Tokenized shares: legal subtleties and risks for investors
Date: 2025-07-10 Author: Henry Casey Categories: BUSINESS
SEC Commissioner Esther Pierce emphasized that, despite the impressive potential of blockchain, this technology is not capable of radically changing the legal nature of assets. According to her, if a company's shares are converted into a digital token, they are still considered securities and are subject to federal law. Any transactions with such instruments must comply with market rules, and if new technologies require amendments, the regulator is ready to discuss updating the rules or developing individual exceptions.
Pierce reminded that investors buying tokenized shares should clearly understand who issues these tokens and what exactly is being digitized. According to her, such assets may be associated with special risks, including counterparty risk, which requires increased attention from buyers. She also drew the attention of issuers to the fact that certain types of securities are prohibited from being sold to retail investors outside of stock exchanges, even if they are presented in the form of tokens. As an example, she cited swaps, which remain regulated financial instruments regardless of the form of their implementation.
The essence of tokenization is the transfer of traditional shares into digital form. Investors do not receive paper certificates of ownership, but tokens that confirm ownership of the share. Moreover, such tokens can be issued both by the company itself and by third-party organizations. Many crypto market participants believe that the use of tokenization can simplify the trading process and reduce barriers to investment.
At the same time, Pierce reminded that the regulator's attitude towards other crypto assets may differ. Thus, in May, she said that most cryptocurrencies do not fall under the concept of securities. However, the commissioner warned investors that the commission will not protect their interests in the event of losses in such risky projects as the TRUMP memecoin. This example showed that investor protection does not automatically apply to any tokenized or crypto products.
Thus, experts urge market participants to carefully analyze the structure of transactions to avoid violations of the law and unnecessary risks. Blockchain technology can open up new opportunities, but does not relieve from the responsibility for compliance with regulations and understanding the nature of the assets being acquired.
