Key Takeaways
- According to the guidance, tokenised securities fall into two primary classifications: those created by or on behalf of security issuers themselves, and those tokenized by unaffiliated third parties without issuer involvement.
- Third-party tokenization operates through custodial or synthetic structures, the SEC explained.
The Securities and Exchange Commission (SEC) published comprehensive guidance on Wednesday clarifying how blockchain-based securities will be regulated, establishing distinct categories for issuer-led and third-party tokenisation while affirming that traditional securities laws apply regardless of technological format.
The joint statement from the SEC’s Divisions of Corporation Finance, Investment Management, and Trading and Markets defines tokenized securities as financial instruments meeting the legal definition of “security” under federal law, formatted as crypto assets with ownership records maintained wholly or partially on blockchain networks.
According to the guidance, tokenized securities fall into two primary classifications: those created by or on behalf of security issuers themselves, and those tokenized by unaffiliated third parties without issuer involvement.
Issuer-sponsored tokenization can occur through two mechanisms. Companies may integrate blockchain technology directly into their official ownership recordkeeping systems, or they may issue crypto assets that automatically trigger corresponding updates to separate off-chain ownership ledgers when tokens transfer between wallets.
Third-party tokenization operates through custodial or synthetic structures, the SEC explained. Custodial models create tokenized entitlements representing indirect ownership interests in underlying securities held by custodians, while synthetic approaches involve issuing new securities—such as structured notes, exchangeable stock, or security-based swaps—that provide exposure to underlying assets without conveying actual ownership.
The regulatory framework makes explicit that blockchain represents merely a recordkeeping technology rather than a basis for exemption from securities regulation. The SEC emphasized that format changes do not alter legal obligations.
“The format in which a security is issued or the methods by which holders are recorded (onchain vs offchain) does not affect application of the federal securities laws,” the agency stated in its official guidance.
Registration requirements, disclosure obligations, and other federal securities law provisions continue to apply to tokenized instruments. All offers and sales must be registered under the Securities Act unless specific exemptions apply, as per the statement.
Further, the guidance also permits issuers to offer identical securities in multiple formats simultaneously. Under the rules, a company could distribute traditional shares to some investors while providing tokenized shares to others without changing the legal characteristics of the underlying security.
The SEC warned that third-party sponsored tokenized securities expose holders to additional risks, specifically highlighting bankruptcy concerns related to the third-party tokenization provider.
Meanwhile, tokenisation platform Securitize welcomed the regulatory clarity on Wednesday. Taking to X, the firm described the guidance as recognition that “native, issuer-supported tokenization and onchain recordkeeping” represent “a modern extension of securities infrastructure.”
The framework arrives as part of current SEC leadership’s broader initiative to establish clear regulatory boundaries for digital assets. Chair Mark Atkins announced in November that the agency would develop a “token taxonomy” to distinguish between different categories of digital asset securities.
The guidance follows a last December SEC outline detailing how tokenised securities can operate within existing U.S. market protections, with the agency expressing preference for broker-led custody arrangements over crypto-native self-custody solutions.
In December, the SEC also authorised the Depository Trust and Clearing Corporation to migrate certain stocks, bonds, and US Treasury securities onto blockchain infrastructure, signaling institutional acceptance of distributed ledger technology for traditional financial instruments.
