Emerging opportunities in the digital asset landscape: Tokenized securities and corporate governance

Tokenized assets – digital representations of tangible or intangible assets created using distributed ledger technology ("DLT") – are in a period of accelerated growth. This article outlines the U.S. Securities and Exchange Commission's ("SEC") taxonomy for tokenization models and describes how infrastructure providers (such as Broadridge Financial Solutions Inc. and Computershare Limited) have extended the existing proxy infrastructure to support corporate governance for tokenized securities. It then surveys the current regulatory landscape governing tokenized securities and concludes with an assessment of the challenges and opportunities that tokenization presents for the U.S. public markets.

Taxonomy of tokenization models

As the market for tokenized assets continues to grow, various models for tokenizing securities have emerged. The SEC's "Statement on Tokenized Securities" (January 28, 2026)¹ organized these into two principal categories: (1) Issuer-Sponsored Tokenized Securities and (2) Third Party-Sponsored Tokenized Securities. The former category includes two sub-variants: (a) DLT-Integrated Recordkeeping and (b) Mirror Recordkeeping. The latter encompasses two distinct sub-models: (a) Custodial Tokenized Securities and (b) Synthetic Tokenized Securities. The following taxonomy summarizes the key differences between these models.

1. Issuer-Sponsored Tokenized Securities. Under this model, the issuer (or its agent, such as a transfer agent) integrates DLT into its master securityholder file or issues a tokenized security that operates in conjunction with that file.
   1. DLT-Integrated Recordkeeping. The issuer (or its agent) integrates DLT into its master securityholder file such that a transfer of the tokenized security "on-chain" automatically results in a transfer of the recorded owner of the underlying security in the on-chain master securityholder file. That automaticity is based in Section 224 of the Delaware General Corporations Law ("DGCL"). Under DGCL § 224, a Delaware corporation may maintain its stock ledger on a distributed ledger, thereby making the on-chain record the corporation's authoritative ownership ledger rather than a mere shadow copy. The tokens themselves are best characterized as uncertificated securities under Article 8 of the Uniform Commercial Code ("UCC"), which supplies the framework for the creation, transfer, and perfection of interests in such securities. Article 12 supplements Article 8 by providing rules governing control and protected purchasers of qualifying controllable electronic records, thereby enhancing transfer finality for certain digital assets. Absent this statutory infrastructure, an on-chain transfer would be nothing more than a bookkeeping signal. Thus, DGCL § 224, together with the applicable provisions of the UCC and the issuer's governing documents, can provide the legal framework under which an on-chain transfer is recognized as a transfer of legal title.²
   2. Mirror Recordkeeping. Alternatively, the issuer (or its agent) can continue using its existing master securityholder file and issue a separate tokenized security. The on-chain asset generally does not itself convey any rights, obligations, or benefits of the security, but a transfer of the tokenized security is still a securities transaction since it operates to notify the issuer (or its agent) to record the transfer of ownership on the master securityholder file.
2. Third Party-Sponsored Tokenized Securities.
   1. Custodial Tokenized Securities. Under this sub-model, a third-party issues crypto assets that represent underlying securities of another issuer. The underlying security is held in custody by the third party³, and the crypto asset evidences the holder's ownership interest (whether direct or indirect) in that underlying security. Like issuer-sponsored tokenized securities, the third party may either integrate DLT into its entitlement-holder recordkeeping system (DLT-Integrated Recordkeeping) or use an on-chain record that tracks transfers of tokens to record transfers of security entitlements on its off-chain official recordkeeping system (Mirror Recordkeeping). In December 2025, the Depository Trust Company ("DTC"), a subsidiary of the Depository Trust & Clearing Corporation ("DTCC"), received a No-Action Letter from the SEC⁴ stating that the SEC staff would not recommend enforcement action to offer a defined tokenization service for DTC participants and their clients for three years.⁵ However, the service is not yet commercially live; DTCC plans to facilitate initial, limited production trades of securities tokenized via DTC's tokenization service in July 2026, with plans to launch the service more broadly in October 2026.⁶
   2. Synthetic Tokenized Securities. As their name implies, these third party-issued tokens only provide synthetic exposure to the securities of an unrelated issuer. These "linked securities" – the primary form of synthetic tokenized security – do not represent an obligation of the issuer of the referenced security and confer no rights or benefits from the issuer of the referenced security. The return on a linked security is tied to the value of the security it references.⁷

Enabling corporate governance for tokenized securities

As noted above, while the ecosystem of tokenized securities is growing, many digital assets currently being traded do not grant holders the full slate of shareholder rights. The expansion of corporate governance solution providers' platforms is designed to address that gap – enabling the shareholder franchise for tokenized securities to support the continued growth of the market.

Governance solution providers have expanded their platforms to facilitate corporate governance for issuer-sponsored, synthetic, and third party-custodied tokenized securities. As a result, dividend processing, proxy voting, and on-chain governance for holders of both traditional and tokenized equities can now all be handled by existing platforms.

For tokenized equities, shareholder voting continues to be governed by the federal proxy rules under Exchange Act Section 14(a) and Regulation 14A – including Rule 14a-8 for shareholder proposals – as well as the intermediary distribution rules under Rules 14b-1 and 14b-2, which establish the NOBO/OBO framework through which proxy materials are distributed down the chain of intermediaries. The entire proxy machinery is premised on the structural distinction between the record holder and the beneficial owner: in the traditional model, DTC is the record holder, participants hold through DTC, and beneficial owners sit at the end of an intermediary chain through which governance solution providers distribute proxy materials and tabulate votes. The most consequential unresolved question raised by direct on-chain holding of tokenized securities is whether that model collapses this record-holder/beneficial-owner bifurcation. If an on-chain wallet holder is treated as a record holder rather than a beneficial owner, the intermediary distribution rules under Rules 14b-1 and 14b-2 may apply differently or may become unnecessary depending on how record ownership is structured, and the issuer – rather than a chain of intermediaries – would bear the obligation to furnish proxy materials directly to each holder. In that scenario, the layered infrastructure on which proxy distribution and vote-tabulation services depend would need to be fundamentally reconceived, and the NOBO/OBO framework – which governs whether and how an issuer may communicate with beneficial owners – would lose much of its practical significance.

The regulatory landscape for tokenized securities

Despite the recent – and projected – growth in tokenized securities, investors in the United States currently have limited access to this market.⁸ While accredited investors may access certain tokenized securities, retail investors currently only have limited access to issuer-sponsored tokenization securities. Issuer-sponsored tokenized securities have, to date, been offered almost exclusively through private-placement exemptions – principally Regulation D Rules 506(b) and 506(c), Regulation S for offshore offerings, and Regulation A+ – which meaningfully constrain both the eligible investor pool and the liquidity of the instruments by imposing resale restrictions such as Rule 144 holding periods and limiting secondary market activity to registered alternative trading systems.

However, regulators are beginning to lay the groundwork for tokenized trading in the United States.⁹ In January, the SEC issued a statement clarifying that tokenized securities will receive the same treatment as traditional securities under the federal securities laws. The statement defines tokenized securities as "securities" – as defined under the federal securities laws – that take the form of a crypto asset with ownership recorded in whole or in part on one or more crypto networks.¹⁰ By bringing tokenized securities within the existing definition of securities, the SEC confirmed that the form of an asset does not determine which laws apply. This approach is consistent with the "same risk, same rules" principle that has emerged as the prevailing standard among regulators globally.¹¹ The SEC has also suggested it may issue a proposed innovation exemption that would allow crypto-native platforms to list tokenized securities without full registration and could permit entities unaffiliated with the issuer to wrap a publicly listed company's stock in tokenized form without the issuer's consent.¹²

Major exchanges have also taken steps to facilitate tokenized trading.¹³ In March, the SEC approved NASDAQ's proposal, developed in partnership with crypto exchange Kraken, to allow trading of tokenized stocks for eligible issuers that choose to opt in.¹⁴ The proposal allows both tokenized and traditional securities to trade within NASDAQ's existing exchange platform, which settles trades through the DTCC. The New York Stock Exchange ("NYSE") has taken a different approach, announcing a partnership with digital transfer agent Securitize to develop a separate digital trading venue where tokenized securities are issued and settled directly on-chain.¹⁵

Governance solution providers are acting in parallel with these regulatory developments. The expansion of corporate governance platforms to support tokenized securities will enable investors and issuers to seamlessly integrate tokenized securities into their existing workflows. Together, the developing regulatory framework and expanding governance infrastructure are setting the stage for a fully integrated system of digital asset trading in the U.S. public markets. While tokenization and the movement of securities on-chain offer potentially significant benefits, they also present challenges that regulators and market participants will need to navigate.

Challenges and opportunities for on-chain securities

Challenges

• Adoption of New Technology. Market participants face operational hurdles in integrating blockchain technology into existing workflows. Beyond the how, there is also the why. Investors may question whether the benefits of tokenization are sufficiently incremental to justify the disruption of integrating tokenized securities into their portfolios – particularly if, over time, traditional market access proves adequate.
• Reduced Transparency for Beneficial Owners. Regulated tokenized securities typically require KYC/AML verification, meaning that token holders are identified to their platform operators and, where applicable, to regulators. However, for tokenized securities recorded on public blockchains, transfers are made using pseudonymous wallet addresses, and the beneficial identity behind any given address is not automatically visible to other market participants. This creates potential complications for hostile proxy campaigns, where activists ordinarily seek to identify and approach significant shareholders directly. For regulated, issuer-sponsored tokens, this concern is largely mitigated because the beneficial-ownership reporting obligations under Sections 13(d), 13(g), and 16 of the Exchange Act continue to apply, and issuers retain transfer-agent records, KYC data, and compelled-disclosure tools sufficient to identify holders. The pseudonymity concern is more acute for synthetic or public-chain products, where no equivalent issuer-side infrastructure exists to identify wallet holders.
• Limited Secondary Market Liquidity. A secondary market for tokenized securities is evolving, with a handful of SEC-registered alternative trading systems already facilitating trading of security tokens to accredited investors and Rule 144 resales available following the applicable holding period. The concerns with the current secondary market are depth, liquidity, and fragmentation across multiple venues – deficiencies that continue to make tokenized securities less attractive than their traditional counterparts to many institutional investors. Until trading activity consolidates and liquidity meaningfully improves, the practical utility of tokenized securities will likely remain constrained.
• An Evolving (But Still Incomplete) Regulatory Framework. The regulatory landscape for tokenized securities has developed materially, but significant regulatory questions remain unanswered, and regulators are still sorting out how tokenized stocks should work. The absence of comprehensive, final rules leaves investors vulnerable to confusion about what they are actually purchasing and increases the chances for investors to be misled.¹⁶ For example, trading platforms in Europe offer digitally tradable rights to U.S. equities without providing actual shares, thereby conveying only economic rights but not the full extent of traditional shareholder rights.¹⁷ Uninformed investors may assume otherwise, and may price such products accordingly.
• Risk of Price Divergence. Some tokenized securities have diverged materially from the price of the underlying traditional security, owing largely to thin trading and limited secondary market liquidity. Price convergence is unlikely to become reliable until regulatory clarity is established and secondary market liquidity deepens.
• Corporate Governance Concerns. When decentralized autonomous organizations ("DAOs") first utilized blockchain technology for corporate governance, the promise was to democratize traditional entity ownership and broaden meaningful participation. The result, however, was high voter concentration and low voter turnout as compared to traditional corporate governance.¹⁸ This raises genuine concerns about whether on-chain corporate governance structures for tokenized securities would face similar pathologies of concentration and low engagement.

Opportunities

• Bringing Crypto-Native Users into the Fold. The integration of tokenized securities into U.S. public markets opens the stock market to an entirely new class of investors. Crypto-native participants – accustomed to on-chain asset management – will have access to the equities markets in a format native to their experience. Capturing even a portion of that demand within a regulated, issuer-sponsored framework represents a significant commercial opportunity.
• Increased Efficiency and Accessibility. Unlike the traditional financial system, trading on-chain can operate 24/7. As opposed to the traditional T+1 settlement cycle, tokenized securities allow for instantaneous settlement. Moreover, the blockchain's automated system reduces reliance on intermediaries, which can lower overall transaction costs. Finally, tokenization allows for fractional ownership, making high-priced securities accessible to a broader range of investors. The question for the tokenized market is whether its infrastructure can develop sufficiently to reliably serve that anticipated increase in demand.
• Improved Auditability of Ownership Ledger. Blockchain records are immutable and update in real time. For issuer-sponsored tokenized securities using DLT-integrated recordkeeping – only where DGCL § 224 and UCC Article 8 make the ledger authoritative – legal ownership is recorded on-chain as tokens are transferred, making the ownership record continuously available and auditable. This reduces the risk of record-keeping errors and could meaningfully reduce fraud risk and increase trust in the market over time.
• Interoperability of On-Chain/Off-Chain Systems. The regulatory framework being developed by the SEC contemplates the coexistence of tokenized and traditional securities within a single legal and financial system. If achieved, this would allow investors to hold, trade, and manage both forms of securities through integrated systems, enabling portfolio customization and diversification without unnecessary operational friction.
• Corporate Governance Benefits. On-chain corporate governance has the potential to offer meaningful structural improvements to certain aspects of traditional governance. The blockchain's decentralized and automated nature means that on-chain corporate governance should require less oversight and reduced transaction costs. For example, smart contracts (self-executing programs stored on a blockchain that automatically enforce agreed-upon terms when predetermined conditions are met), once deployed, could make governance rules self-executing and tamper-resistant, reducing the risk of circumvention and lowering the cost of administering shareholder votes. Nonetheless, the self-executing quality of smart contracts is qualified in practice: governance still depends on off-chain legal documents – charters, bylaws, and operating agreements – that must mirror the code, and any divergence between contractual terms and the code risks creating enforceability and fiduciary-duty complications, particularly given that smart contracts cannot override mandatory corporate-law requirements such as board fiduciary duties, record-date mechanics, or appraisal rights.

Conclusion

The tokenized securities market is at an inflection point. Regulatory developments – from the SEC's statement on tokenized securities to exchange proposals by NASDAQ and the NYSE – are beginning to establish the framework for broader market access. At the same time, infrastructure providers are building the governance tools necessary to support this transition. But key questions remain: Will regulators extend access to retail investors, and if so, under what conditions? Will the SEC's proposed innovation exemption reshape the regulatory landscape for tokenized equities? And will investors embrace tokenized securities as a meaningful evolution of the financial markets? The answers to these questions will determine whether tokenized securities become a permanent feature of the U.S. public markets – or remain a niche product.

Special thanks to Summer Associate Kimi Nasiri for her assistance with this article.

_{1 U.S. Securities and Exchange Commission, "Statement on Tokenized Securities," Jan. 28, 2026, https://www.sec.gov/newsroom/speeches-statements/corp-fin-statement-tokenized-securities-012826-statement-tokenized-securities.
2 Galaxy Digital Inc. implemented this sub-variant through its partnership with Superstate Advisers LLC in September 2025, with Superstate Advisers LLC acting as the SEC-registered transfer agent, recording legal ownership and transfers of tokenized securities in real time on the Solana blockchain. Those tokenized securities confer the same rights as shares of Galaxy Digital Class A Common Stock held by traditional investors. See Galaxy Digital Inc., "Galaxy and Superstate Launch GLXY Tokenized Public Shares on Solana," Sep. 3, 2025, https://www.galaxy.com/newsroom/galaxy-superstate-launch-glxy-tokenized-public-shares. See also Digital Asset Market Clarity Act of 2025, H.R. 3633, 119th Cong. § 305 (2025) ("CLARITY Act") (requiring the SEC to issue rules permitting broker-dealers, transfer agents and exchanges to utilize blockchain-based records for books and recordkeeping purposes). The CLARITY Act passed the House on July 17, 2025, advanced out of the Senate Banking Committee on May 14, 2026 and was pending before the Senate as of the date of this article.
3 The SEC's custody framework is beyond the scope of this article. But see Custody of Crypto Asset Securities by Special Purpose Broker-Dealers, Exchange Act Release No. 90788 (Dec. 23, 2020) (regarding broker-dealers) and Rule 206(4)-2 under the Investment Advisers Act of 1940, as amended (17 C.F.R. § 275.206(4)-2) (regarding investment advisors).
4 The Depository Trust Company, SEC No-Action Letter, Div. of Trading and Mkts. (Dec. 11, 2025), available at https://www.sec.gov/files/tm/no-action/dtc-nal-121125.pdf.
5 The conditions under which the SEC staff agreed not to recommend enforcement action included , among others: ascribing no collateral or settlement value to tokenized entitlements; limiting eligible securities to Russell 1000 constituents, U.S. Treasury securities and ETFs tracking major indices; restricting wallet registration and token transfers to DTC Participants and their Registered Wallets; requiring compliance-aware tokenization protocols supporting distribution control and transaction reversibility; maintaining Tier 2 or better system ratings for key DTCC systems; prompt notification to the Division of Trading and Markets staff of material systems events; quarterly reporting to Division staff; public disclosure of technology standards, approved blockchains and applicable fees; and providing DTC with override capability via a root wallet to address erroneous entries, lost tokens or malfeasance. The Depository Trust Company, SEC No-Action Letter, Div. of Trading and Mkts. (Dec. 11, 2025), available at https://www.sec.gov/files/tm/no-action/dtc-nal-121125.pdf.
6 "DTCC Advances Development of New Tokenization Service, Convenes 50+ Firms to Drive Digital Assets Adoption," (DTCC) May 4, 2026, https://www.dtcc.com/news/2026/may/04/dtcc-advances-development-of-new-tokenization-service.
7 A token that pays a return tied to a reference equity and conveys no issuer rights is economically a swap and likely a security-based swap under Title VII of the Dodd-Frank Act. Offering security-based swaps to persons who are not eligible contract participants (i.e., most retail investors) is generally prohibited absent an effective registration statement pursuant to Section 5 of the Securities Act of 1933 and Section 6(l) of the Securities Exchange Act of 1934.
8 However, tokenized trading has been available in many international markets (including Singapore, the UAE, Hong Kong and the European Union member states) and continues to grow in popularity.
9 See also Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets, Securities Act Release No. 33-11412, Exchange Act Release No. 34-105020 (Mar. 17, 2026), available at https://www.sec.gov/files/rules/interp/2026/33-11412.pdf (providing the SEC's most comprehensive guidance to date on the application of the federal securities laws to crypto assets, including an affirmative five-category taxonomy classifying digital commodities, digital collectibles, digital tools and covered stablecoins as non-securities – in contrast to digital securities (i.e., tokenized securities) which remain subject to the full scope of the federal securities laws regardless of whether they are issued on-chain or off-chain).
10 See supra note 1.
11 See, e.g., Financial Stability Board, Thematic Peer Review on the FSB Global Regulatory Framework for Crypto-Asset Activities (Oct. 2025), https://www.fsb.org/2025/10/thematic-review-on-fsb-global-regulatory-framework-for-crypto-asset-activities/ (describing the principle as "same activity, same risk, same regulation").
12 Paul Atkins & Hector Pierce, Number Go Down and Other Schadenfreude, at ETHDenver (February 18, 2026), https://www.sec.gov/newsroom/speeches-statements/atkins-peirce-021826-number-go-down-other-schadenfreude.
13 Intercontinental Exchange, Inc., New York Stock Exchange and Securitize Agree to Memorandum of Understanding to Support Tokenized Securities (March 24, 2026), https://ir.theice.com/press/news-details/2026/New-York-Stock-Exchange-and-Securitize-Agree-to-Memorandum-of-Understanding-to-Support-Tokenized-Securities/default.aspx.
14 Order Approving a Proposed Rule Change, as Modified by Amendment No. 2, to Amend the Exchange's Rules to Enable the Trading of Securities on the Exchange in Tokenized Form, Exchange Act Release No. 34-105047, File No. SR-NASDAQ-2025-072 (Mar. 18, 2026).
15 Intercontinental Exchange, supra note 13.
16 See CLARITY Act, supra note 2. The CLARITY Act would establish a multi-tiered asset classification framework – distinguishing among "digital commodities," "investment contract assets" and "permitted payment stablecoins" – and assign regulatory authority to the SEC and CFTC accordingly.
17 Intercontinental Exchange, supra note 13.
18 Rachel Layne, "Blockchain's Promise to Democratize Investor Power Faces Its First Real Tests," (HBS Working Knowledge) Oct. 31, 2025, https://www.library.hbs.edu/working-knowledge/blockchains-promise-to-democratize-investor-power-faces-first-real-tests.}

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