“Today’s milestone demonstrates that we can tokenize securities in ways that meet both market and regulatory requirements for US and global investors and provides a strong foundation for our expanded access to onchain investments for more US investors,” he added.
Tokenization, or the process of representing traditional assets as blockchain-based tokens, has emerged as one of the fastest growing areas blurring digital assets and traditional finance. Supporters say it could modernize capital markets through faster settlement, around-the-clock trading and easier movement of assets across financial platforms. A report by Citi predicted 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 custodian model could comply with existing securities laws. SEC staff statements don’t carry the full weight of formal guidance approved by the agency’s commissioners, but indicate how the regulator thinks about issues like tokenization.
Under this approach, a regulated intermediary holds traditional shares in custody and issues blockchain-based tokens that represent a holder’s right to those assets. It is an alternative approach to the issuer-sponsored tokenization, where 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 issuer involvement provide the same rights as traditional shares. The topic attracted wider attention when OpenAI said last year that it did not approve Robinhood’s tokenized offering tied to its shares, warning that the tokens did not represent equity in the company.
