Key Highlights
- Prometheum, HashKey Digital Asset Group, and Velocity Capital have outlined a distribution framework for tokenized U.S. equities that relies on the existing DTC custody system and Article 8 of the Uniform Commercial Code, rather than creating new registered ownership.
- Each token functions as a “digital twin” of a share already held at DTC, preserving SEC-registered broker-dealer protections, standard redemption processes, and corporate action flows through established market infrastructure.
- International distribution would be conducted through HashKey’s licensed exchanges, subject to local regulations, with a pilot launch contingent on definitive agreements, regulatory approvals, and DTCC’s tokenization service slated for October 2026.
Proposed Structure Leverages Existing Securities Law Framework
Prometheum co-CEO Aaron Kaplan detailed how international investors would hold, redeem, and receive legal protection for tokenized U.S. stocks under a proposed arrangement involving HashKey and Velocity Capital. The structure would operate through the indirect holding system established under Article 8 of the Uniform Commercial Code, rather than making each tokenholder the registered shareholder on a company’s official books.
Cede & Co., the nominee used by the Depository Trust Company (DTC), would remain the registered owner of the underlying shares. Kaplan emphasized that tokenization would not alter this arrangement, which is already used for nearly all publicly traded U.S. equities held through brokerage accounts. Within the planned structure, the participant connected to a registered blockchain wallet would hold the securities entitlement. Acting as a securities intermediary, the participant would then treat its customer as an entitlement holder under Article 8.
“The Token itself does not create or define the customer’s ownership interest,” Kaplan said.
According to Kaplan, the customer’s rights would instead derive from the participant’s duties under Article 8, the Securities and Exchange Commission’s Customer Protection Rule, and the Securities Investor Protection Act. Each protection would apply independently of the blockchain used to represent the position. This draws a distinction between appearing as the registered owner and holding a legally protected interest through an intermediary. Under the proposed system, an international customer’s name would not replace Cede & Co. on the issuer’s official shareholder record, but the customer would have an entitlement through the regulated custody chain.
Distinction from Synthetic and SPV Products
Kaplan contrasted the model with synthetic or special-purpose vehicle (SPV) structures, which place investors in a different legal position because an offshore entity may own the conventional shares while a customer holds only a contractual claim against that entity. In a synthetic product, the token can track the price of a listed stock without giving its holder rights in the underlying company. An SPV-backed product may hold real shares, but the tokenholder’s claim can run against the separate legal entity rather than through the established U.S. securities holding system.
Prometheum, HashKey Digital Asset Group, and Velocity Capital intend to use shares custodied at DTC as the assets behind the proposed tokens. The companies described each token as a digital twin of a conventional security rather than a synthetic instrument or an offshore wrapper. Kaplan said the planned model would preserve the legal protections attached to securities held through SEC-registered broker-dealers. Prometheum Capital is registered with the SEC and belongs to the Financial Industry Regulatory Authority (FINRA), while Velocity is an SEC-registered, FINRA-member broker-dealer with traditional securities clearing and execution permissions.
Regulatory Context and SEC Exemption
The ownership question has entered current U.S. policy. Under a five-year SEC exemption announced on Sep. 17, qualifying tokenized National Market System stocks must provide the same rights as their conventional counterparts, including applicable voting, dividend, and liquidation rights. Synthetic products offering only price exposure do not qualify under the order. The SEC framework also allows an issuer to object when an unaffiliated party seeks to offer a tokenized version of its shares, and the regulator can modify the temporary exemption while it considers permanent rules for onchain securities trading.
Prometheum’s arrangement concerns international distribution rather than an offer to U.S. investors. HashKey would provide access through eligible licensed exchanges in several jurisdictions, subject to local laws, licensing terms, and investor eligibility requirements.
Redemption and Corporate Actions Through Standard DTC Processes
For an investor seeking to exit the blockchain-based position, Kaplan said each token could be converted into a conventional share or sold for cash through the broker-dealer. Both routes would use DTC’s standard securities processes because the corresponding shares would already sit within its custody system.
“Each token is a digital twin of a share already held at DTC, and investors can convert the token position back into a conventional share or sell it for cash through the broker-dealer, using DTC’s standard processes,” Kaplan said.
Dividends, stock splits, and other corporate actions would also move through the same DTC channels used by the U.S. securities market, according to Kaplan. His comments did not set out separate procedures for voting or for processing corporate actions when a token trades outside regular U.S. exchange hours.
Investor Protections in Failure Scenarios
In the event of a broker-dealer failure, Kaplan said SEC Rule 15c3-3 would require customer securities to remain separate from the firm’s own property. Segregated shares could then be returned to customers rather than becoming part of the failed company’s estate. The Securities Investor Protection Act (SIPA) provides another layer of protection within the U.S. broker-dealer system, although the proposed international distribution chain would also involve HashKey exchanges operating under the rules of their respective jurisdictions. The binding memorandum does not itself establish the treatment of customer claims under every participating country’s insolvency law.
Broader Market Infrastructure Developments
Traditional market infrastructure has begun supporting other tokenized investment products. On Sep. 16, Ondo Finance subsidiary Oasis Pro Markets joined DTCC’s Fund/SERV, becoming the first tokenization platform admitted to a network that processes more than 85% of U.S. mutual fund transaction activity. Oasis Pro, like Prometheum Capital and Velocity, operates through U.S. securities registrations. Its Fund/SERV connection supports transaction processing and distribution, while the legal rights attached to each product still depend on its custody and ownership structure.
HashKey’s Distribution Role and Product Scope
Under the memorandum of understanding, HashKey would act as the international distributor through eligible exchanges within its licensed network. Prometheum Capital and Velocity would provide the custody, trade execution, and clearing services needed to connect the token positions with conventional securities held in the United States.
“Through this collaboration, eligible clients in multiple jurisdictions will have the opportunity to access tokenized U.S. equities supported by SEC-registered clearing infrastructure, subject to applicable laws and regulatory requirements,” HashKey CEO Xiao Feng said.
HashKey has already entered DTCC’s digital-assets work. Earlier in September, the company joined its industry group after DTC completed initial production transactions involving tokenized equities, exchange-traded funds, and Treasury products in July. Velocity CEO Roy Yan said the underlying shares would need to be executed, cleared, and held according to the same standards used in regulated U.S. equity markets. Velocity holds memberships with DTC, the National Securities Clearing Corporation, and the Options Clearing Corporation.
The proposed product list could include companies in the Russell 1000, which covers the 1,000 largest publicly traded U.S. companies by market value. ETFs tracking major indexes and U.S. Treasury bills, notes, and bonds could also qualify. DTC has said its tokenized assets will carry the same ownership rights, investor protections, and entitlements as securities held in conventional form. DTCC scheduled the full launch of its Tokenization Service for October 2026 after conducting limited production transactions in July, and the organization said DTC held more than $114 trillion in assets when it announced the program’s timetable.
Prometheum, HashKey, and Velocity are still selecting the securities and jurisdictions for the initial pilot, Kaplan said. A launch requires definitive agreements, regulatory approval, completed technical and operational integration, relevant licenses, and the availability of DTCC’s tokenization infrastructure.
Why This Matters
The proposed arrangement represents a significant step toward bridging traditional securities infrastructure with blockchain-based distribution for international investors. By anchoring tokenized equities in the existing DTC custody system and Article 8 entitlement framework, the model seeks to avoid the legal ambiguities associated with synthetic tokens or offshore SPV wrappers. This approach aligns with the SEC’s recent exemption requiring tokenized stocks to mirror conventional shareholder rights, and it leverages the regulatory standing of SEC-registered, FINRA-member broker-dealers. The involvement of HashKey—a licensed digital asset platform expanding into DTCC’s industry group—signals growing institutional convergence. However, the pilot’s success hinges on multiple contingencies: finalizing definitive agreements, securing regulatory clearances across jurisdictions, integrating with DTCC’s tokenization service (slated for full launch in October 2026), and resolving cross-border insolvency treatment for customers on HashKey exchanges. The initiative also underscores a broader trend where traditional market utilities like DTCC and Fund/SERV are actively onboarding tokenization platforms, suggesting that the plumbing for onchain securities may increasingly rely on established, regulated rails rather than parallel systems.
Frequently Asked Questions
What legal rights do holders of these tokenized U.S. stocks receive?
Token holders receive a securities entitlement under Article 8 of the Uniform Commercial Code, with protections from the SEC’s Customer Protection Rule (Rule 15c3-3) and the Securities Investor Protection Act (SIPA). They do not become registered shareholders on the issuer’s books; Cede & Co. remains the registered owner via DTC. The token itself does not create ownership—the legal interest flows from the intermediary’s duties.
How can an investor redeem or sell a tokenized share?
Investors can convert the token back into a conventional share or sell it for cash through the broker-dealer, using DTC’s standard securities processes. Because the underlying shares are already held in DTC custody, redemption follows existing market infrastructure without requiring bespoke blockchain settlement.
Is this offering available to U.S. investors?
No. The arrangement described in the memorandum of understanding concerns international distribution only. HashKey would provide access through eligible licensed exchanges in multiple jurisdictions, subject to local laws, licensing terms, and investor eligibility requirements. U.S. investors are not the target audience for this specific distribution channel.
