SEC Says Tokenized Assets Are Securities First, Technology Second
Placing a security on a blockchain does not alter its legal status, according to the SEC’s Divisions of Corporation Finance, Trading and Markets, and Investment Management. Tokenized securities remain subject to all federal securities laws, regardless of whether ownership is recorded on-chain or off-chain. Issuers may offer tokenized securities as a separate class or alongside traditional shares; if the rights and privileges are substantially similar, they may be treated as the same class under securities laws. The only operational difference is recordkeeping via crypto networks instead of conventional databases. While the SEC has eased some enforcement actions against major crypto firms, its current stance confirms that securities regulations apply irrespective of technological format. The guidance does not address whether crypto-native products or blockchains can legally replace traditional recordkeeping or regulatory intermediaries. Critics argue that tokenization changes operational processes but not the legal framework, and that the SEC maintains "technology neutrality" in classification while enforcing traditional requirements. The agency’s approach is seen as maintaining the status quo and shifting the compliance burden to innovators in the sector.
