Recently, the topic of equity tokenization has been hotly debated. SEC Commissioner Hester Peirce, known as the "Crypto Mom," stated that blockchain technology has opened up a new mode of issuing and trading securities in "tokenized" form, but tokenized securities are still securities. Therefore, market participants must consider and comply with federal securities laws when trading these instruments. She called on market participants to meet with SEC staff, and the SEC is prepared to cooperate, creating appropriate exemption clauses and updating relevant rules if necessary.
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ToggleTokenization Trend Sweeping the Market
Robinhood announced the launch of equity token services in the EU, offering over 200 US stock tokens with trading available Monday through Friday. However, the first wave of tokens featuring companies like "SpaceX" and "OpenAI" has raised licensing disputes and regulatory attention.
(OpenAI Refutes Robinhood: Are Tokenized Private Equity Investments or Prediction Markets?)
US exchanges Coinbase and Kraken have also expressed strong interest. Swiss crypto startup Backed Finance's xStocks tokens, Ondo Finance's Global Markets platform, and others are gradually emerging, suggesting that the capital market is entering an on-chain era.
Traditional Financial Companies Issue Warnings on Tokenization
Traditional financial companies have issued warnings about tokenization. The Securities Industry and Financial Markets Association (SIFMA), representing broker-dealers, investment banks, and asset management companies, warned in June that the SEC should not quickly approve requests for digital asset companies to trade tokenized securities.
One concern is that digital asset companies might bypass Know Your Customer (KYC) and Anti-Money Laundering (AML) securities-related regulations.
SIFMA emphasized that such significant structural changes should be considered and implemented through an open and transparent process, allowing public awareness, commentary, oversight, and broad industry participation to help the committee and public fully understand the policy implications of such changes.
Tokenization Still Requires Compliance with Securities Laws, but Appropriate Exemption Clauses May Be Established
SEC Commissioner Hester Peirce, known as the "Crypto Mom," issued a statement. Her comments are notable as she is the chair of the SEC's cryptocurrency working group and is typically seen as an opponent of regulations hindering the crypto industry's development.
Peirce acknowledged the concept of "tokenization" enabled by blockchain technology, believing it can promote capital formation and enhance investors' ability to use assets as collateral. However, despite blockchain technology's powerful capabilities, it does not have the magical ability to change the nature of underlying assets. Tokenized securities remain securities. Therefore, market participants must consider and comply with federal securities laws when trading these instruments. Although blockchain-based tokenization is new, the process of issuing securities representation tools is not. Both on-chain and off-chain versions of these tools are subject to the same legal requirements.
She called on market participants to meet with SEC staff, and the SEC is prepared to cooperate, creating appropriate exemption clauses and updating relevant rules if necessary.
Risk Warning
Cryptocurrency investments carry high risks, and prices may fluctuate dramatically. You may lose all your principal. Please carefully assess the risks.
