“Today’s milestone shows that we can tokenize securities in a way that meets both market and regulatory requirements, for U.S. and global investors, and provides a strong foundation for expanding access to on-chain investing for more U.S. investors,” he added.
Tokenization, or the process of representing traditional assets as blockchain-based tokens, has become one of the fastest growing areas, blending digital assets and traditional finance. Supporters say it can modernize capital markets through faster settlement, around-the-clock trading and easier movement of assets between financial platforms. A Citi report predicts 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 described how a third-party custody model could comply with current securities laws. Statements from SEC staff do not carry the full weight of formal guidance approved by the agency’s commissioners, but indicate how the regulator views issues such as tokenization.
Under this approach, a regulated intermediary holds conventional shares in custody and issues blockchain-based tokens representing a holder’s right to these assets. This is an alternative approach to issuer-sponsored tokenization, in which the issuer of the underlying security is involved 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 topic gained wider 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 the company’s equity.
