Trust Law/Level IX · Trusts on chain/9.2 Tokens and real-world assets/Lesson 1
Tokenised real-world assets and who owns what
How real-world assets such as property, government bonds and fund shares are represented by tokens, why legal ownership usually sits with an SPV, fund or trust, and why investors’ rights depend on documents and securities law rather than on the token.
Education, not legal advice. Trust law changes from country to country and state to state, and the right structure depends on your situation. Anything you sign should be drafted or reviewed by a qualified lawyer where you live.
The lean path
The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.
- Lowest-risk default: own the underlying securities in a brokerage account with a transfer-on-death registration, where SIPC protects up to $500,000, including $250,000 cash, if the broker fails. Catch: SIPC excludes unregistered digital-asset investment contracts and never covers price falls.
- If buying a token, prefer one tokenised by or for the issuer, where the blockchain can be the official holder record, over third-party tokens (SEC staff statement, 28 January 2026). Catch: third-party token holders may bear that firm’s bankruptcy risk and hold no shareholder rights.
- Before buying, read the offering documents: they decide whether you hold shares, a trust beneficial interest or only a contractual claim and what happens at death. Catch: securities law applies whatever the format, so registration or an exemption is still required.
- Tokens held over a year generally qualify for long-term capital-gain rates, 0% up to $49,450 of 2026 taxable income for single filers. Catch: broker reporting and the Form 1040 digital-asset question still apply, and tax follows the underlying entity’s structure.
MaterialsSEC v. W. J. Howey Co., 328 U.S. 293 (1946), free on law.cornell.eduThe SEC staff’s Statement on Tokenized Securities of 28 January 2026, free on sec.govLesson 9.2.2, on Delaware statutory trusts and tokenisation, and lesson 1.1.5, on legal title and beneficial ownership
Wonder
- If a token stands for a share of a building, whose name is on the title register for the building?
- Does putting a security on a blockchain change whether securities law applies to it?
- What happens to token holders if the company that issued the tokens fails?
Explore
- Tokenisation means representing rights in a real-world asset, such as real estate, government bonds or shares in a fund, as tokens on a blockchain. A land registry or bond register does not usually list token holders as owners. Instead, legal ownership of the asset generally sits with an entity, such as a special purpose vehicle (SPV), a fund or a trust, and the token records the holder’s interest in that entity or claim against it. The token is a record; the rights come from the law and the documents behind it. This lesson explains these structures in general terms and recommends no token, issuer or product.
- What a token holder actually has depends on the legal documents, not the token. Depending on the structure, the holder may own shares or units in an SPV or fund, hold a beneficial interest under a trust (lesson 1.1.5), or have only a contractual claim against the issuer, which can leave the holder an unsecured creditor if the issuer fails. In Delaware, for example, a statutory trust’s governing instrument may provide for ownership of beneficial interests to be recorded on a blockchain (lesson 9.2.2). The documents also decide whether a token transfer changes the official register, and what happens if a key is lost.
- In the US, many tokenised real-world assets are securities. Shares and fund interests are securities in their own right, and the Securities Act of 1933 also covers any ‘investment contract’. In SEC v. W. J. Howey Co. (1946), the Supreme Court held that an investment contract is a contract, transaction or scheme in which a person invests money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party. The Court added that it does not matter whether interests are evidenced by formal certificates or by nominal interests in physical assets.
- On 28 January 2026, three divisions of the SEC staff published a Statement on Tokenized Securities. It says that the format in which a security is issued, or whether its holders are recorded on-chain or off-chain, does not affect how the federal securities laws apply; for example, every offer and sale must still be registered unless an exemption applies. The staff described two broad categories: securities tokenised by or for their issuer, where the blockchain may form part of the official record of holders, and securities tokenised by third parties unaffiliated with the issuer. Staff statements express views, are not rules and can change.
- Third-party tokens raise particular questions. According to the staff statement, such a token may or may not represent an ownership interest in the underlying security or give its holder any rights as a holder of that security, and token holders may be exposed to risks of the third party, such as its bankruptcy. The staff identified custodial models, where the underlying security is held in custody and the token evidences an interest in it, and synthetic models, where the token is the third party’s own security giving only economic exposure. Similar questions arise for tokens linked to property or bonds.
- Other risks come from gaps between code and law. A smart contract may allow transfers the documents do not recognise, or block transfers the law requires, such as to an executor. The underlying asset usually sits with a custodian, and the protection of token holders if the issuer or custodian becomes insolvent depends on how the structure was set up and on local law. Tax treatment depends on the entity and on each holder’s own country. Legal work, custody and audits all cost money, borne somewhere in the arrangement, and costs vary widely. What a particular token conveys can only be learned from its offering documents.
Key facts
- In a tokenised real-world asset, legal ownership usually sits with an SPV, fund or trust, and the token records the holder’s interest in or claim against that entity.
- Depending on the documents, a token holder may be a shareholder or unitholder, a trust beneficiary, or only a contractual creditor of the issuer.
- In SEC v. W. J. Howey Co. (1946), an investment contract is an investment of money in a common enterprise with profits expected solely from the efforts of the promoter or a third party.
- The SEC staff’s Statement on Tokenized Securities (28 January 2026) says a security’s format, or whether holders are recorded on-chain or off-chain, does not affect application of the federal securities laws.
- The staff statement divides tokenised securities into those tokenised by or for the issuer and those tokenised by unaffiliated third parties, whose holders may bear the third party’s bankruptcy risk.
- Delaware law lets a statutory trust’s governing instrument provide for ownership of beneficial interests to be recorded on a blockchain.
Exercise nine, six, three, one
9CollectList up to 9 features of a tokenised real-world asset described in this lesson or a source you are reading (some sources give fewer), such as who holds legal title, what the token records, who issued it and what happens if the issuer fails.
6ClusterSort them into 6 categories: the underlying asset, the legal owner, the holder’s rights, securities law, third-party and custody risk, and gaps between code and law.
3DistillReduce the 6 categories to 3 groups: what is owned, who owns it in law, and what protects the token holder.
1CrystallizeWrite 1 sentence explaining, in your own words, why a token holder’s rights depend on legal documents rather than on the blockchain.
Fact check
Dates, figures and claims checked against the published sources listed below.