From property to bonds and investment funds, asset tokenization is back in the spotlight in 2026. Presented as the link between traditional finance and blockchain, it is attracting growing interest. But what is the actual situation regarding its legal framework? Here is an overview of what has already been established and the questions that remain unanswered.
It’s an enticing promise: investing in a fractional share of a property, a bond or a fund in the form of a token, with a low entry threshold and the option to trade these assets on a secondary market. This trend is currently being driven by developments in the European regulatory framework and by the entry of financial institutions into this market.
However, the real question isn’t whether or not the technology is enticing, it is to know whether it is legally solid and fully operational. The answer remains nuanced: the framework exists, but it is primarily dependant on the legal qualification of the token.
MiCA doesn’t apply to all tokenization projects
A common misconception is that all tokenization projects fall within the scope of the European MiCA regulation.
In reality, MiCA primarily regulates utility crypto-assets, as well as certain e-money tokens and stablecoins.
However, when a token constitutes a financial instrument – such as a bond, a fund unit or a right to income – it is generally regarded as a security token. It is therefore subject to traditional financial law, in particular the MiFID II Directive and the regime applicable to financial securities.
This distinction is essential. An incorrect classification may result in the application of much stricter rules, particularly in relation to authorisations, prospectuses or regulated intermediaries.
The legal qualification of the token is crucial
Before launching any project, one question must be clearly answered: what exactly does the token represent?
Can it be equated with a property right, a claim, a debt, or even a shareholding in a company or a fund?
The answer determines the rights granted to investors, the applicable regulatory obligations and the organisation of the project.
The Autorité des marchés financiers (AMF, French Financial Markets Authority) specifically considers that certain arrangements providing access to future income linked to a property asset may be classified as debt securities. In such cases, the transaction falls fully within the scope of financial law.
The current framework does allow for the development of security tokens, provided that they comply with existing regulatory frameworks.
Notaries are still indispensable in France
Property tokenization is hampered by a specific feature of French law.
The transfer of ownership of a property always requires the involvement of a notary and the completion of land registration formalities. Currently, blockchain technology does not replace either the notarised deed or the procedures prescribed by law.
This is why the majority of projects do not tokenize buildings directly, but rather the shares in a company that owns those properties.
This distinction is important: the investor is acquiring a stake in a structure, rather than a share of property ownership in the legal sense.
As a result, the claim that blockchain technology now makes it possible to transfer property ownership directly should be treated with caution.
Intermediaries subject to regulatory obligations
The different parties involved in the issuance, holding or trading of tokens may be subject to various authorisation regimes, depending on the nature of the project.
This may apply both to crypto-asset service providers (CASPs) as defined by MiCA and to investment service providers subject to financial legislation.
In France, the transitional period allowing former PSANs to continue their activities without a MiCA authorisation ends on 1 July 2026. From now on, only authorised service providers or those holding a European passport may offer these services.
This means that choosing reliable regulated partners is a key consideration for project leaders.
The main risks for investors
There are several points to bear in mind when it comes to tokenization.
The first concerns liquidity. Even though the assets are represented in the form of tokens, their resale still depends on the existence of an actual market and buyers.
The second risk concerns legal classification. A transaction initially presented as a simple blockchain project may be reclassified as a financial instrument, with significant regulatory and tax consequences.
Finally, technical risks still exist: vulnerabilities in smart contracts, the loss of private keys, and exposure to foreign exchange risk when earnings are paid out in stablecoins.
A genuine innovation, yet still a work in progress
Today, the tokenization of shares in companies or funds holding assets is a reality within an increasingly structured regulatory framework.
In contrast, the direct tokenization of buildings, the promise of permanent liquidity in retail secondary markets, and the relationship between blockchain and property law remain evolving issues.
In practice, the most robust projects are those that rely on regulated financial structures rather than those that seek to circumvent them.
Key takeaways
- Security tokens generally fall under MiFID II and financial law, rather than MiCA.
- The legal classification of the token is the critical element of any project.
- In France, property ownership remains governed by the notarial system and the land registry.
- Intermediaries must have the appropriate authorisations, particularly since the end of the MiCA transition period.
- The main risks relate to liquidity, legal reclassification and technological aspects.
- The tokenization of units in investment vehicles is currently the most mature solution from a regulatory perspective.
Conclusion
Asset tokenization is increasingly establishing itself as a legitimate development in the financial sector, driven by an increasingly structured European regulatory framework and the involvement of institutional players.
However, its development depends on a robust legal framework. It is essential for investors to have a clear understanding of the rights attached to the token, the applicable legal regime and the intermediaries involved before making any investment.
The French version of this article was written based on the expertise of HASHTAG avocats.
