SEC Provides Clarity on Tokenized Securities Under Federal Law

Reading Time: < 1 minute

The US Securities and Exchange Commission is working to provide clarity around the emerging category of tokenized securities, via guidance from the Division of Corporation Finance, Division of Investment Management, and Division of Trading and Markets published late on Wednesday.

In essence, the agency asserts that while the format is new, these onchain assets remain under its jurisdiction. They continue to carry standard registration, disclosure, and other obligations.

“A tokenized security is a financial instrument enumerated in the definition of ‘security’ under the federal securities laws that is formatted as or represented by a crypto asset, where the record of ownership is maintained in whole or in part on or through one or more crypto networks,” the SEC wrote.

This guidance is part of the current SEC administration’s broader effort to clarify rules for novel crypto assets. Chair Atkins previously noted the agency would develop a “token taxonomy” to distinguish digital asset securities.

This development occurs alongside legislative efforts in the US to pass a crypto market structure bill defining regulatory roles. It also coincides with global exchanges launching services like tokenized stocks.