“Today’s milestone shows that we can tokenize securities in a way that meets regulatory and market requirements, for US and global investors, and provides a solid foundation for our expanded access to on-chain investments for more US investors,” he added.
Tokenization, or the process of representing traditional assets as blockchain-based tokens, has become one of the fastest growing areas blurring digital assets and traditional finance. Supporters say it can modernize capital markets through faster settlements, round-the-clock trading and easier movement of assets across financial platforms. A Citi report projected that tokenized securities could reach a market size of $5.5 trillion by 2030.
Debate around tokenization models
The launch follows the SEC’s January staff statement on tokenized securities, which outlined how a third-party custody model could comply with existing securities laws. The SEC staff statements don’t carry the full weight of formal guidance approved by the agency’s commissioners, but they do indicate how the regulator thinks about issues like tokenization.
Under that approach, a regulated intermediary holds conventional stocks in custody and issues blockchain-based tokens that represent the holder’s claim on those assets. That is an alternative approach to issuer-sponsored tokenization, where the issuer of the underlying security participates in the process.
The agency’s guidance coincided with a growing debate over whether tokenized shares issued without the issuer’s participation confer the same rights as traditional shares. The issue attracted broader attention when OpenAI said last year that it did not authorize Robinhood’s token offering tied to its shares and warned that the tokens did not represent equity in the company.
