SEC's Crypto Task Force Head Warns: Assets Remain Securities Regardless of Tokenization
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SEC's Crypto Task Force Head Warns: Assets Remain Securities Regardless of Tokenization
Peirce emphasized that tokenized stocks, bonds, or equities "are still securities," and issuers, intermediaries, and traders must comply with existing federal laws when creating, selling, or transferring these securities.
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Hester Peirce, head of the U.S. SEC's cryptocurrency task force, said that putting securities on a blockchain "does not have magical powers to transform the nature of the underlying asset."
In a statement issued on July 9, Peirce emphasized that tokenized stocks, notes, or equity interests "are still securities," and issuers, intermediaries, and traders must comply with existing federal laws when creating, selling, or transferring these securities.
Peirce noted that tokenization can be achieved in two ways: first, by having the issuer mint a blockchain-based version of its own stock; second, by a custodian wrapping third-party securities and issuing receipts.
She warned that the second model introduces counterparty risk, as token holders rely on the solvency of the custodian and its control over the underlying shares.
Peirce urged distributors to consult the SEC’s Division of Corporation Finance’s “staff statements” regarding disclosure obligations and to meet early with SEC staff if seeking tailored exemptions.
She also pointed out that relevant regulations may classify certain token forms as “security receipts,” or, if lacking beneficial ownership, as “security swaps,” which are prohibited from over-the-counter retail trading.
"The on-chain versions of these instruments are subject to the same legal requirements as their off-chain counterparts," wrote Peirce.
Peirce made these remarks as trading volume in tokenized stocks continues to rise. As of July 4, the total market capitalization of stock tokens issued on Solana under Backed Finance’s xStocks framework reached $48.53 million.
A dashboard snapshot from data provider RWA.xyz shows that by July 6, this figure had surpassed $50 million.
Additionally, xStocks is expanding to other platforms. BNB Chain announced it will collaborate with Kraken and Backed to list tokenized stocks of companies like Apple and Tesla as BEP-20 assets, offering users 24-hour trading access and composability within DeFi.
Market participants have largely welcomed regulatory clarity. Adam Levi, co-founder of Backed Finance, stated in a press release that the company “designed xStocks to mirror traditional stock custody arrangements, ensuring clear regulatory treatment.”
Kraken added that DeFi integration on BNB Chain will allow users to use tokenized stocks as collateral without altering their status as securities.
Meanwhile, Bitget integrated xStocks into its on-chain platform on July 9, enabling users to trade these tokens directly from their spot accounts without requiring a separate wallet.
Finally, Peirce stated that the SEC remains open to modernization, noting that the commission “stands ready to work with market participants to craft appropriate exemptions and update rules when technology exposes gaps in the current framework.”
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