SEC Publishes Updated Tokenized Securities Standard Amid Institutional Push

The Securities and Exchange Commission (SEC) in the United States has come up with new guidelines regarding tokenized securities. The SEC has made it clear that this type of asset is subject to the same laws as other securities.

SEC Clarifies Rules on Tokenized Securities

In its press release, the SEC said that a tokenized security remains an existing security within US law despite how crypto ledgers may view it. The agency seems to be taking the view that whilst the form of tokenized securities is altered, these assets will remain within the scope of the SEC’s remit.

“A tokenized security is 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,” they shared.

The new update comes as the agency looks to clarify rules regarding assets in the country. Just last month, the SEC and the Fed announced key policy changes to boost tokenization and overall institutional participation.

As per the agency, there are two types of tokenized securities, which are “issuer-sponsored tokenized securities” and “third-party sponsored securities.”

In the first type, the issuer implements blockchain technology directly into their ownership structure in such a way that on-chain transfers are actual transfers of securities.

Likewise, the SEC makes an analogy with third-party issued securities, where the third party is the custodian of the underlying security and issues a tokenized “entitlement.” The laws remain the same.

Digital Asset Rules Begin to Take Clear Shape

Regulation surrounding digital assets is nearing a stage of clarity as policymakers near final stages. The crypto space is currently awaiting the verdict of today’s Senate Agriculture Committee markup of the crypto market bill.

Also, the US SEC and CFTC are set to hold their harmonization talks later today. This comes as they look to implement the President’s policies on digital assets. The talking points expected include how assets like tokenized securities would be regulated under the SEC and CFTC.

Most recently, the White House of the United States said it would meet with banking and crypto executives over the stalemate on the CLARITY Act. This comes as the Senate Banking Committee draft of the legislation is still at a stalemate. This was due to the stablecoin yield issues between the two institutions.