USA: what a property token holder owns under the SEC's three models

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Kooky

Builder of Shaka, the payment router that pays every agent their commission on closing date.

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Two tokens can carry the name of the same building and give their holders very different things. One may be the ownership record of an interest in the company that owns the property. Another may be a claim on an intermediary that holds that interest. A third may be a promise by an unrelated firm to pay according to how the interest performs. For a buyer, the difference decides who owes what when something goes wrong. For a sponsor, it decides which parts of United States federal securities law come into play.

On 28 January 2026 the staff of the Securities and Exchange Commission published a short text that sets these structures side by side, the Statement on Tokenized Securities. This guide goes through it model by model: what the token is, who issued it, what the holder owns and which federal provisions the staff attaches to it. It then places the statement among the other Commission texts on tokenisation published between July 2025 and September 2026. The statement never mentions real estate. Where this guide applies its categories to a property interest, it does so as an illustration with stated assumptions, and it deals with federal law only.

Securities and Exchange Commission staff, Statement on Tokenized Securities, 28 January 2026.

A staff text, and what that means

The statement comes from three divisions of the Commission at once: Corporation Finance, Investment Management, and Trading and Markets. Its stated purpose is to explain how the federal securities laws apply to tokenised securities.

It is careful about its own rank. According to its second footnote it sets out the views of the staff only. It is not a rule or guidance of the Commission, it has no legal force, and it creates no new obligations for anyone. A further footnote says it assumes that the activities it describes comply with applicable law and governing documents.

That status shapes how the text can be used. It is a map of how the staff reads existing statutes. It closes with an offer: the staff says it stands ready to engage on questions, and directs them to the Office of Chief Counsel of each division.

The vocabulary the staff uses

Four definitions carry the whole text. A crypto asset is a digital representation of value recorded on a cryptographically secured distributed ledger; the first footnote notes that this wording matches the definition in the GENIUS Act, a federal law of 2025. A crypto network is a blockchain or a similar distributed ledger network. Data is onchain when it is recorded directly on such a network and offchain when it is recorded outside one. Tokenisation, in the third footnote, is the creation of a digital representation of a tangible or intangible asset using distributed ledger technology.

The central term is narrower than everyday use suggests. A tokenised security, for the staff, is a financial instrument that already falls within the federal definition of a security and that is formatted as, or represented by, a crypto asset, with the record of ownership kept wholly or partly on one or more crypto networks. The fourth footnote points to the three statutory definitions: section 2(a)(1) of the Securities Act, section 3(a)(10) of the Exchange Act and section 2(a)(36) of the Investment Company Act.

Two consequences follow for anyone reading the statement with property in mind. First, it starts after the question of whether something is a security has been answered. It does not help decide whether a given real estate interest is one. Second, a footnote says that any type of security can be tokenised, so nothing in the text limits it to listed shares. The same footnote records an assumption that runs through the analysis: the crypto asset is treated as a format for the security, and not as a second, separate security.

From there the staff divides the field in two. Some securities are tokenised by the issuer or on its behalf. Others are tokenised by third parties that have no affiliation with the issuer. The statement has those two categories and divides the second into a custodial model and a synthetic model. This guide counts the result as three models: issuer-sponsored, custodial and synthetic.

Issuer-sponsored tokens: the ledger as the register

In the first category the party that created the security also creates the token. The staff describes two ways of doing it.

In the first, the issuer or its agent builds the crypto network into its master securityholder file, the record of who owns the security. A transfer of the crypto asset from one holder to another produces a transfer of the security on that file. The statement says the difference from a conventional security lies in where the record is kept: in onchain database entries in place of offchain ones. The holder of the token is the holder of the security.

In the second, the network is not part of the master file. The issuer issues the security offchain and gives holders a crypto asset. The staff is explicit that this crypto asset conveys no rights, obligations or benefits of the security. Its function is that of a signal: a transfer of the token notifies the issuer or its agent, which then records the transfer of the security in the offchain records. Ownership changes when the offchain record changes.

On the legal side the staff's message for both variants is that the format changes nothing. The Securities Act requires every offer and sale of a security to be registered unless an exemption is available, and the statement applies that to a tokenised security as to any other.

The staff adds three points about classes of securities. An issuer may issue one class in several formats, tokenised and traditional, and may allow holders to convert from one to the other. A tokenised security whose character and rights are substantially similar to those of the traditional one may be considered the same class for certain purposes, and the footnote gives sections 12(g)(5) and 15(d)(1) of the Exchange Act as examples. For funds, another footnote flags that different formats can raise questions under section 18 of the Investment Company Act.

Third-party tokens: the custodial model

The second category begins when someone other than the issuer puts the security on a network. The staff opens it with a general warning. The rights attached to a third party's token may or may not match those of the underlying security, and holders may be exposed to risks tied to the third party, such as its bankruptcy, that a person holding the underlying security would not necessarily face.

The first third-party model is custodial. A third party holds the underlying security in custody and issues a crypto asset against it. The staff calls the result a tokenised security entitlement. The crypto asset evidences the holder's ownership interest, direct or indirect, in the security held in custody. A footnote places digital custodial receipts within this model, and another refers to Article 8 of the Uniform Commercial Code, the body of state commercial law that governs security entitlements.

The record can sit in either place here too. The statement says the entitlement may be recorded onchain as part of the third party's own records, or offchain, with onchain activity used to update the offchain record.

What the holder owns in this model is therefore an interest that runs through the custodian. A footnote adds a further consequence for the third party itself: depending on the facts and circumstances, it may be deemed an investment company under the Investment Company Act.

The staff's footnotes cite two documents for this model: a Commission concept release of 2010 on the United States proxy system, and a no-action letter of 11 December 2025 addressed to The Depository Trust Company, discussed further below.

Third-party tokens: the synthetic model

In the second third-party model nobody holds the underlying security for the token holder. The third party issues an instrument of its own that refers to it. The staff describes two forms this can take.

The first is the linked security. It is issued by the third party, and its return is tied to the value of a referenced security or to events relating to it. The statement says a linked security is not an obligation of the issuer of the referenced security and confers no rights or benefits from that issuer. It can be a debt security, and the example given is a structured note. It can be an equity security, and the example given is exchangeable stock.

The holder of a linked security therefore owns a claim on the third party and nothing else. Whether the claim is paid depends on that third party. The referenced issuer owes the holder nothing.

The second form is the security-based swap, which has its own regime.

When the token is a security-based swap

According to the statement, an instrument is a security-based swap when it is a swap as the Commodity Exchange Act defines the term and it meets one of three tests in section 3(a)(68) of the Exchange Act. It is based on a narrow-based security index; or on a single security or loan; or on the occurrence of an event relating to a single issuer that directly affects that issuer's financial position.

The swap definition has exclusions, and the staff names two. Notes and other evidences of indebtedness that are securities under section 2(a)(1) of the Securities Act are excluded, and a footnote says structured notes typically fall there. Options on securities that are subject to the Securities Act and the Exchange Act are excluded as well. This is why a linked security and a security-based swap can be economically similar and still be governed by different rules.

Two restrictions follow if the instrument is a swap. Under section 5(e) of the Securities Act, it may not be offered or sold to persons who are not eligible contract participants unless a registration statement is in effect. Under section 6(l) of the Exchange Act, transactions with such persons must be effected on a national securities exchange; transactions among eligible contract participants need not be. Eligible contract participant is a category defined in the Commodity Exchange Act; the statement refers to a joint rule of the Commission and the Commodity Futures Trading Commission of 2012 for its details.

The staff ends this part with a rule of reading. What an instrument is called does not decide what it is. The statement cites the Supreme Court's decision in Tcherepnin v. Knight, of 1967, for the principle that economic reality prevails over form. A footnote adds that a token sponsored by the issuer could also turn out to be a security-based swap, so the label "issuer token" is no shelter either.

The three models read for a property interest

None of the above is written for real estate. The table below sets the models against one illustrative case. Assume a company formed to own a single rental building, and assume the ownership interests it has issued are securities under federal law, a question the statement leaves to other sources.

Read across the rows, the questions a holder can put to the documents of an offering become concrete. Is the token the register, or a signal to a register kept elsewhere? If a third party stands between the holder and the company, does that third party hold the interests, and what happens to them if it fails? If nothing is held, who is the debtor, and is the instrument a note or a swap? The statement supplies the questions. The answers depend on the documents and the facts of each structure.

One further Commission text bears on tokens that point at the property itself and not at a company. The fact sheet for the interpretation that the Commission issued in March 2026 as Release No. 33-11412, joined by the Commodity Futures Trading Commission, sorts crypto assets into five categories. One of them, digital securities, uses the same definition as the staff statement and is classed as securities. Another, digital tools, is classed as not being securities, and the fact sheet's examples are a membership, a ticket, a credential, a title instrument and an identity badge. It does not mention real estate, and it does not say what a title instrument means for land.

Before the statement: July and December 2025

The staff text of January did not arrive alone. The Commission's pages show a sequence that began six months earlier.

Commissioner Peirce's statement of 9 July 2025 already contained the outline. It said: "Tokenized securities are still securities." It distinguished an issuer that tokenises its own security from a third party that holds another entity's securities and issues a token tied to them, and it said buyers of the second kind may face counterparty risks. Depending on the facts, the statement went on, such a token may be a receipt for a security, which is a security in its own right and separate from the underlying one. A token that does not give its holder legal and beneficial ownership of the underlying security could be a security-based swap, which retail persons cannot trade off an exchange. The statement also named possible benefits, saying tokenisation may facilitate capital formation and make it easier for investors to use assets as collateral. It was a Commissioner's own statement, and it referred distributors to a Division of Corporation Finance staff text of 10 April 2025 on disclosure.

The letter of 11 December 2025 is the one the staff statement cites under the custodial model. The Division of Trading and Markets told The Depository Trust Company that it would not recommend enforcement action over a limited, voluntary pilot in which participants may have their security entitlements recorded as tokens on a blockchain instead of as book-entry credits only. Under the letter, the participant remains the entitlement holder under Article 8 of the Uniform Commercial Code with the same rights as before, and Cede & Co. remains the registered owner of the underlying securities.

The pilot is narrow. The eligible securities are those in the Russell 1000 index at launch, United States Treasury bills, bonds and notes, and exchange-traded funds that track major indices. Tokens may move only between wallets that participants have registered, the depository screens wallets against sanctions lists and keeps the ability to reverse transactions, and the tokenised entitlements are given no collateral or settlement value in its risk calculations. The letter says the depository planned to launch in the second half of 2026, and the relief runs until three years after launch. As a worked example with an assumed date, a launch on 1 December 2026 would carry the relief to 1 December 2029. Commissioner Peirce, in a statement the same day, called the model "a promising step" and noted that different tokenisation structures may raise distinct regulatory considerations.

Nothing in the letter concerns private real estate interests. Its relevance here is the structure: what the participant holds, in token form, is an entitlement, and the registered owner does not change.

After the statement: an advisory draft and the innovation exemption

Two later texts show how the categories of January were used.

The first is a draft recommendation on the tokenisation of equity securities, prepared by the Market Structure Subcommittee of the Commission's Investor Advisory Committee, dated 26 February 2026 and put down for discussion at the committee's meeting of 12 March 2026. It cites the staff statement, and uses a slightly different vocabulary: native tokens, issued directly on a blockchain, and wrapped tokens, where the underlying equity is held in custody and the token represents an interest in that position. The draft says wrapped tokens issued by third parties may lack the voting or bankruptcy rights that owners of native tokens have. It sets out three principles: a brief disclosure document explaining ownership rights, filed with the Commission and posted on the issuer's website; regulatory oversight of intermediaries; and trading that seeks the best terms for all investors. It recommends against a blanket innovation exemption. Whether the committee adopted the draft was not verified for this guide.

The second is the Commission's own order of 17 September 2026, which its press release calls the Innovation Exemption. It gives temporary and conditional relief to what it names Tokenized Securities Venues, which operate permissioned liquidity pools run by automated market makers. Those venues are exempted from the Exchange Act's definition of an exchange, and liquidity providers in the pools from its definition of a dealer. Chairman Paul S. Atkins said in his statement that the relief rests on section 36(a)(1) of the Exchange Act and that the anti-fraud provisions continue to apply in full.

The order applies the three-way division directly. According to the Chairman's statement, a venue may trade stock tokenised by or for the issuer, and stock tokenised by an unaffiliated third party, and may not trade synthetics. The press release adds that the venue must verify that the token gives its holder the same rights and privileges as the traditional stock of the equivalent class, and that for third-party tokens the issuer of the underlying stock must receive notice and a chance to object. Other conditions listed in the press release include limits on the number of symbols and on volume, smart contracts that are public and auditable, and a halt in trading whenever the primary listing exchange halts the underlying stock.

The scope is narrow in a way that matters for property. The press release limits the exemption to tokenised NMS stock, a term of the Commission's market rules that the release does not define. It does not extend the relief to interests in a private company that owns a building. The press release says the exemptions expire five years after publication of the order and does not give the publication date; as a worked example, if publication fell on 17 September 2026, expiry would fall on 17 September 2031. Commissioner Peirce described the measure as "an interim step on the road to permanent rules". The Commission requested public comment.

The name on a token says which building it points to. The model behind it says who the holder can turn to.

What the sources leave open

No page read for this guide addresses tokenised real estate by name. The application of the three models to a property-owning company in the table above is an illustration, and it assumes the interests are securities.

The staff statement does not discuss the intermediaries around a token. Brokers, transfer agents, trading systems and custody rules are outside its text, and so is state law.

The interpretation of March 2026 was read here through its fact sheet only. For the innovation exemption, the numerical limits on symbols and volume and the date from which the five years run are not given in the press release. The actual start of the depository's pilot was not verified either.

Finally, several of the texts described are statements of staff or of individual Commissioners. Each can be revised, and Chairman Atkins said on 17 September 2026 that the temporary order must be followed by durable rulemaking. The categories of 28 January 2026 are the staff's reading of the law as of that date.

Kooky, from Shaka

Kooky edits Agents Estate and builds Shaka, the payment router he made for real estate professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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