Three tokenization structures
The SEC staff's 2026 tokenized-securities statement describes three broad models:
| Model | What the token represents | Key risk |
|---|---|---|
| Issuer-sponsored | The issuer or its agent integrates the chain into the authoritative securityholder record | Transfer controls, identity and class-of-share rules |
| Third-party custodial | A direct or indirect entitlement to securities held by a custodian | Custodian, third-party insolvency, record and redemption risk |
| Third-party synthetic | The third party's own security or contract tracks a referenced share | It may confer no ownership or shareholder right in the underlying company |
The eight-step stock-tokenization workflow
- Design the legal product: define whether it is native equity, a custodial entitlement or a separate linked instrument.
- Choose the authoritative record: specify who maintains the official holder file and how an onchain transfer updates it.
- Onboard participants: complete identity, anti-money-laundering, jurisdiction and investor-status checks; wallets may be allowlisted.
- Source the shares: the issuer, market maker or client holds the shares with a supported broker and transfers them to designated custody.
- Request issuance: the broker or custodian confirms settlement while the issuer validates ticker, quantity, chain and destination wallet.
- Mint onchain: the contract issues the authorized quantity to an eligible wallet and records supply and transaction data.
- Reconcile continuously: token supply, custody and holder records are matched; dividends, splits, halts and delistings follow the terms.
- Redeem and burn: tokens go to the designated redemption address, are burned or locked, and shares or cash are returned under the product rules.
What stays onchain and offchain?
A public chain can show a contract, wallet, balance, transfer and token supply. Identity, custody, tax status and jurisdiction usually remain offchain. A transaction hash proves a token transfer occurred; it does not by itself prove that sufficient shares sit in custody. Issuer documents, custodian identity, reserve verification and redemption rules still matter.
How do dividends and splits work?
Products may distribute cash or stablecoins, reinvest dividends and adjust a per-token multiplier, or rebase wallet balances. Splits, mergers and delistings also require product-specific rules. Different mechanisms may produce different tax outcomes.
Why not deploy a wrapper yourself?
Anyone can technically mint a token named AAPL. Without authorized issuance, custody, enforceable rights and redemption, it is only a same-name token. Raising money while claiming share backing can also create securities, fraud and trademark exposure.
Next: when a brokerage share can be converted to a token and the SEC pilot's limits.