New SEC Guidance Splits Tokenized Assets into Two Classes

According to the SEC’s January 28 statement, tokenized securities can fall into two main groups.

The first includes assets created or issued by the companies that own them. The second involves securities that third parties tokenize without direct ties to the original issuers.

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For company-backed tokenization, there are two common setups. Some firms integrate blockchain directly into their recordkeeping to digitally track ownership. Others release crypto tokens that link to an external ownership record stored off-chain.

In both situations, the SEC emphasized that the same securities laws and registration rules apply. The way a security is issued, whether recorded on-chain or off-chain, does not change the legal requirements.

The regulator added that third-party tokenization can also take different forms. In a custodial model, tokens represent indirect ownership of real securities held by a custodian. In a synthetic approach, new assets are issued that track the value or performance of another security without granting actual ownership.

These “linked securities” may take the form of structured notes, convertible shares, or derivatives such as security-based swaps.

The agency’s message is that blockchain is simply another form of recordkeeping. Using it does not exempt a security from the same oversight and rules that apply to traditional instruments.

The SEC recently received two new public comments through its Crypto Task Force page. What did they say? Read the full story.