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US SEC Confirms Tokenized Securities Are Subject to Federal Laws Bhushan Akolkar

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 The US SEC has made it clear that tokenized securities will remain fully subject to existing securities laws, with ownership records maintained on blockchain networks.
The post US SEC Confirms Tokenized Securities Are Subject to Federal Laws appeared first on Coinspeaker. –   

The U.S. Securities and Exchange Commission (SEC) is weighing in on a newly emerging asset class known as tokenized securities.

The move follows joint guidance from the SEC’s Division of Investment Management, Division of Corporation Finance, and Division of Trading and Markets.

US SEC Says Tokenized Securities Fall Under Its Umbrella

The SEC stated that tokenized assets will fall under its regulatory oversight and will be subject to similar disclosure, registration, and compliance requirements.

In its statement on tokenized securities released on Jan. 28, the SEC said:

“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.”

Big market platforms are already moving ahead with adopting tokenized assets. A growing number of exchanges, including the New York Stock Exchange (NYSE), are rolling out platforms to support tokenized equities.

Classification of Two Major Categories

According to the US SEC, tokenized securities usually fall into two categories. One is the issuer-sponsored tokenized securities, and the second is the third-party sponsored tokenized securities.

In issuer-sponsored models, the issuing company integrates blockchain technology directly into its ownership records. This allows on-chain transfers to represent actual transfers of the underlying security.

For third-party sponsored structures, the agency said a separate entity holds the underlying security in custody and issues a tokenized equivalent.

The SEC said that this is similar to traditional custodial arrangements, which means that the existing securities laws would continue to apply.

The agency also identified a separate third-party “synthetic” structure in which an issuer tokenizes a security issued by another party.

It helps to provide economic exposure to the underlying asset without granting associated rights such as voting.

The regulator said these instruments are classified as “linked securities.” This category basically includes certain structured notes and equity-linked products.

Securitize welcomed the SEC’s guidance, saying clear frameworks are essential for responsibly scaling tokenized securities.

Robinhood noted that wider adoption of tokenized stocks could help reduce the risk of market disruptions like those seen during the GameStop trading halt.

The post US SEC Confirms Tokenized Securities Are Subject to Federal Laws appeared first on Coinspeaker.

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