The U.S. Securities and Exchange Commission (SEC) has published comprehensive guidance on new financial instruments categorized under tokenized securities. Released to the public Wednesday night, this document incorporates joint assessments from the SEC's Corporate Finance, Investment Management, and Trading and Markets divisions, and specifically aims to clarify the legal status of securities represented on blockchain technology.
SEC's guidance on tokenized assets
The SEC's approach in the guidance is quite clear. The issuance of a security in token format or its representation on crypto networks does not exempt it from existing securities legislation. According to the agency, tokenized securities remain subject to the same legal framework as traditional securities. This means that registration obligations, public disclosure rules, and investor disclosure responsibilities remain the same.
The guidance defines tokenized securities as the representation of financial instruments defined in federal securities laws in crypto asset format. The SEC emphasizes that holding ownership records, either partially or entirely, on crypto networks does not alter the legal nature of the asset. In other words, the security itself remains the same, even if the technology changes. This step is seen as a continuation of the SEC's efforts to create a clearer and more predictable regulatory framework for crypto asset markets.
In November, SEC Chairman Atkins announced that a "token taxonomy" would be created to differentiate between digital assets. The recently published guidance is considered a significant milestone in demonstrating how this approach will be implemented in practice. The SEC categorizes tokenized securities into two main categories. The first group is defined as "issuer-backed tokenized securities." In this model, the issuer directly integrates the blockchain into its own ownership record system. On-chain transfers represent actual security transfers, and investor records are held on crypto networks instead of traditional databases. According to the SEC, this structure is no different from classic securities issuance except for the technical infrastructure. The second category encompasses tokenized securities offered by third parties. In this model, a third party holds the underlying security in custody and offers the investor a tokenized right to that asset.
The SEC views this structure as similar to existing custody and ownership regulations and emphasizes that the token format does not affect legal practice. In addition, the guidance also addresses synthetic structures called “linked securities.” These products offer investors exposure to economic returns without providing certain rights, such as voting rights. The SEC states that these structures should also be evaluated under existing securities and derivatives regulations. The publication of the guidance coincides with ongoing work on a comprehensive market structure law for the cryptocurrency market in the US. At the same time, global exchanges and financial platforms are preparing to launch tokenized stocks and similar products.
The New York Stock Exchange's announcement that it plans to launch a platform for tokenized US stocks and ETFs, subject to regulatory approval, stands out as one of the most concrete examples of this transformation. In general, this SEC guidance clarifies how existing regulations apply to tokenized securities, rather than introducing new rules for the market.
