What Are the Legal Implications of Fractionalizing a Security Token?

Fractionalizing a security token (which represents ownership in an asset like real estate) does not change its status as a security. Each fraction remains a security, and the fractionalization process must still comply with all relevant securities laws.

This includes registration requirements and restrictions on who can purchase the fractions (accredited investors). The complexity increases as regulatory bodies may view the fractionalization process itself as a new offering.