But familiar forms of market exposure, including brokerage-held securities, ETFs, depository receipts, structured notes, and other equity-linked instruments, are well-established parts of the market today. Tokenization alone does not make them more or less legitimate. Their economic and legal structures should dictate their regulatory treatment.
The third model is issuer-sponsored tokenization. A company and its transfer agent support tokenized ownership directly. This may be the right model for many issuers. It can connect tokenized records to shareholder systems and support familiar processes for corporate actions, recordkeeping and communications.
Brokerage held securities, depository receipts, structured notes, and direct registration all coexist in today’s market. They do not provide identical rights. Investors choose among them because they serve different needs. The important questions are whether the structure is clear, the risks are disclosed, the backing is real where promised, and the product does what it says it does.
That is the right standard for tokenized markets as well.
One wrong outcome of the current tokenization debate would be a market where products borrow the language of stocks without telling investors what they actually hold or misleading investors altogether. That would harm investors and undermine confidence in the technology.
Another wrong outcome would be a market where tokenization becomes a set of private walled gardens. That would convert a promising new technology into a tool that narrows competition before the market has had a chance to learn what works.