SEC Warning Puts Tokenized Securities and Alpaca Under the Microscope

Key Insights

• Tokenized securities remain subject to US securities laws, with the SEC making clear that blockchain use does not change legal ownership or compliance duties.
• Most tokenized stock products rely on third-party structures, where investors may not hold direct ownership and instead depend on intermediaries.
• Alpaca’s central role highlights concentration risk, showing how much on-chain stock trading still depends on a single off-chain broker.

Tokenized securities are often described as a cleaner, faster way to trade real-world assets on the blockchain. But new guidance from the US Securities and Exchange Commission brings the discussion back to basics.

The message is simple. Putting a security on a blockchain does not change what it is. The rules still apply, and the structure behind many tokenized stock products now looks more exposed than many assumed.

SEC Is Saying This About Tokenized Securities

In its joint staff statement, the SEC made one point clear. A tokenized security is still a security. Using blockchain technology does not change ownership rights, disclosure duties, or investor protections.

The SEC described tokenized securities as a form of recordkeeping. In simple terms, the blockchain can be used to track ownership, but it does not replace the legal structure behind a stock or bond.

If a product represents a security, it must follow securities law, regardless of how it is issued or traded.

This framing pushes back against the idea that on-chain assets sit outside traditional rules. The SEC is saying that technology changes the format, not the obligation.

Two Models With Very Different Levels of Risk

The SEC also split tokenized securities into two clear groups, highlighted by the earlier discussion.

The first group is issuer-sponsored tokenization. In this model, the company or issuer is directly involved. Ownership records connect to the issuer’s official books, and investors hold rights similar to traditional shareholders. These products follow established rules around disclosures and reporting.

The second group is third-party tokenization. Here, a separate platform creates tokens that track the value of a stock without being issued by the company itself. In many cases, holders may not own the actual shares. Instead, they rely on contracts set up by the platform.

The SEC warned that these third-party products can carry additional risks. Some may be treated like security-based swaps rather than direct ownership. That changes how they are regulated and what protections investors actually receive.

Most Tokenized Securities Sit at Risk Today

Most tokenized stock products currently fall into the second category. Platforms such as Ondo

Finance, Kraken’s xStocks, and Dinari do not issue shares themselves. Instead, they rely on third-party structures that mirror stock prices while holding shares through traditional brokers.

This design allowed tokenized stocks to launch quickly, but it also places distance between token holders and direct ownership. Investors depend on the platform, the broker, and the agreements connecting them.

The SEC’s statement puts attention on that gap. It does not shut these products down, but it makes clear they do not receive different treatment simply because they operate on a blockchain.

Alpaca Sits at the Center of the Market

Behind many tokenized stock platforms sits Alpaca, a regulated broker that executes trades and holds the underlying shares. Because few brokers are willing to sell shares to tokenization firms, Alpaca has become the main route for execution.

As a result, a large part of the tokenized securities market depends on one off-chain intermediary. If access tightens or relationships change, several platforms could feel the impact at the same time.

The SEC did not single out Alpaca by name. But its statement makes this reliance easier to see. Tokenized securities may look decentralized on the surface, but much of the risk still sits inside traditional market plumbing.

The SEC’s position does not end with tokenized securities. It changes expectations.

Issuer-backed models now appear clearer from a legal standpoint, but they are slower and harder to build. Third-party models can still operate, but investors need to understand that they come with extra layers of structure and dependency (risks).

For builders, progress likely means closer coordination with issuers or regulators. For investors, the takeaway is clear.

Tokenized securities are not separate from traditional markets. They carry familiar risks, along with new ones tied to custody, contracts, and intermediaries.