When a platform offers a digital token linked to a listed company, the familiar name and matching price do not tell the investor what they own. The token itself is the blockchain-recorded instrument held in a wallet, while the underlying legal wrapper decides whether the holder has an ownership interest in the shares, an indirect interest through an intermediary, or only a separate stock-linked claim against another issuer.
Revaz (Rezo) Shmertz, co-founder and Managing Partner of digital asset investment firm BR Capital and founder of Web3 research initiative Beyond Research Labs LLC (BR Labs), applies over 20 years of financial markets experience to cut through this market ambiguity. He describes an asset wrapper as a receipt pointing to an asset held elsewhere, under another set of rules. In Shmertz’s view, such arrangements are useful when their legal nature is accurately and transparently described, so that they can be clearly understood. But the danger arises when a wrapper is presented to the market as the underlying asset itself. When structural realities are obscured, investors are left exposed to counterparty risks they were never informed about. These differences explain why tokens linked to similar assets can give investors very different rights.
Issuance Architecture: Who Issued the Underlying Security?
In January 2026, the U.S. Securities and Exchange Commission (SEC) distinguished securities tokenized by or on behalf of their issuers from arrangements created by unaffiliated third parties. The staff statement discusses both tokenized security entitlements, representing indirect interests in securities, and synthetic exposure through separately issued instruments. It is a staff statement, not a new rule or a Commission-approved framework. Its categories describe a U.S. regulatory context. The legal treatment of any particular holding depends on the law and documents governing it.
Under the issuer-sponsored model described by SEC staff, a company or its agent can integrate blockchain records into its official shareholder register, so a legally effective token transfer also changes ownership of the shares. The statement also describes an arrangement in which the official register remains off-chain: a token transfer notifies the company or its agent to update that register, while the token itself conveys no shareholder rights. In both cases, the shares and their governing legal terms establish the investor’s rights; the token’s role is to represent or help transfer the holding. Different share classes can still carry different rights.
These distinctions help clarify two concepts that are easily confused: what security has been issued, and how an investor holds it. A share in a fund is not the same holding as shares in the companies in its portfolio. Likewise, holding a security through an intermediary is different from buying an intermediary’s own instrument that tracks that security. The presence of a custodian in both arrangements does not make them equivalent.
Where an instrument references another issuer’s security, its description needs to identify both entities and their different roles. A company whose share price determines a note’s payoff is not necessarily the company responsible for paying the noteholder. That difference becomes consequential if a payment is disputed or the note issuer cannot perform, even when the referenced company continues operating normally.
A Tokenized Fund Share Remains a Fund Share
When the holding is a mutual fund share, the investor has an interest in a pooled portfolio and the gains and losses it generates. That is not the same purchase as acquiring a particular portfolio security in an individual account, nor does every token linked to a fund necessarily represent a fund share. In a government money market fund, the shareholder holds the fund interest rather than a personally selected Treasury bill.
Pooling assets under a defined investment mandate changes what the investor is evaluating. Someone seeking a specific bond’s maturity and cash flows is assessing something different from someone seeking a redeemable share in a managed portfolio. For the fund investor, the portfolio mandate, expenses and redemption arrangements form part of the investment, even if blockchain records make the share easier to hold or transfer.
A share in a fund that holds government bonds gives the investor a fund interest, while a note issued by another entity and secured by government bonds creates a debt claim under that note’s terms. Identifying the securities in the portfolio or collateral pool does not, by itself, identify what the investor has purchased.
Intermediary Holdings and the Mechanics of Beneficial Rights
Traditional securities markets already distinguish registered ownership from beneficial ownership. In the United States, securities held in “street name” are registered on the issuer’s books in an intermediary’s name, while the broker maintains records identifying the investor as the beneficial owner. The broker also handles associated payments and the delivery of shareholder communications.
It would therefore be misleading to divide tokenized products into “real ownership” whenever an investor’s name appears directly on an issuer’s register and “just an IOU” whenever an intermediary is involved. Indirect ownership has a place in conventional markets, and an intermediary-held interest should be assessed on its actual legal terms.
For a tokenized holding, the important question is what the intermediary records for the investor. A security entitlement can represent an indirect interest in the underlying shares, and a custodial receipt can evidence that interest without making its holder the registered shareholder. A separately issued stock-linked instrument may instead give the holder rights under a different security.
Asset Collateralization vs. Direct Shareholder Equity
In a hypothetical stock-linked note secured by shares, the collateral supports the note issuer’s payment obligation. It does not, merely by being present, turn the noteholder into a shareholder of the referenced company. The holder’s entitlement to payments comes from the note, while any rights over collateral depend on the security arrangements. The distinction between secured lending and share ownership is established in conventional finance as well.
Assessing the collateral means following what happens if the issuer cannot pay: which assets secure the obligation, who can enforce the claim and how proceeds would reach holders. The answer requires the relevant documents and legal framework. A statement that assets have been set aside does not establish the investor’s priority over other claimants or the amount recoverable after a default.
A payment formula can reference a company’s dividends without making the recipient a shareholder of that company. Whether a holder receives cash, another asset or an adjustment under a contractual formula must be established from the instrument’s terms. As Revaz Shmertz explains, price exposure and collateral cannot substitute for the particular shareholder rights an investor is trying to identify.
Owning a Linked Security is Different from Owning the Referenced Shares
Conventional structured notes can calculate payments by reference to a stock or index while remaining obligations of the note issuer. Their payment formulas may differ from simply holding the referenced asset, and the investor remains exposed to the issuer’s ability to pay. The investor owns a security, but that security is the note rather than the shares used to calculate its return.
For a tokenized product with a contractual payoff, an assessment therefore needs to follow the payment terms rather than infer them from the name of the referenced asset. A promise to deliver an amount linked to a share price is not the same promise as delivering the share. Whether that distinction matters depends on the investor’s purpose, but it cannot be removed by choosing a more convenient settlement technology.
For example, a note might calculate its payment using a share’s price on a specified date and settle that payment in cash. Holding it would not give the investor the same position as holding the share through that date, particularly if the formula excludes distributions or limits participation in a price increase. According to Revaz Shmertz, those are terms to examine, not assumptions to make about every linked instrument.
Token Sales and Redemptions Are Different Transactions
Selling an instrument to another investor depends on finding a buyer, whereas redemption exchanges the holding for the cash or assets due under its redemption terms, through the issuer or its appointed agent. A security’s ability to move between wallets does not establish that either route is available on demand.
For U.S. mutual funds, a redemption is generally priced at the next net asset value calculated after receipt of the order, less applicable fees. As per the SEC, pricing the redemption and paying its proceeds are separate steps; the pricing rule does not promise immediate cash.
Consider an instrument whose permitted holders can transfer it outside business hours, but whose issuer processes cash redemptions only during specified windows. A weekend transfer would change who holds the instrument without making the issuer’s cash available that weekend. The holder would also need to establish whether they can submit a redemption request directly or must go through an eligible intermediary. If redemption is unavailable when they need to exit, a sale would still require a permitted buyer willing to pay an acceptable price. Transfer permission, access to redemption and payment timing each affect whether the holder can obtain cash when needed.
If a holder keeps a tokenized note in a personal wallet while pledged securities remain with a custodian, control of the token does not, by itself, give that holder authority to instruct the custodian or obtain the collateral. As Revaz Shmertz emphasizes, those rights depend on the note’s terms, the custody and security arrangements, and applicable law. Safeguarding the wallet cannot establish them.
What Blockchain Can Add without Changing the Investment
Revaz Shmertz’s view of tokenization’s potential extends beyond moving existing instruments onto a blockchain. He wants assets that can be used more openly across decentralized finance (DeFi), rather than remaining subject to access restrictions that limit how they can be combined with other financial tools. Schmertz also recognizes that neutral blockchain infrastructure permits issuers to choose restricted designs.
For an application accepting a tokenized security as collateral, the instrument’s rights remain relevant to how that application operates. A fund share with a defined redemption process presents different questions from a note payable at maturity, even if both can be transferred through the same network. Assessing whether the application can obtain cash when needed requires understanding the asset it holds, not only the software that moves it.
Before comparing two tokenized investments, an investor should be able to describe each in an ordinary sentence: what instrument is being acquired, from whom, and what right can be exercised as a result. If one answer is a fund share and the other is a separately issued stock-linked note, the comparison has already become more informative than their shared use of a blockchain. The technology can change how an investment is held and used; the investor still needs to know which investment they have bought.
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