(Article from Registered Funds Regulatory Update, April 2026)
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On January 28, 2026, the SEC’s Divisions of Corporation Finance, Investment Management, and Trading and Markets issued a joint statement clarifying how the federal securities laws apply to tokenized securities and providing a framework to help market participants understand different tokenization models.
The statement defines a “tokenized security” as “a financial instrument enumerated in the definition of ‘security’ under the federal securities laws that is formatted as or represented by a crypto asset, where the record of ownership is maintained in whole or in part on or through one or more crypto networks.” The statement establishes two main categories of tokenized securities: (i) issuer-sponsored tokenized securities, and (ii) third party-sponsored tokenized securities.
For issuer-sponsored tokenized securities, which are securities tokenized by or on behalf of the issuers of such securities, the Divisions state that the federal securities laws apply the same way regardless of the “format in which a security is issued or the methods by which holders are recorded (e.g., onchain vs. offchain).” Registration requirements and other regulatory obligations do not change when a security is tokenized rather than issued in a traditional form.
For third-party-sponsored tokenized securities, which are securities tokenized by third parties unaffiliated with the issuer(s) of such securities, the statement describes two models: (i) custodial tokenized securities, and (ii) synthetic tokenized securities. The statement notes that these structures may expose holders to additional risks related to the third party that holders of the underlying security would not face.
The statement emphasizes that tokenization does not create exemptions from existing securities laws or alter how those laws apply. Importantly, the Divisions indicate willingness to engage with market participants on questions regarding the guidance.
SEC Statement, Divisions of Corporation Finance, Investment Management, and Trading and Markets, Statement on Tokenized Securities (Jan. 28, 2026), available at:
https://www.sec.gov/newsroom/speeches-statements/corp-fin-statement-tokenized-securities-012826-statement-tokenized-securities.