Tokenized securities are also securities! The US SEC clarifies regulations and officially incorporates them into securities law oversight

The U.S. SEC explicitly states that tokenized securities only change in form, not in nature, and still qualify as securities subject to federal securities regulations, paving the way for Wall Street’s tokenization entry.

Addressing the long-standing debate over the classification of “tokenized securities” in Wall Street and the cryptocurrency industry, the U.S. Securities and Exchange Commission (SEC) has officially issued regulatory guidance, emphasizing that even if tokenized securities are issued and circulated on blockchain, the fundamental nature of these on-chain assets remains unchanged, and therefore they remain under SEC jurisdiction.

In the guidance released on Wednesday by the SEC’s Division of Corporation Finance, Division of Investment Management, and Division of Trading Markets, it is stated that tokenized securities are merely a “change in form,” not a “change in substance.” As long as they meet the SEC’s definition of “securities” under federal law, they must adhere to the same registration, disclosure, and compliance obligations as traditional stocks and bonds. The SEC notes:

A tokenized security refers to a financial instrument that meets the definition of “security” under federal securities law, formatted as an encrypted asset or presented in the form of an encrypted asset, with all or part of the ownership record stored on one or more encrypted networks, or maintained through encrypted networks.

This latest guidance continues the policy direction of the current SEC leadership in recent years to provide regulatory clarity for the crypto asset market. SEC Chair Paul Atkins revealed last November that a “Token Taxonomy” would be established to clarify the legal nature and applicable regulations of different digital assets.

In the latest guidance, the SEC categorizes tokenized securities into two main types, with a further explanation of a third derivative structure:

1. Issuer-led

In this model, the issuer directly integrates blockchain into the ownership registration system, and transferring tokens on the chain represents a real securities transfer.

The SEC points out that the only difference from traditional issuance is that the record of shareholders is moved from a conventional central database to a “blockchain database.” In other words, this is a digital upgrade with no change in legal properties.

2. Third-party Custody

Another type involves a third-party custodian holding the actual securities and issuing corresponding tokenized “beneficial certificates.” The SEC believes that this model is essentially the same as traditional securities custody arrangements, and existing securities laws apply.

The SEC emphasizes: “Under this framework, encrypted assets only represent the holder’s ‘indirect interest’ in the underlying securities, and the form of issuance does not affect the applicability of federal securities law.”

3. Synthetic

Additionally, the SEC highlights another more controversial structure — “synthetic tokenized securities.” These assets are usually created by third parties tokenizing securities issued by others, providing only economic exposure (such as gains or losses from price movements), without granting voting rights or other shareholder privileges.

The SEC classifies these assets as “linked securities,” which are similar in nature to structured products or partial equity derivatives; “Security-Based Swaps” may also fall into this category, covering derivatives that provide synthetic exposure, often with stricter eligibility requirements for participants.

Overall, the SEC’s recent guidance is more of a systematic reiteration and clarification of its existing stance. Hester Peirce, a long-time advocate for cryptocurrency policy on the SEC Commission, has publicly stated multiple times: “Tokenized securities are still securities.”

What truly warrants market attention is the recent acceleration of traditional financial institutions embracing tokenization. The most indicative case is the New York Stock Exchange (NYSE), which has announced plans to launch a tokenized trading platform for U.S. stocks and ETFs after obtaining regulatory approval. The SEC’s guidance effectively serves as a “preparatory step” for traditional financial giants to enter the space.

• This article is reprinted with permission from: 《BlockCast》
• Original title: “U.S. SEC Clarifies ‘Tokenized Securities’ Regulations, Fully Incorporating Securities Law Jurisdiction”
• Original author: Block Sister MEL