“One share per token” is an inventory statement
An issuer can hold enough shares and still leave token holders exposed to its insolvency. If those shares belong beneficially to the issuer, they may enter its estate. If they are pledged, another secured lender may rank first. If the custodian has a lien or set-off right, it may retain assets until its own fees or debts are paid.
That is why proof of reserves and bankruptcy remoteness answer different questions. Proof of reserves asks whether assets appear to exist. Bankruptcy remoteness asks whether those assets are legally insulated and available to the token holders in a failure.
Two issuers each hold $10 million of shares against $10 million of tokens. Issuer A holds them in its ordinary brokerage account and promises token holders an unsecured payment. Issuer B places them in a trust for holders under enforceable terms. Their reserve ratios look identical. Their insolvency outcomes may be radically different.
The legal tools do different jobs
| Tool | What it tries to achieve | What still needs checking |
|---|---|---|
| Separate SPV | Limits unrelated operating liabilities around the asset pool. | Independent purpose, separateness covenants, ownership and consolidation risk. |
| Trust / bare trust | Separates legal title from beneficial ownership for identified beneficiaries. | Whether the trust is valid, assets are identifiable and token holders qualify as beneficiaries. |
| Security interest | Gives creditors priority over specified collateral. | Attachment, perfection, governing law, priority, collateral description and enforcement agent. |
| Segregated account or portfolio | Keeps assets operationally or statutorily separate. | Whether segregation has legal effect against creditors, not merely internal accounting. |
| Custody arrangement | Places assets with a specialist holder. | Account name, client-asset status, liens, rehypothecation, subcustody and shortfalls. |
“Bankruptcy remote” is therefore a design goal, not a magical status. Even strong structures can face delays, valuation disputes, foreign proceedings, operational failures and litigation over the identity of beneficiaries.
Trace the claim through every entity
Tokenized stocks often create a chain: token holder → token issuer → special-purpose vehicle → broker or custodian → underlying company. A failure at any link can change the outcome.
- If the token issuer fails, does the SPV remain outside its estate?
- If the SPV fails, do holders have a direct proprietary claim or only an unsecured debt?
- If the broker fails, are the shares client assets or part of the broker’s estate?
- If a security agent fails or refuses to act, can holders replace it or enforce independently?
- If the shares are lent or rehypothecated, is the “backing” still present in a recoverable form?
What convincing evidence looks like
Marketing language is the weakest place to stop. A serious analysis looks for the operative trust deed, security agreement, prospectus or note terms; identifies the asset-owning entity and account; checks governing law and enforcement provisions; and distinguishes an issuer statement from a custodian or auditor confirmation.
A reserve attestation can support asset existence. It usually does not determine title, priority or enforceability. An on-chain proof-of-reserve feed can be useful and still be silent about custodian liens or whether the holder is secured.
Questions that expose the insolvency path
- Which legal entity owns the underlying shares?
- Are holders beneficiaries, secured creditors or unsecured creditors?
- Which agreement creates that interest, under which law?
- Has any security interest been perfected, and who is the security agent?
- Can the custodian, broker or bank exercise a lien, set-off or rehypothecate?
- Are assets reconciled independently and at what frequency?
- Can holders enforce directly if the issuer or agent does nothing?
How RWA Sonar shows it
Each legal template separates holder standing, asset segregation, security, custodian dependencies and enforcement. Evidence confidence is recorded independently for ownership and custody/insolvency. Where the operative agreement is unpublished, the result remains a gap even if marketing calls the product fully backed.
Takeaway
Ask not only “are there shares?” Ask “whose shares are they when the issuer cannot pay, and what legal machinery lets the holder reach them?”