

For other ways to get exposure to crypto through traditional markets, see bitcoin ETFs explained.