Tokenized Securities Subject to Existing Laws, SEC Confirms

In a move to provide market clarity, the SEC has issued guidance stating that tokenized securities are subject to federal securities laws. The directive came from three key operational divisions.

The SEC’s position is that tokenization alters the format, not the fundamental nature, of a security. Consequently, these assets must fulfill all traditional registration and disclosure requirements.

The release included a definitive statement: a tokenized security is a statutory instrument represented by a crypto asset, where ownership is maintained on a crypto network.

This is the latest in a series of SEC actions to address the novel crypto asset class. It follows earlier commitments to develop a framework, or “token taxonomy,” for digital assets.

The timing coincides with legislative work in the US on a crypto market structure bill. Globally, exchanges are moving forward with services like tokenized stocks on platforms such as Arbitrum.