Nasdaq Warns that “Tokenization” Masks Key Regulatory Differences
Based on a recent survey which found that 52% of institutional participants anticipate utilizing tokenized collateral by the end of 2026, Nasdaq's Chief Economist underscored that the word "token" encompasses fundamentally different types of financial exposures and that investors and regulators need to understand that not all tokens carry the same rights, risks or legal standing.
Nasdaq's Chief Economist Phil Mackintosh warned that the key risk to investors and regulators is the failure to realize how different one "token" can be from another. He said that the term is a broad umbrella covering everything from meme coins to stock equivalents. He warned that the differences between token types carry real financial risk—factors like whether a token is redeemable for the underlying asset, how settlement works, and whether a special purpose vehicle's ("SPV's") credit risk is involved can significantly affect an investor's actual exposure. He said that knowing the type of token matters enormously for pricing, risk management, and legal protection.
He highlighted that the SEC tried to bring clarity through a token taxonomy, using the "Howey Test" to determine which tokens qualify as securities. But under the test, most crypto (like bitcoin or meme coins) does not qualify, since there's no "efforts of others"—a company or management team—driving returns. He distinguished three types of security tokens: native tokens (a stock recorded directly on a blockchain, with full shareholder rights); asset-backed tokens (analogous to ETFs or ADRs, where a fund holds underlying shares and issues tokens over them); and unbacked tokens (analogous to futures or swaps, where buyers and sellers hold economic exposure without owning the underlying asset). He said that each structure carries distinct risks, including arbitrage costs, credit exposure to SPVs, and valuation challenges for tokens on illiquid or private assets.
He argued that most tokenized structures aren't actually new. He said that despite the disruptive framing, asset-backed tokens mirror ETFs/ADRs, unbacked tokens mirror futures/swaps, and native tokens are essentially just stocks on a blockchain. He said the technology is new, but the underlying economics largely aren't.