Of recent, talk of tokenization has become popular in the market, with platforms such as Robinhood seeking to tokenize assets such as stocks (and even private equities!). As a consequence, the intersection of these new technologies with longstanding securities law has piqued the interest of regulators and market participants alike. As such, if tokenized offerings are to proliferate, the challenge will be finding which regulatory schema they best fit into—or, failing that, what future schema could look like for these offerings. Answers at present are unclear, but what is clear is that regulators are paying careful attention to these developments.
The Rise of Tokenization
At its core, tokenization refers to the creation of digital tokens on a blockchain that represent interests in real-world equities. The idea is simple: custody an asset, and then represent it on the blockchain via a token, all tradable on a common blockchain.1 Through this process, platforms such as Robinhood and others have enabled the trading of tokenized stocks, while several other companies are exploring similar ventures.2 This new approach to market access offers the potential for near-instant settlement, fractionalized ownership, and expanded participation, all anchored by the blockchain’s transparency and immutability.3
To that end, the pace of adoption has accelerated considerably in recent months. For example, Robinhood’s recent event—“To Catch a Token”—previewed some of its tokenization push, among other innovations.4 But Robinhood’s recent foray into tokenized stocks has also brought heightened attention to both the innovation itself and the complex regulatory environment in which it must operate.5 That said, at present, many of these projects exist in legal gray areas with respect to some of their features, and some projects and issuers are now looking to the current SEC for further guidance.6
The (Current) Legal Mechanics of Tokenization
Currently offered only outside of the U.S., the legal structure of many tokenized offerings—stocks in particular—departs from the traditional model of direct ownership. Generally speaking, the underlying tokens serve as representations of contractual claims or synthetic exposures, rather than conveying actual legal title to underlying equities. Accordingly, these assets are different in kind from traditional stocks.
Gemini, a major cryptocurrency exchange, has begun offering tokenized stocks in the EU, much like Robinhood. The exchange has structured these tokenized assets as derivatives, explaining that their tokenized stocks are “[a]n over-the-counter derivative contract linked to the performance (1:1) of an underlying security[.]”7 The provider of these contracts, Dinari, provides further color: “The Product [tokenized shares] is a fully-funded and unleveraged swap. The Product . . . provides indirect exposure to the financial performance of the Underlying Asset . . . without you owning the Underlying Asset itself.”8
As if speaking to the rationale behind these offerings being outside of the U.S., Robinhood pointed out in its tokenization memorandum that, “[u]nder the current U.S. regulatory framework, the vast majority of RWAs [real-world assets] are treated as securities. . . . The only viable option currently available in the US is to offer tokens to ‘accredited investors’ and to rely on Regulation D[.]”9
The Regulatory Response to Tokenization
Given these developments, the SEC has taken a more assertive posture toward tokenized equity products. Commissioner Hester Peirce, shortly after Robinhood’s tokenization announcement, issued a statement exploring tokenization.10 Commissioner Peirce explained that “[a]s powerful as blockchain technology is, it does not have magical abilities to transform the nature of the underlying asset. Tokenized securities are still securities.”11 Pointed, perhaps, more directly at Robinhood’s efforts, she further explained that “a token that does not provide the holder with legal and beneficial ownership of the underlying security could be a ‘security-based swap’ that cannot be traded off exchange by retail persons.”12 This position is also remarkably similar to that taken by the SEC in 2020 regarding Abra, which saw that company charged by the SEC with offering unregistered security-based swaps via blockchain technology.13
To that end, SEC Chair Paul Atkins, upon announcing the SEC’s “Project Crypto,” noted that “many firms seek to ‘tokenize’ their common stock . . . or tokenize the securities of third parties[,]” and directed the Commission to “work with firms seeking to distribute tokenized securities within the United States and to provide relief where appropriate[.]”14
Fitting Tokenization into U.S. Securities Law?
Given Chair Atkins and Commissioner Peirce’s statements on asset tokenization, it is clear that the SEC is currently exploring how tokenization fits into the agency’s crypto-regulatory calculus. Under current U.S. securities laws, as Robinhood’s memorandum notes, these potentially securities-based swaps are unattainable for the vast majority of retail investors.15
Returning to the SEC’s Abra Order, the Commission there explained that under Section 5(e) of the Securities act, it is “unlawful for any person to offer to sell, offer to buy or purchase or sell a security-based swap to any person who is not an eligible contract participant without an effective registration statement.”16 Perhaps, as lawyer Aaron Brogan proposes, “the SEC should promulgate rules that allow projects to sell securities in the form of cryptocurrency tokens with limited compliance and disclosures – combining the relative simplicity of a private placement with the secondary liquidity of a public offering.”17 The SEC may ultimately find some agreement here, given Chair Atkins’ words in his announcement of “Project Crypto.”
However, what is also possible is the lowering of barriers to accredited investor status for these assets—creating an opt-in, self-certification approach that comports with what Commissioner Peirce has long argued for and Chair Atkins has recently discussed in the context of private funds.18 It is imaginable that, rather than issuing new rulemaking regarding these tokens specifically, the SEC may change accredited investor status for tokenized assets—or more—allowing investors to assume risk accordingly, and permitting private investment pursuant to Regulation D. With that said, a more bespoke rulemaking regarding tokenization of real-world equities may ultimately be more pragmatic.
Conclusion
Ultimately, tokenization occupies a complex and evolving space squarely at the intersection of financial innovation and established regulation. While the underlying technology holds real promise for expanding market access, the legal landscape remains unsettled. The SEC’s current approach reflects a determination to identify gaps where innovation and regulation meet, and to fill them as best it can. To that end, it is likely that we will see some rules emerge in the near future on this front—and perhaps a further opening-up of the market for tokenization to retail investors.
1 Cryptopedia Staff, What Are Tokenized Stocks and How Do They Work?, Gemini, https://www.gemini.com/cryptopedia/what-are-tokenized-stocks-and-how-do-they-work (July 28, 2025).
2 See, e.g., Tanaya Macheel, Coinbase says it’s launching tokenized stocks, predictions markets for U.S. users in coming months, CNBC (July 31, 2025, 4:11 PM), https://www.cnbc.com/2025/07/31/coinbase-to-launch-tokenized-stocks-predictions-markets-in-us-in-coming-months.html; Krisztian Sandor, EToro Plans to Tokenize U.S. Stocks on Ethereum in Blockchain Push, CoinDesk (July 29, 2025, 10:51 AM), https://www.coindesk.com/business/2025/07/29/etoro-plans-to-tokenize-u-s-stocks-on-ethereum-in-blockchain-push; Rosalia Mazza, Robinhood Tokenization Push Redefines Market Hours and Investor Access, FinTech Weekly (July 5, 2025, 8:43 AM), https://www.fintechweekly.com/magazine/articles/robinhood-tokenization-stock-trading-eu-arbitrum.
3 Tokenization, Robinhood 2 (Jan. 2025), https://cdn.robinhood.com/assets/robinhood/legal/tokenization_memo.pdf.
4 Robinhood Presents: To Catch a Token, Robinhood, https://go.robinhood.com/presents (last visited Aug. 8, 2025).
5 Matthew Goldstein, Head of S.E.C.’s Crypto Task Force Says ‘Tokenized’ Stocks Are Securities, N.Y. Times (July 9, 2025), https://www.nytimes.com/2025/07/09/business/sec-crypto-tokenized-securities.html.
6 Robinhood, supra note 3, at 4 (“[T]he current SEC securities registration regime is [currently] incompatible with the tokenization of real-world assets[.]”).
7 Trade Tokenized U.S. Stocks with Gemini Tokenized Stocks, Gemini, https://www.gemini.com/tokenizedstocks (last visited Aug. 5, 2025).
8 Supplemental Information Document, Dinari 1 (July 29, 2025), https://bit.ly/41bK3fM.
9 Robinhood, supra note 3, at 3.
10 Commissioner Hester M. Peirce, Enchanting, but Not Magical: A Statement on the Tokenization of Securities, Sec. & Exch. Comm’n (July 9, 2025), https://www.sec.gov/newsroom/speeches-statements/peirce-statement-tokenized-securities-070925.
11 Id.
12 Id.
13 See generally Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order, Exchange Act Release No. 89296 (July 13, 2020) [hereinafter “Abra Order”].
14 Chairman Paul S. Atkins, American Leadership in the Digital Financial Revolution, Sec. & Exch. Comm’n (July 31, 2025), https://www.sec.gov/newsroom/speeches-statements/atkins-digital-finance-revolution-073125.
15 Robinhood, supra note 3, at 3.
16 See Abra Order, supra note 13, at 10.
17 Aaron Brogan, Put Securities On-Chain!, CoinDesk, https://www.coindesk.com/opinion/2025/01/30/put-securities-on-chain (Jan. 30, 2025, 9:20 AM).
18 See Commissioner Hester M. Peirce, Statement on Amending the “Accredited Investor” Definition, Sec. & Exch. Comm’n (Aug. 26, 2020), https://www.sec.gov/newsroom/speeches-statements/peirce-accredited-investor-2020-08-26 (“Why shouldn’t mom and pop retail investors be allowed to invest in private offerings?”); Commissioner Hester M. Peirce, Generally Soliciting Comments without Checking Accreditation: Remarks before the Small Business Capital Formation Advisory Committee, Sec. & Exch. Comm’n (Nov. 13, 2024), https://www.sec.gov/newsroom/speeches-statements/peirce-remarks-sbcfac-111324 (“How could the Commission mitigate these costs and legal risk? Should we allow an investor to self-certify her accredited investor status?”); Melanie Waddell, Accredited Investor Standard Should Be Eliminated: SEC’s Peirce, ThinkAdvisor (May 20, 2025, 2:08 PM), https://www.thinkadvisor.com/2025/05/20/accredited-investor-standard-should-be-eliminated-secs-peirce/ (“‘I would like to see elimination of the accredited investor standard,’ Peirce responded.”); Chairman Paul S. Atkins, Remarks by Chair Atkins Before SEC Speaks, Harv. L. Sch. F. on Corp. Governance (May 20, 2025), https://corpgov.law.harvard.edu/2025/05/20/prepared-remarks-by-chair-atkins-before-sec-speaks/ (“Allowing this option [for retail, non-accredited investors to participate in these funds,] could increase investment opportunities for retail investors seeking to diversify their investment allocation in line with their investment time
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