The Tokenized Stock Market is Built on "Receipts"—A New Model Aims to Fix That

The vast majority of tokenized stocks trading across various digital asset platforms are not natively issued on a blockchain. Instead, they begin life as conventional, traditional shares sitting snugly with a traditional broker or custodian, only to be subsequently represented by digital tokens issued entirely separately by third parties. According to industry insiders, this means the broader market has largely replicated traditional, legacy securities structures directly on-chain rather than fundamentally rethinking them from the ground up to leverage the underlying technology’s true capabilities.

Writing in an essay shared with media outlets, Ivan Kan, the Chief Marketing Officer of tokenization platform T7X, noted that while a digital token may accurately track the prevailing market value of the underlying shares, the actual token holder is not necessarily recognized as the legal shareholder of record. While an investor might technically own the price movement and exposure of the asset, whether they actually own the underlying share itself remains an entirely different matter under corporate and securities law.

This structural distinction has drawn increasing regulatory attention. Backing up these observations, the U.S. Securities and Exchange Commission (SEC) explicitly laid out three distinct operational models for tokenized securities in January: issuers tokenizing their own shares directly, third-party entities issuing tokens against shares held securely in custody, and specialized firms issuing a separate, distinct security designed purely for synthetic market exposure.

Further compounding the issue, research highlighted by Kan in an August contribution to Forbes’ Technology Council—drawing on data from Pantera Capital covering some 593 tokenized assets across 11 distinct asset classes—revealed that a staggering 77.6% of these assets operated merely as what Pantera classified as "digital wrappers around traditional infrastructure" rather than functioning as genuine securities in their own right.

This creates a fundamental legal ambiguity that market participants are increasingly forced to confront. Questions regarding what a token actually and legally represents, as well as who authorized its creation in the first place, form the bedrock of an alternative model that platforms like T7X Equities are actively pursuing. Dubbed "native issuance," this approach posits that a security exists strictly because an authorized corporate issuer brings it into existence, and that the adoption of blockchain technology does not eliminate or bypass established corporate and securities-law requirements.

One token, one security, one issuance

Under the native issuance model, the digital token is incorporated as an official part of the authorized issuance right from the very beginning of its lifecycle. This process runs a continuous thread from initial issuer authorization through investor verification and finally to transfer-agent validation, with the overarching goal of achieving "one security, one authorized issuance, one ownership record, one digital representation."

Corporate law in states like Wyoming, Delaware, and Nevada explicitly recognizes what is known as a "certificate token," a legal mechanism allowing shares to be represented electronically on a blockchain ledger. Capitalizing on this legal framework, T7X is incorporated in Wyoming and structures its specific issuances to operate seamlessly within these established bounds. Consequently, the blockchain functions directly as an integral part of the infrastructure supporting the corporate capitalization table, rather than operating as just another arbitrary financial instrument layered precariously on top of legacy systems.

Within this architecture, the transfer agent maintains the official master securityholder file, while the blockchain simultaneously records every transaction in real-time. Crucially, the ultimate legal record of ownership remains securely positioned right where regulators expect to find it.

In T7X’s administrated offerings, that designated transfer agent is T7X Equities itself. SEC-registered transfer agents hold the authoritative record of who precisely owns a security at any given moment, processing transfers and maintaining the master file. This dual positioning places the company directly inside the very regulatory model it is actively advocating, as well as behind its implementation.

The firm’s inaugural execution of this model can be seen in the Tranquil Healthcare Fund I, a Tier 2 Regulation A+ offering seeking up to $75 million that received SEC qualification late last June. In this offering, T7X Equities issues tokens that directly represent its shares on the Trusted Smart Chain network, subsequently delivering them straight into the digital wallets of participating investors, according to corporate announcements.

Speaking at the Consensus conference in Miami earlier this year, T7X Chief Executive Pablo Penaloza emphasized the structural security of this approach. He pointed out that having a registered, SEC-regulated gatekeeper determine ownership at any point in time ensures accountability, noting that as long as a qualified transfer agent is involved in the transaction lifecycle, securities cannot simply disappear without a trace.

RWA+

To describe this comprehensive approach, Kan has coined the broader category "RWA+." The plus sign does not point to any single arbitrary rule, he argues, but rather encapsulates the strict requirement that compliance and oversight must be real and substantive. This framework rests firmly on three foundational elements: native issuance that creates the token as an intrinsic part of the security’s authorized issuance; integrated compliance that bakes investor verification and mandatory disclosures directly into the instrument from its inception rather than treating them as an afterthought; and legally enforceable ownership that explicitly places the token holder directly on the official transfer agent’s record.

Elaborating on this distinction in his Forbes writing, Kan emphasized that a digital receipt is fundamentally not an asset in its own right. Instead, it is merely a financial claim wrapped around an asset, leaving it entirely dependent on an intermediary to honor it. Pointing to synthetic "PreStocks" tied to high-profile private companies like SpaceX and Anthropic, he noted that such instruments were never valid legal claims because neither underlying company authorized the transfers. When executed properly, Kan argues, ownership, compliance, and settlement must essentially represent the exact same factual reality.

This debate over whether a token genuinely carries the legal rights of an ordinary share is rapidly becoming the defining dividing line across the wider digital asset landscape. For instance, the SEC’s recent innovation exemption specifically covers tokenized stocks that carry traditional shareholder dividends and voting rights while systematically excluding price-tracking synthetics. Similarly, a high-profile partnership between Nasdaq and Kraken centers on tokens that convey the exact same voting rights found in ordinary, traditional shares.

Looking at the near-term commercial landscape, Penaloza identifies the primary market opportunity among companies seeking to raise under $100 million, typically falling within a sweet spot of $50 million to $75 million executed through Regulation A offerings.

Regulation A+, Kan contends, is uniquely suited for this native model because it permits public solicitation and participation by non-accredited retail investors while simultaneously demanding audited financial statements and ongoing disclosure compliance. By contrast, the vast majority of existing tokenized assets rely heavily on Regulation D private placements, which are strictly limited to accredited investors. Regulation A also opens the vital door to retirement accounts, according to Penaloza. While unregistered securities can legally sit within a self-directed IRA, many traditional brokers refuse to hold them, and the vast majority of investment advisers actively steer their clients away from them. Pointing out that a massive pool of capital sits locked within the retirement accounts of older generations, Penaloza suggests that formal registration directly attached to the investment is precisely what makes an individual retiree comfortable holding the asset.

For investors who already hold these types of securities, the most immediate tangible benefit is an accessible exit strategy. Historically, shareholders participating in Reg A and Reg D placements receive a physical paper certificate and are subsequently left to navigate the difficult task of finding someone willing to provide liquidity. In contrast, a native digital security can trade fluidly on a secondary market, settling securely wallet-to-wallet without requiring an intermediary custodian standing in between the buyer and seller.

Providing Reg A and Reg D holdings with an efficient venue to trade would, Penaloza argued, dramatically accelerate both the rate of capital formation and overall market liquidity. Looking ahead, he predicts that within five years, the total portfolio value of tokenized assets will far surpass the existing market capitalization of what is currently trading across all traditional public equity markets.