¶ 801
Overview
Scope of the chapter. This chapter examines the private law that governs securities, fund interests and claims to physical or financial assets when those interests are recorded on a distributed ledger. It begins with the structure of Article 8 of the Uniform Commercial Code, which distinguishes between securities held directly from the issuer and interests held indirectly through a securities intermediary. It then considers how an issuer may keep its register of holders on a ledger, how a lawyer decides whether a given token falls under Article 8 or under Article 12, and what an investor holds when tokens are credited to an account at an exchange or custodian that has agreed to treat them as financial assets. Later sections address the customer-protection rules of Part 5 of Article 8, tokenized investment funds and deposits, the tokenization of real estate, receivables and commodities through special-purpose vehicles, and the comparable regimes of Switzerland, the European Union, the United Kingdom and Luxembourg. The chapter closes with drafting guidance and a due-diligence checklist.
The limits of the chapter. The chapter concerns private-law holding: who owns the interest, how ownership passes, what a purchaser takes free of, and what an investor can recover when an intermediary fails. Whether a token is a security for purposes of the federal securities laws, and what registration, broker-dealer, exchange and transfer-agent obligations follow, is a separate question taken up in ch. 35. The two inquiries use the same word, "security," for different purposes. Article 8 says so expressly: "The characterization of a person, business, or transaction for purposes of this Article does not determine the characterization of the person, business, or transaction for purposes of any other law, regulation, or rule." U.C.C. § 8-102(d). A token can be a security under the Securities Act of 1933 and fall outside the Article 8 definition, and the reverse is also possible. See infra ¶ 830.06. Security interests in tokenized securities, including perfection by control and priority, are treated in ch. 7. The commercial-law rules for controllable electronic records under Article 12 are treated in ch. 6.
The central proposition. The SEC's staff and individual Commissioners have repeated one proposition since 2025. The same proposition holds for private law: recording a security on a blockchain does not change what the security is. In the words of one Commissioner, "As powerful as blockchain technology is, it does not have magical abilities to transform the nature of the underlying asset." Hester M. Peirce, Comm'r, SEC, Enchanting, but Not Magical: A Statement on the Tokenization of Securities (July 9, 2025). A share of a Delaware corporation remains a share, governed by the Delaware General Corporation Law and by Article 8, whether the corporation's stock ledger is kept on paper, in a conventional database or on a distributed ledger. What changes is the evidence of ownership and the mechanics of transfer, and those changes can carry legal consequences of their own. This chapter is concerned with identifying those consequences.
Two questions in every tokenization. Every tokenized security or real-world asset presents two questions. The first is what the token represents: the security itself, a security entitlement against an intermediary, a beneficial interest in a trust or vehicle, a contractual claim against a sponsor, or nothing enforceable at all. The second is which body of law governs the transfer of that representation. The answer to the second question depends on the answer to the first. If the token is the record of an uncertificated security, the issuer's registration of transfer governs, and a transfer on the ledger that the issuer does not recognize may convey nothing. If the token evidences a security entitlement, the intermediary's books govern. If the token is itself a controllable electronic record, Article 12 governs. Figure 8.4 sets out the models in the form the SEC staff used in its January 2026 statement.
Terminology. This chapter uses tokenized security for any security, in the Article 8 sense or the federal sense, whose ownership is recorded or evidenced by a token on a distributed ledger. Issuer-sponsored tokenization means tokenization by the issuer or its agent; third-party tokenization means tokenization by a person unaffiliated with the issuer. Real-world asset (RWA) is the industry term for a token that represents an interest in an asset existing off the ledger, such as land, a receivable or a bar of gold. The terms direct holding and indirect holding follow Article 8: a direct holder's name appears on the issuer's register, while an indirect holder holds a security entitlement against a securities intermediary. The vocabulary of keys, wallets and control is defined in ch. 1, ¶ 180.