Security tokenization can provide the economic benefits of share ownership without making token holders shareholders of record. T7X Equities is advocating a different approach, known as native issuance, in which a token is included in a security's authorized issuance from the outset and a transfer agent maintains the official ownership record.

Most tokenized stocks are not natively issued on a blockchain. They begin as conventional shares held by a broker or custodian and are later represented by separately issued tokens. In practice, this has largely replicated traditional securities structures on-chain rather than redesigning them from the ground up.

“The token may track the value of the underlying shares,” Ivan Kan, chief marketing officer of tokenization platform T7X, wrote in an essay shared with Decrypt, “but the token holder is not necessarily the shareholder of record.” A holder may own the price exposure without owning the underlying share itself. The distinction matters because shareholder-of-record status is what connects an owner to dividends, voting rights, and the official ownership record that regulators expect a registered transfer agent to maintain.

In a January statement, the SEC outlined three tokenization models: issuers tokenizing their own shares; third parties issuing tokens backed by shares held in custody; and firms issuing separate securities that provide synthetic exposure to an underlying asset.

Writing for the Forbes Technology Council in August, Kan cited Pantera Capital research covering 593 tokenized assets across 11 asset classes. The research found that 77.6% were what Pantera described as “digital wrappers around traditional infrastructure,” rather than securities in their own right.

“What does the token legally represent, and who authorized it?” Kan asks. T7X Equities' proposed alternative is native issuance. The company argues that a security exists because an issuer authorizes it, and that “blockchain does not eliminate those corporate and securities-law requirements.”

One token, one security, one issuance

Under the native-issuance model, the token forms part of the authorized issuance from the beginning. The process runs from issuer authorization through investor verification and transfer-agent validation, with the goal of creating “one security, one authorized issuance, one ownership record, one digital representation.”

Corporate law in Wyoming, Delaware, and Nevada recognizes a “certificate token,” allowing corporate shares to be represented electronically on a blockchain. T7X is incorporated in Wyoming and structures its issuances to operate within that framework. The blockchain consequently becomes “part of the infrastructure supporting the capitalization table,” rather than merely another instrument layered on top of an existing security.

The transfer agent maintains the official master securityholder file, while the blockchain records transactions. The legal ownership record therefore remains in the location expected by regulators.

For T7X's administered offerings, the transfer agent is T7X Equities. Transfer agents register with the SEC and maintain the authoritative record of who owns a security, processing transfers and keeping the master file. That places T7X Equities within the model it is promoting as well as behind the technology.

The company's first example is Tranquil Healthcare Fund I, a Tier 2 Regulation A+ offering of up to $75 million that the SEC qualified on June 29. T7X Equities issues tokens representing the fund's shares on Trusted Smart Chain and delivers them to investors' wallets, according to the company. A T7X announcement also described the company's support for the offering.

“There's a registered, SEC-regulated gatekeeper that determines who owns which security at any point in time,” T7X Chief Executive Pablo Penaloza said at Consensus in Miami earlier this year. “As long as you have a transfer agent involved, there is no way that securities can disappear without trace.”

The RWA+ framework

Kan calls the broader category “RWA+.” The term does not refer to a single rule, he argues, but to the requirement that “compliance and oversight are real.” He identifies three elements: native issuance, in which the token is part of the security's authorized issuance; integrated compliance, in which investor verification and disclosure are built into the instrument from the start; and legally enforceable ownership, in which the token holder appears on the transfer agent's record.

“A receipt is not an asset,” Kan wrote in Forbes. “It is a claim wrapped around one, dependent on an intermediary to honor it.” He also said synthetic “PreStocks” linked to SpaceX and Anthropic were never valid claims because neither company authorized the transfers. When structured properly, he argues, “ownership, compliance and settlement are the same fact.”

Whether a token carries the rights of a share is also becoming a dividing line in other market and regulatory initiatives. The SEC's new innovation exemption covers tokenized stocks that carry dividends and voting rights while excluding price-tracking synthetics. Nasdaq's arrangement with Kraken similarly depends on tokens conveying the same voting rights as ordinary shares, with the service slated to launch in 2027, according to Decrypt's report.

Regulation A and the liquidity question

Penaloza identifies companies raising less than $100 million—typically between $50 million and $75 million—as the near-term opportunity for Regulation A offerings. That range sits within Tier 2, which allows issuers to raise up to $75 million in a 12-month period—the structure the SEC used to qualify Tranquil Healthcare Fund I.

Kan argues that Regulation A+ fits the native-issuance model because it permits public solicitation and participation by non-accredited investors while requiring audited financial statements and continuing disclosure. Most tokenized assets instead rely on Regulation D placements, which are limited to accredited investors.

Regulation A can also provide access to retirement accounts, Penaloza said. Although unregistered securities can legally be held in a self-directed IRA, many brokers will not custody them, and most investment advisers steer clients away from them. “The money is sitting in the older generations' retirement accounts,” he said, adding that registration attached to an investment can make an individual retiree more comfortable holding it.

For investors who already hold securities issued under Regulation A or Regulation D, the potential benefit is an exit route. Shareholders in such placements typically receive a paper certificate and then “have to go around and find somebody who will want to give them liquidity,” Penaloza said.

A native digital security could trade on a secondary market and settle from wallet to wallet without an intermediary custodian, he said. Providing a trading venue for Regulation A and Regulation D holdings would, in his view, “incredibly speed up not only the rate of capital formation, but also the liquidity in the market.”

Penaloza also predicted that within five years, “the total tokenized portfolio will far surpass the existing market capitalization of what is currently trading on all the public markets.”