Staff in the U.S. Securities and Exchange Commission’s Divisions of Corporation Finance, Investment Management, and Trading and Markets published a statement describing how they analyze common “tokenized security” structures under the federal securities laws. The statement emphasizes that formatting a security as a crypto asset and using onchain records for ownership or transfer mechanics does not change the application of core securities law requirements, including Securities Act registration for offers and sales absent an available exemption. A tokenized security is described as a security represented by a crypto asset where the record of ownership is maintained in whole or in part on one or more crypto networks, with models grouped into issuer-sponsored and third party-sponsored structures. Issuer-sponsored models include securities issued directly in tokenized form with distributed ledger technology integrated into the issuer’s master securityholder file, as well as structures where the security is issued offchain and a crypto asset is used to effect or signal transfers that are then recorded on the offchain master file; the statement also addresses when tokenized and traditional formats may be treated as the same class if substantially similar in character, rights, and privileges. For third party-sponsored tokenization, the staff highlights custodial models that create tokenized security entitlements backed by underlying securities held in custody and synthetic models where the third party issues its own instrument providing exposure to a referenced security, including linked securities and security-based swaps; it notes that holders may not receive rights in the underlying security and may face additional third-party risks. For tokenized security-based swaps, the statement flags that offers and sales to persons who are not eligible contract participants would generally require an effective Securities Act registration statement and that such transactions must be effected on a national securities exchange, and it discusses how the “security-based swap” analysis turns on the Exchange Act definition, Commodity Exchange Act swap definition and exclusions, and the instrument’s economic reality. The staff frames the statement as intended to help market participants prepare any needed registrations, proposals, or requests for staff action and indicates it is available to engage on questions.
U.S. Securities & Exchange Commission 2026-01-28
U.S. Securities and Exchange Commission staff issues statement outlining taxonomy and securities law considerations for tokenized securities
The U.S. SEC staff clarified that tokenized securities, despite being on crypto networks, remain subject to federal securities laws, including Securities Act registration. The statement outlines issuer and third-party tokenization models, emphasizing that tokenized security-based swaps require registration and must occur on a national securities exchange.