The U.S. Securities and Exchange Commission issued new staff guidance on Jan. 28, 2026, and it separated tokenized securities into two clear models. The statement came from the SEC’s Division of Corporation Finance, Division of Investment Management, and Division of Trading and Markets in Washington, D.C.
The SEC defined a tokenized security as a “security” under federal law that is “formatted as or represented by a crypto asset,” while ownership records sit “in whole or in part” on one or more crypto networks.
The staff also made the core point in plain terms.
“The format in which a security is issued or the methods by which holders are recorded (e.g., onchain vs. offchain) does not affect application of the federal securities laws.”
SEC Defines Issuer-Sponsored Tokenized Securities and Keeps Securities Rules
Under the issuer-sponsored tokenized securities model, an issuer issues the security “in the format of a crypto asset.” The issuer, or its agent, integrates distributed ledger technology into the system that records owners.
The SEC said the transfer mechanics matter. A transfer of the crypto asset on a crypto network triggers a transfer of the security on the issuer’s “master securityholder file.”
The staff then described what changes and what does not. The issuer replaces conventional offchain database records with onchain database records, but the security stays a security. The SEC added that issuers can pair onchain details like wallet address, quantity, and issue date with offchain details like a holder’s name and address.
The statement also covered a second issuer route that still creates a tokenized security flow. In that setup, the issuer issues the security offchain, and then issues a separate crypto asset to holders.
Here, the SEC drew a line around rights. The crypto asset “does not convey any rights, obligations, or benefits” of the security. Instead, the crypto transfer can notify the issuer to update the offchain master file.
SEC Warns Third Party-Sponsored Tokenized Securities Can Be Custodial or Synthetic
The SEC said third parties unaffiliated with an issuer can also create third party-sponsored tokenized securities. However, the rights tied to the crypto asset can differ from the underlying security.
The staff flagged third-party risk in direct language. Holders “may be exposed to risks with respect to the third party, such as bankruptcy.” That risk may not exist for holders of the underlying security.
The SEC said it has observed two main third-party models: custodial tokenized securities and synthetic tokenized securities. In the custodial model, the third party issues a crypto asset that represents the underlying security, such as a tokenized security entitlement, while the underlying security sits in custody.
In the synthetic model, the third party issues its own security that provides exposure to a referenced security. The SEC said a linked security “confers no rights or benefits” from the referenced issuer, even when the return tracks the referenced security. It can take forms such as structured notes or exchangeable stock.
The staff also addressed tokenized security-based swaps. It said a security-based swap “typically does not convey” equity, voting, or information rights in the referenced security. It also said the third party may not offer or sell the crypto asset to people who are not eligible contract participants, unless a Securities Act registration statement is effective and transactions occur on a national securities exchange.
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Tatevik Avetisyan is an editor at Kriptoworld who covers emerging crypto trends, blockchain innovation, and altcoin developments. She is passionate about breaking down complex stories for a global audience and making digital finance more accessible.
📅 Published: January 29, 2026 • 🕓 Last updated: January 29, 2026
