Who Owns the Tokens? Understanding Legal Protection in Tokenized Real Estate
Saher Khatib-Octoper 2025
Real estate tokenization promises something big:
to let you own part of a property from anywhere in the world, with just a few clicks.
But as the concept grows, one question keeps coming up — from investors, lawyers, and regulators alike:
“Who actually owns the property behind the tokens?”
This issue dives deep into the legal side of tokenized ownership — where your rights come from, how they’re protected, and what’s changing in the UAE and beyond.
The Promise of Digital Ownership
Tokenization sounds simple:
A property is divided into small fractions (tokens).
Each token represents a share of ownership or income.
Investors buy, trade, and earn from those tokens.
But while blockchain records who holds the token, the real question is whether that token is legally recognized as ownership of the underlying property.
This is where the legal structure matters more than the technology itself.
Two Main Legal Models Today
1. SPV (Company-Share Model)
Used by platforms like SmartCrowd or Stake.
The property is owned by a special company (SPV).
Investors buy shares in that SPV.
Each share corresponds to a fraction of ownership.
Pros:
✔ Easy to regulate and familiar to lawyers.
✔ Investors get real equity in a registered entity.
Cons:
❌ Ownership is indirect — you own shares in a company, not the land itself.
❌ Transferring shares can be slow or restricted.
2. Direct Tokenization (Asset-Backed Token Model)
Used by newer blockchain-native platforms.
The property’s title is digitally linked to tokens via a smart contract.
Each token represents direct ownership or a claim recorded on the blockchain.
Regulators like the Dubai Land Department (DLD) are now piloting ways to legally connect land records with digital ledgers.
Pros:
✔ Transparent and efficient.
✔ Easier to fractionalize and trade globally.
✔ Blockchain serves as a single, tamper-proof record of ownership.
Cons:
❌ Requires new legal frameworks and government support.
❌ Still in early stages — full property registries on blockchain are not yet standard.
The Role of Regulators
In tokenization, technology moves faster than the law, but the gap is closing.
UAE Example:
The Dubai Land Department (DLD) has already explored blockchain title registration since 2017.
VARA (Virtual Assets Regulatory Authority) now supervises digital asset trading, including tokenized property.
ADGM (Abu Dhabi Global Market) offers frameworks for real-world asset (RWA) tokenization and licensed custodianship.
Together, these agencies are setting up a system where:
Property titles can be mirrored on blockchain.
Tokens can be traded under regulated conditions.
Investor rights are legally enforceable, not just digital.
This makes the UAE one of the most advanced ecosystems globally.
What Happens if a Platform Shuts Down?
A fair question — and a crucial one.
If a platform disappears, who keeps track of your ownership?
In a properly structured model:
The property is owned by an SPV or recorded on a blockchain tied to the land registry.
Your tokens are legally recognized as your stake.
Custodians or administrators can manage transfers if the platform ceases operations.
Essentially, your rights don’t vanish — they are protected by law, not by the company’s survival.
This is why regulation and custodianship are essential layers in the ecosystem.
Custody: The Unsung Hero of Tokenization
Just as banks safeguard your money, custodians safeguard your tokens.
Licensed custodians:
Hold digital assets on behalf of investors.
Provide recovery systems in case of loss or platform failure.
Ensure compliance with KYC/AML standards.
Dubai and Abu Dhabi are already licensing digital asset custodians — a key milestone before mainstream adoption.
The Global View
Other countries are also moving fast:
Switzerland: Property tokens are legally recognized under the DLT Act.
Singapore: The Monetary Authority supports tokenized funds and asset-backed tokens.
Germany: The eWpG law enables blockchain-based securities, including real estate.
US: The SEC allows trading of “digital securities” through regulated ATS platforms like tZERO.
The direction is clear:
Token ownership is evolving from a technological novelty into a legally protected asset class.
The Future: Blockchain Meets Land Registry
Imagine this:
Every property in Dubai has a digital twin on blockchain.
Every sale, lease, or mortgage updates instantly and securely.
You can verify ownership, rent history, or transaction prices with one click.
That’s where we’re heading — and it’s not science fiction.
Dubai Land Department’s pilots and several European projects are already laying the foundation.
The future of property ownership will be digital, secure, and transparent — but also legally binding.
Closing Thoughts
Technology made real estate tokenization possible.
Regulation will make it trustworthy.
The question “Who owns the tokens?” is not just about blockchain — it’s about ensuring every investor’s rights are protected by both code and law.
Dubai, Switzerland, and Singapore are leading the charge in creating frameworks where tokenized ownership is real, enforceable, and future-proof.
Soon, owning a property token won’t feel any different from holding a property title — except it will be faster, cheaper, and global.