The U.S. Securities and Exchange Commission has given tokenized equities a clearer regulatory path, pushing onchain securities closer to mainstream financial markets. Coinbase CEO Brian Armstrong said tokenized equities are coming “very soon” and described them as a major positive change for the financial system.
Tokenized equities are traditional securities issued on blockchain networks or represented through onchain records. The SEC said ownership records may now exist partly or fully onchain, and transfers can take place across crypto networks, so long as federal securities laws are still followed. The technology can change the infrastructure. It does not erase the legal obligations tied to the securities themselves.
SEC statement sets out the federal framework
On January 28, 2026, SEC policy divisions issued a joint statement explaining how federal securities laws apply to tokenized stocks, bonds, and derivatives. The aim was to remove legal uncertainty for issuers and other market participants considering blockchain-based securities structures.
Under the guidance, issuer-sponsored tokenization allows a company to issue a security directly as a crypto asset, with the blockchain serving as the shareholder ledger. The SEC made clear that registration and other legal requirements remain in place regardless of whether the instrument is paper-based, electronically recorded, or onchain.
Issuers may offer both traditional and tokenized versions
The regulator also said issuers may maintain both conventional and tokenized forms of the same security, and they may allow conversion between the two. In that structure, tokenization changes recordkeeping and transfer mechanics, not the investor rights attached to the security. Coinbase Chief Legal Officer Paul Grewal said, “It’s happening,” while praising the SEC’s stance.
That point matters because the main issue is no longer whether tokenization can fit within securities law, but how firms can structure it in compliance. If the issuer itself supports the tokenized version, the legal connection between the onchain asset and the underlying security is more straightforward.
Third-party models carry different rights and risks
The SEC also addressed tokenization carried out by third parties without issuer involvement. It said these models differ sharply in legal rights and risk exposure. One approach is a custodial tokenized security, where a firm holds actual shares and issues onchain entitlements linked to those holdings.
Another approach creates synthetic exposure. These linked instruments, including security-based swaps, can track stock prices without giving investors ownership rights in the underlying shares. The SEC said those structures can expose investors to counterparty risk and bankruptcy risk, and they should not be confused with direct ownership.
The agency stressed that economic reality matters more than product labels. Compliance depends on how an instrument actually functions, not how it is marketed. By separating these structures, the SEC is trying to reduce confusion while keeping investor protections in place as tokenized securities gain traction in the U.S.
Armstrong said the U.S. is positioned to lead in regulated crypto-linked stocks. Grewal added that regulators now recognize what is at stake for U.S. competitiveness. Based on the SEC’s statement, the agency is not loosening securities law. It is defining a clearer boundary for how onchain securities can operate within the existing framework.