US Asset Tokenization: Securities Classification and Offering

What Is Asset Tokenization

Asset tokenization is a process in which rights to a real-world asset are recorded on a blockchain in the form of digital tokens. Such tokens do not create a new asset class but represent existing legal or economic rights, such as ownership, a fund share, or a claim on a debt obligation.

In the U.S., tokenization covers a wide range of assets:

• shares in real estate or investment funds (REITs, private real estate);
• claims on debt instruments (bonds, private loans, loan portfolios);
• shares in private equity (private equity, venture capital);
• economic interests in structured financial products;
• rights to income from intellectual property (royalties, license fees);
• rights to commodities, precious metals, and other physical assets held in custody by a licensed custodian.

In practice, real estate projects, tokenized funds, debt obligations, and structured products are most commonly tokenized.

The legal link between the token and the underlying asset is established through contracts, corporate structures, and accounting mechanisms that operate outside the blockchain.

Features of tokenization in the U.S.

Tokens allow for increased liquidity of traditionally illiquid assets, automated settlements, and simplified auditing, but are strictly regulated by law. The key point is that RWA tokens in the U.S. are almost always considered securities.

Case law applies the Howey Test, which determines whether a token constitutes an investment contract. A token may be deemed a security and fall under SEC regulation if the following conditions are met simultaneously:

1. Investment of money. This can be any form of capital, such as cash, checks, or current cryptocurrencies.
2. A common enterprise. This means that the investor’s return is tied to the success of the entire enterprise, not just the success of their individual investment.
3. A reasonable expectation of profit. This means that investors invest in expectation of a financial return, rather than to use or consume what they purchase.
4. Profit derived from the efforts of others. This means that investors must rely on the efforts of a promoter or a third party to generate a profit.

If a token meets these criteria, the issuer must either register the offering with the SEC or rely on an available exemption, such as Regulation D, Regulation S, Regulation A or Regulation Crowdfunding, each of which governs marketing, investor access and resale differently.

Regulation D as the Primary Framework for U.S. Investors

Regulation D allows companies to raise capital without full registration with the SEC, provided that investor eligibility and disclosure requirements are met.

Rule 506(b) – Private Placement

The Rule 506(b) model is suitable for projects that raise funds without public advertising. A company may raise funds from an unlimited number of accredited investors and a limited number of qualified non-accredited investors, provided that they are given full information about the risks and structure of the transaction.

Rule 506(c) – Offering with Public Marketing

Rule 506(c) permits public marketing but requires the issuer to take reasonable steps to independently verify the accredited status of each investor. Self-certification alone is generally insufficient. The issuer must take reasonable steps to verify accredited status, for example by reviewing tax returns or bank statements, or by obtaining a written confirmation from a registered broker-dealer, registered investment adviser, licensed attorney or CPA. Under SEC staff no-action relief of March 12, 2025, minimum investment amounts of at least $200,000 for individuals and $1 million for entities, combined with written investor representations (including that the investment is not third-party financed) and no contrary knowledge, may also satisfy the verification requirement.

For asset tokenization, Regulation D is used in cases where the project targets U.S. investors, including funds, family offices, and institutional market participants.

Rule 144 Restrictions on Resale

Tokens issued under Regulation D are classified as restricted securities. They cannot be freely resold on the secondary market until the expiration of the lock-up period, which is governed by SEC Rule 144.

For most issuers that are not public companies, the minimum holding period is 12 months from the date of full payment for the tokens. Upon expiration of this period, an investor who is not an affiliate of the issuer may generally resell the tokens without further Rule 144 conditions; affiliates remain subject to additional conditions, including volume limits and manner-of-sale requirements.

In tokenized structures, compliance with the lock-up period is typically enforced technically—through smart contracts with programmed restrictions on the transfer of tokens until a specified date.

Blue Sky Laws: State-Level Regulation

In addition to federal legislation, tokenized securities are subject to the laws of individual states, known as Blue Sky Laws. Each state has the right to establish its own requirements for securities registration and disclosure.

When Regulation D is used, most states grant federal preemption—meaning offerings under Rule 506 are exempt from state-level registration. However, the issuer is required to file a notice with the regulator of each state where investors reside and pay the applicable fee. Failure to comply with this requirement may result in administrative penalties even if federal regulations are fully complied with.

Regulation S – Tokenization for International Investors

Regulation S allows tokens to be offered outside the U.S. without SEC registration, provided that the requirements regarding the absence of a targeted offering within the U.S. are met.

To comply with Regulation S, it is necessary to:

• exclude marketing directed at U.S. investors;
• ensure control over the geographic location of investors;
• implement restrictions on the resale of tokens in the U.S. for a specified period: typically 1 year for equity instruments and 40 days for debt instruments, applicable to Category 3 offerings, which cover most tokenized RWAs.

In practice, this is achieved through the use of:

• KYC procedures with residency verification;
• geographic access restrictions;
• smart contracts with programmable rules for token transfers.

This structure allows companies to raise international capital while remaining compliant with U.S. law.

Combined Reg D and Reg S Structures

Many projects use a hybrid model in which:

• U.S. investors participate through Regulation D;
• international investors participate via Regulation S.

This allows companies to reach a global audience while complying with U.S. legal requirements. This model requires precise coordination of legal documents, investor verification procedures, and technical restrictions at the token level.

Documentation Required for Tokenization in the U.S.

To comply with legal requirements, a set of legal documents is prepared, including:

• a legal opinion on the token’s status;
• a private placement memorandum;
• investor subscription agreements;
• risk disclosures and investor representations.

Form D, a notification to the SEC that the issuer is required to file no later than 15 calendar days after the first sale of tokens under Regulation D.

Such documentation confirms the legality of the structure, boosts investor confidence, and reduces the risk of claims from regulators.

Risks of Improperly Structured Tokenization

The absence of an appropriate legal structure may lead to:

• the offering being deemed an illegal securities offering;
• fines and orders from the SEC;
• restrictions on secondary trading of tokens;
• a loss of trust among institutional investors.

Therefore, tokenization projects in the U.S. require the involvement of specialists with experience interacting with financial regulators and a track record of structuring private placements.

Gofaizen & Sherle’s Approach to Asset Tokenization

Gofaizen & Sherle advises clients on asset tokenization in more than 50 jurisdictions and supports projects at all stages, from initial assessment to post-issuance compliance. The firm specializes in structuring regulated products and engaging with regulatory authorities in the areas of digital assets and capital markets.

Gofaizen & Sherle’s services include:

• legal analysis and structuring of tokenized products;
• developing offering structures under Regulation D and Regulation S;
• preparation of legal documentation and support for investor outreach;
• advising on secondary trading and post-issuance compliance.

Our attorneys support projects at every stage—from evaluation and structuring to token launch and engagement with regulators.

Tokenization as an Infrastructure Solution for Capital Markets

Today, tokenization is viewed not as an experimental technology, but as a means of modernizing financial infrastructure. It enables the automation of accounting, settlement, and compliance processes while maintaining alignment with existing legal frameworks and investor protection mechanisms.

Companies planning to tokenize assets in the U.S. must consider not only technical but also legal aspects, as the legal framework determines whether tokens will be recognized as a legitimate investment instrument.