62 THE US-ISRAEL | Legal Review 2025/26 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 “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.”
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