In opening remarks at the Crypto Task Force’s fourth roundtable on tokenization, U.S. Securities & Exchange Commission Commissioner Hester M. Peirce framed the tokenization of traditional financial assets such as stocks and bonds onto crypto networks as squarely within the SEC’s jurisdiction and argued that tokenization cannot reach its full potential without greater legal clarity. Peirce described how smart contracts and common crypto-network protocols could automate transfers and payments, support use of tokenized securities across other onchain applications (including DeFi), and enable near-instant, simultaneous settlement when assets reside on the same network. She cited registered tokenized money market products under the Investment Company Act of 1940 and tokenized private funds issuing stable-value, yield-bearing securities, and highlighted potential use cases such as posting tokenized securities as derivatives collateral and using them as onchain settlement assets. Key legal uncertainties she identified included whether a crypto network can serve as the master securityholder file under Exchange Act transfer agent rules, custody questions stemming from the SEC’s Special Purpose Broker-Dealer statement defining “crypto asset security,” and the SEC’s proposed amendments to the Investment Advisers Act custody rule that would make traditional securities issued on a public, permissionless crypto network ineligible for an exception from the qualified custodian requirement. She urged a fact-and-law based approach under which tokenized securities are treated the same as traditionally issued securities, including treating a crypto network as all or part of a transfer agent’s books and allowing tokenized mutual fund shares and tokenized privately issued securities to rely on existing custody exceptions. She also pointed to follow-on work on DeFi integration, transfer agent and National Market System requirements, permissionless networks, and the classification of tokenized instruments as certificated versus uncertificated securities.
U.S. Securities & Exchange Commission 2025-05-12
U.S. Securities & Exchange Commission Commissioner Peirce urges legal clarity and equal regulatory treatment for tokenized securities
SEC Commissioner Hester M. Peirce stressed the need for legal clarity to realize the potential of tokenizing traditional financial assets on crypto networks. She highlighted uncertainties about crypto networks as master securityholder files, custody issues, and proposed amendments affecting tokenized securities. Peirce advocated treating tokenized securities like traditional ones and addressed follow-on work related to DeFi integration and regulatory requirements.