Hester Peirce, head of the SEC's Crypto Task Force, declared on July 9 that tokenized securities retain their regulatory status regardless of blockchain implementation. "Putting securities on a blockchain does not have magical abilities to transform the nature of the underlying asset," Peirce stated, emphasizing that tokenized shares, notes, or entitlements remain subject to federal securities laws. Issuers, intermediaries, and traders must comply with existing regulations when creating, selling, or transferring these instruments.
Peirce outlined two tokenization models: direct issuance by companies of blockchain-based shares, or third-party custodians wrapping traditional securities to issue digital receipts. She warned the custodian model introduces counterparty risk, as token holders depend on the custodian's solvency and control of underlying assets. The SEC cautioned that certain token formats may be classified as "receipts for a security" or prohibited "security-based swaps" if lacking beneficial ownership rights.
The guidance emerges amid surging tokenized equity activity. Solana-based xStocks tokens surpassed $50 million in market value by July 6, while BNB Chain announced listings of tokenized Apple and Tesla stocks as BEP-20 assets through partnerships with Kraken and Backed Finance. These integrations enable 24-hour trading and DeFi composability, with Kraken confirming tokenized stocks can serve as collateral without altering their securities status. Bitget also integrated xStocks on July 9 for seamless spot trading.
Market participants welcomed the clarity, with Backed co-founder Adam Levi noting xStocks was "designed to mirror traditional equity custody" for regulatory alignment. Peirce concluded by signaling openness to "craft appropriate exemptions and modernize rules" where technology exposes regulatory gaps, urging firms to consult the SEC's Division of Corporation Finance for bespoke guidance.