US Securities Regulator Clarifies Framework for Tokenized Assets: Issuer-Led vs Third-Party Models
Fresh guidance on tokenized securities has been issued by the United States Securities and Exchange Commission, distinguishing between two distinct categories of these assets while offering enhanced regulatory clarity for businesses looking to operate in this emerging sector.
According to the regulator's statement, "Tokenized securities generally fall into two categories: (1) securities tokenized by or on behalf of the issuers of such securities; and (2) securities tokenized by third parties unaffiliated with the issuers of such securities."
The agency emphasized that registration requirements, legal treatment, and compliance with other securities regulations remain applicable whether a security exists in tokenized form or follows traditional formats.
"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."
Third-party issuance is custodial or synthetic
According to the SEC's guidance, third parties without affiliation to the original issuer have the option to tokenize securities using either custodial or synthetic frameworks.
Under the custodial framework, tokenized security entitlements are established, with the digital asset representing an indirect stake in the underlying securities maintained in custodial arrangements.
The synthetic framework entails the creation of new securities that deliver exposure to the underlying assets without transferring actual ownership. These rights to the asset, referred to as a "linked security," may take various forms including structured notes, exchangeable stock, or security-based swaps.
Fundamentally, the regulatory agency is making clear that blockchain serves merely as a technological tool for maintaining records; while firms are free to utilize this technology, compliance with securities regulations remains mandatory.
Tokenization platform Securitize responded positively in a Wednesday post on X, stating: "We welcome the SEC's thoughtful statement on tokenized securities, recognizing native, issuer-supported tokenization and onchain recordkeeping as a modern extension of securities infrastructure."
"Clear frameworks like this are key to responsibly scaling tokenization."
SEC favors broker over crypto-native custody
In December, the SEC provided details on how tokenized securities can operate within United States market protection mechanisms, expressing preference for broker-managed custody arrangements rather than crypto-native self-custody solutions.