Your Company’s Stock Can Be Tokenized Without Your Involvement. What Does That Mean?
Understanding third-party tokenization, shareholder rights and the SEC’s Innovation Exemption
Imagine learning that shares of your publicly listed company may soon trade as blockchain-based tokens—even though your company did not initiate the project. Who created the tokens? Where are the underlying shares held? Will token holders receive dividends and voting rights? And what, if anything, should your company do?
These are no longer purely theoretical questions. On September 17, 2026, the U.S. Securities and Exchange Commission issued a temporary, conditional Innovation Exemption for certain trading in tokenized National Market System (“NMS”) stocks. The framework permits eligible tokenized stocks to trade through qualifying Tokenized Securities Venues (“TSVs”), subject to specific conditions, including a notice-and-objection process when an unaffiliated third party tokenizes an issuer’s stock.
A recent Latham & Watkins analysis highlights why public-company boards, general counsel and investor-relations teams should understand the framework before a notice arrives. The issue is not simply whether blockchain trading is attractive. It is whether shareholder rights, custody, ownership records and market oversight remain clear.
1. Can another firm tokenize your company’s stock?
Under the SEC’s conditional TSV exemption, third-party tokenization of eligible NMS stocks may occur without an issuer sponsoring the arrangement. A token is a digital representation of an interest in an underlying security; for the exemption, the holder must receive the same relevant economic and voting rights as the underlying stock. A token that merely tracks a share price is not the same thing.
Before a TSV offers a third-party-tokenized stock for trading under this exemption, it must provide written notice to the issuer. The issuer has 30 calendar days from receipt to object. A timely objection prevents that TSV from making the affected tokenized stock available under the exemption. An issuer’s silence is not an affirmative endorsement of the tokenizer or venue, even though the TSV may proceed after the applicable period if the other conditions are met.
This objection right is specific to the conditional TSV framework. It should not be confused with a universal issuer veto over ordinary secondary trading or every possible tokenization structure.
2. What does a token holder actually own?
The most important question is not what the token looks like on a screen. It is what enforceable rights the token represents. Investors should be able to understand who holds the underlying shares, how the tokens are backed, who may issue or redeem them, and what happens if records do not match.
Under a typical third-party arrangement, the token holder may be a beneficial owner rather than the shareholder of record on the issuer’s official register. That distinction matters for dividend delivery, proxy voting, shareholder communications, record dates and corporate actions. Tokenization changes the method of recording or transferring interests; it does not make these obligations disappear.
Public companies should ask how the arrangement passes through dividends and votes, how proxy materials reach token holders, and how the issuer’s transfer agent and other intermediaries reconcile records.
3. Who maintains the official ownership records?
A blockchain ledger can record token transfers, but that does not automatically make it the issuer’s official shareholder register. In conventional U.S. equity markets, shares may be held through intermediaries, including DTC participants, while the transfer agent maintains the issuer’s official securityholder records.
A tokenization provider, custodian, broker-dealer, clearing agency and transfer agent may perform different functions. A sound arrangement must identify each party’s responsibility and explain how the underlying shares, outstanding tokens and investor entitlements reconcile. The fact that an entity is registered in one regulatory capacity does not by itself authorize every other activity.
For an issuer, the practical question is simple: if a token moves between investors at midnight, who can demonstrate that the underlying security remains properly held and that the new investor receives the rights promised?
4. Is a Tokenized Securities Venue a new stock exchange?
A TSV is a distinct trading arrangement operating under the SEC’s temporary conditional exemption, not automatically a conventional national securities exchange. The exemption provides specified relief from the statutory exchange definition for qualifying venues and separate conditional relief for certain liquidity providers. It does not waive all other securities-law obligations or establish that every participant or tokenization provider is exempt from registration.
Another important distinction concerns market data. Under the current order, TSV transactions are published separately rather than reported through the traditional consolidated securities information processors. As a result, the trading volume visible in conventional market-data feeds may not capture all activity in a tokenized stock. Pricing, liquidity and surveillance therefore require careful attention.
Blockchain availability may also extend beyond regular U.S. exchange hours. Issuers should consider how trading halts, corporate announcements and investor communications work when a tokenized market operates on a different timetable.
5. What should public companies do now?
First, make sure notices can be received. The 30-day issuer-response period runs from receipt at the address specified in the applicable Exchange Act filing—not from the date a notice reaches the general counsel or board.
Second, establish a decision process before a notice arrives. Determine who reviews a TSV proposal, who can authorize a response, and what information the company needs about token backing, custody, voting, dividend rights, technology, market integrity and the parties’ regulatory status.
Third, involve the right people before making a decision. The company should consult its transfer agent, legal advisers, investor-relations team and relevant financial intermediaries to understand how the proposed tokenization could affect shareholder records, ownership rights and investor communications.
If the company decides not to object, that simply allows the proposed trading to proceed under the SEC's exemption, provided all other conditions are met. It does not mean the company endorses the trading platform, has entered into a partnership or has appointed the platform as an authorized service provider.
Finally, consider whether the company wants to explore issuer-led tokenization on its own terms. That is a different strategic choice from simply responding to a third-party TSV notice and entails its own legal, technical and commercial analysis.
6. Where Ohanae fits
Ohanae is developing regulated infrastructure for blockchain-native securities markets. Ohanae Securities LLC is a FINRA-member carrying, self-clearing broker-dealer with specified authorized activities involving crypto asset securities, while Ohanae, Inc. is an SEC-registered transfer agent. These functions are relevant to the broader questions of custody, settlement, investor records and shareholder protections.
Ohanae’s core focus is issuer-sponsored blockchain-native securities outside Regulation NMS. Separately, Ohanae is exploring a service for eligible tokenized NMS stocks, including potential operation under the SEC’s Innovation Exemption. That proposed NMS-stock service has not launched and remains subject to the applicable regulatory analysis, authorizations and operating conditions.
For issuers and investors, the central principle is the same in either market: technology should make securities ownership and trading more transparent and efficient without weakening the legal rights and operational protections on which confidence depends.
The bigger picture
Tokenization may change where and when securities trade. It does not change the need to answer foundational questions: What does the investor own? Who safeguards the underlying shares? Who maintains the authoritative records? And who is accountable when something goes wrong? For public companies, those are the questions worth asking before the first token is traded.
Sources and further reading
SEC, Innovation Exemption FAQ (October 20, 2026)
SEC, Innovation Exemption information
Educational information only; not legal or investment advice. SEC staff FAQs do not have independent legal force.