Partner, Guy Ben-Ami, Co-Chair of Israeli Cross Border Practice and Chair of Crypto, Digital Assets, and Blockchain writes for NISHLIS about Tokenization’s New Rulebook.
Israeli clients should not read the latest US moves on tokenization as just another crypto debate. They are better understood as an early attempt by a large financial system to move assets, ownership records, and parts of market activity onto digital rails.
US regulators are also becoming more organized. Instead of treating each new product as a one-off, they are starting to sort digital assets into clearer categories, explain when older rules still control, and adapt safety rules to digital markets. For Israel, the lesson is simple: success will not come from adding a token label to an asset. It will come from building systems that protect the buyer’s rights, satisfy regulators, and work reliably in the real world. In short, the US is treating tokenization less as a speculative craze and more as a practical redesign of financial infrastructure.
Recent US steps mostly move in the same direction. US securities regulators have made clear that turning a share or bond into a digital instrument does not take it outside the securities rulebook, although the design of the token can change what the buyer actually holds. Banking regulators have taken a similar approach: a digital version may be treated like the traditional asset only if it gives the holder the same rights. At the same time, the SEC and CFTC are working more closely together on definitions, oversight, and information. sharing, and enforcement, including through Project Crypto and their new memorandum of understanding. The CFTC has also started explaining how some digital assets, including certain stablecoins and tokenized collateral, may fit into derivatives markets under specific conditions.
From crypto trend to financial plumbing
For Israeli companies, the main point is that tokenization is really about the plumbing of finance in the capital markets. The big questions are practical: who owns the asset, how that ownership is recorded, whether it can back a loan, what value regulators give it, whether it can be used to settle trades, and which regulator oversees it. That is far more useful than simply asking whether the technology is innovative. In the US, the response is increasingly coming through formal rules, special permissions, staff guidance, and public Q&As that try to fit new technology into normal market safeguards.
That is also why the US debate now involves far more than crypto startups and securities lawyers. It also involves bank regulators, clearing bodies, transfer agents, brokers, futures firms, and market infrastructure providers. Recent moves by the Depository Trust Company, Nasdaq, and the New York Stock Exchange suggest that tokenization is moving toward the financial mainstream. International standard-setters have also entered the picture, showing that this is no longer a niche US issue. For Israelis, that is a strong sign that tokenization is becoming a serious finance topic, not just an experiment in innovation labs.
Digital packaging does not change the asset
One simple idea sits at the center of recent US policy: turning a security into a digital token does not change its basic legal nature. In the view of US securities regulators, if something is a security before tokenization, it is still a security afterward. But different designs can give buyers different rights, so not every tokenized product should be treated as the same thing. That is why regulators spend so much time separating one model from another.
In some models, the company that issued the original asset is also behind the digital version. In others, another business creates a token linked to an existing asset. That distinction matters. Sometimes the buyer may truly own a digital version of the underlying asset, and sometimes the buyer may only have an indirect claim or price exposure. Regulators have also warned that these design choices can affect ownership, transfer rights, and how much real control the holder has under US law. For Israelis, the practical question is not simply whether an asset can be tokenized. It is whether the person buying the token truly owns something enforceable, and what happens if there is a dispute, a failure, or an insolvency.
This matters because two digital products can look similar on a screen while giving buyers very different rights. One token may represent a real legal interest in an existing security, while another may only mimic the economics of that security. Recent US policy pushes the market to focus on substance rather than labels. That is a lesson Israeli entities would be wise to absorb early.
Banks will focus on legal details, not the marketing
Recent US banking guidance shows why banks will not treat every digital asset the same way. Banks may be able to treat some tokenized securities much like traditional ones for capital purposes, but only when the digital version gives the holder the same legal rights as the original asset. That leaves room for banks to participate in tokenized markets, while still denying equal treatment where the digital structure changes the substance of the asset. In short, US regulators are open to technology, but they are not willing to ignore legal differences.
The same guidance also says that equal treatment on paper does not remove ordinary risk controls. If a bank wants to rely on a tokenized asset as collateral, it still has to make sure its claim is valid, senior enough, saleable if needed, and enforceable in the relevant jurisdictions. Regulators also expect a careful written legal analysis before a bank relies on tokenized collateral. For Israelis, the message is simple: digital tools may make finance faster, but they do not erase the need for strong legal foundations when money is at risk.
That focus on safety is likely to remain central in the years ahead. Faster trading and round-the-clock markets may sound attractive, but supervisors will keep asking the harder questions about enforceability, credit risk, and operational strength. The winners are likely to be the institutions that can show their digital products still behave like dependable financial instruments when markets are under stress. That is the mindset Israeli clients will need to adopt if they want to create tokenized products that can work across borders.
Stablecoins may become the money used in digital markets
Another important lesson is that tokenization is not just about the asset itself. It is also about the form of money used to pay for trades, settle them, and support margin requirements in digital markets. That is why recent US guidance on payment stablecoins matters beyond the crypto world. US regulators are starting to treat some stablecoins less as speculative instruments and more as tools that may help digital markets function.
For example, the SEC staff allowed broker-dealers to treat certain qualifying payment stablecoins as assets that can usually be sold quickly and to apply only a modest discount when measuring capital.
Commissioner Peirce also described such stablecoins as useful for moving money across blockchain-based systems, especially when the reserves behind them are strong.
The CFTC has taken a similar, though still cautious, approach in parts of the derivatives market, allowing some digital assets to count for margin purposes subject to limits, reporting duties, and operational safeguards. Even there, regulators remain more comfortable when the tokenized version behaves like the underlying asset in both legal rights and economic effect.
For Israel, the lesson is not that every project should rush to use stablecoins. It is that no serious digital market can work without a reliable form of digital cash. If tokenized assets are meant to trade and settle automatically, the market will need payment tools that satisfy rules on reserves, redemption, disclosure, and safety. Recent US developments suggest that regulated stablecoins could play that role. Israelis thinking seriously about digital finance should therefore focus not only on tokenized assets, but also on the money layer that makes those assets usable.
Some compliance checks may move into the software itself
One of the more interesting US ideas is that some compliance requirements may be built into the asset and the platform from the start, instead of being handled only afterward through manual checks. In recent public remarks, Chair Atkins pointed to examples such as resale limits written directly into the code of tokenized securities. US commentary has also highlighted privacy protecting tools, including zero-knowledge proofs, that can confirm a person meets certain rules without exposing all of that person’s private data. The broad point is that compliance may become part of the design, not just part of the paperwork.
That idea should resonate in Israel, where strong products often emerge when lawyers, technologists, and operations teams work together early. Recent US thinking encourages firms to build monitoring, eligibility checks, transfer controls, and reviewable records into their systems from the outset. This is not a loose or deregulatory approach. It is an attempt to enforce clear rules using tools that fit digital systems better. For Israel, that means one of the smartest competitive advantages may be to build products that make compliance easier to verify, not harder.
This also helps explain why regulators may be more willing to allow experimentation than before. If a firm can show that key rules are built into its system, that transfers can be limited appropriately, and that regulators can review what happened, it has a stronger case for special relief or pilot treatment. That does not remove risk, but it can narrow the gap between innovation and trust. Israeli businesses should take that as a practical lesson: design the controls early, and make them visible.
US regulators are starting to work together more closely
Another development Israeli clients should watch is the growing coordination between US regulators themselves. The new SEC-CFTC memorandum of understanding is meant to help senior officials consult earlier, share information, train together, and cooperate on questions that touch both agencies. Its priority areas include product definitions, clearing and collateral, crypto assets, firms overseen by both agencies, simpler reporting, and coordinated examinations and enforcement. That matters because tokenized finance often sits in the gray areas between older regulatory silos.
For Israeli firms with US business, this means that relying on gaps between regulators is becoming a weaker strategy. If an activity touches both securities and commodities rules, or if a business falls under more than one registration regime, the agencies are signaling that they plan to coordinate earlier and more closely. The practical takeaway is that firms subject to more than one regulator should expect more information sharing and, in some cases, joint examinations. Israeli institutions dealing with US partners or US investors should therefore build governance and disclosure with combined regulatory scrutiny in mind.
This also carries a broader lesson for Israel. Tokenization does not fit neatly into one box, so it is hard to regulate well if securities, banking, payments, derivatives, and infrastructure are all treated separately. Recent US experience shows that the hardest problems appear where these systems overlap. Israeli policymakers and market participants should therefore think about joined up rules, not isolated pilots.
What Israeli clients should take from this
So what should you take from all this? First, any tokenization project should start with a basic legal question, not a marketing question. Does the digital version give the buyer the same real rights as the traditional asset, including ownership, transfer rights, and protection if something goes wrong? If not, it may still have value, but it should not be treated as a simple substitute for the original asset.
Second, think about the whole system, not just the token. A workable digital market needs ways to issue assets, record ownership, control transfers, accept collateral, move money, and give regulators visibility. Recent US moves matter because they show those pieces starting to connect. A project that focuses only on issuing the token may look impressive in a demonstration but still fail in a real regulated market.
Third, you should see compliance-friendly software as a serious strength, not a side feature. Digital systems can be built to screen users, limit resale, check eligibility, and confirm compliance while revealing less private information. Software does not replace the law, but it can make the law easier to apply consistently. For a country with Israel’s technical depth, that may be one of the clearest areas to build a real advantage.
Finally, you should approach these developments with both optimism and discipline. The opportunity is real, because tokenization is moving toward mainstream finance rather than remaining a niche crypto activity. But long-term adoption will depend on sound legal rights, credible safeguards, strong operations, and coordinated oversight. If Israel learns those lessons early, it will be better placed to participate in cross border digital markets as they grow.
Conclusion
The overall direction is becoming easier to see: 2026 may be remembered as the year tokenization started moving from theory and enforcement fights into practical market design.
The US agencies do not yet have a final framework, but they are building a much clearer language for thinking about these issues than the market had even a year ago. That language focuses on real legal rights, equal treatment only where it is justified, software based compliance, suitable digital payment tools, and closer coordination between regulators. For Israelis, that is a better way to think about the next stage of digital finance.
The real opportunity is not simply to put old assets into new digital wrappers. It is to build financial systems that are easier to automate, easier to connect, and still dependable in the eyes of regulators, counterparties, and courts. Recent US moves suggest that this balance can be achieved, but only by people willing to do the hard work on legal design, risk control, and coordination. If you want to be part of that next phase, the right approach is not to rush. It is to build carefully and credibly from the start.