Tokenized stocks have moved the representation of equities onto blockchains, but U.S. regulators continue to treat those tokens by their legal character rather than their technology. The Securities and Exchange Commission maintains that tokenized securities remain securities and is pressing for registration, custody controls and enforcement to keep investor protections intact.
Our Division of Trading and Markets issued a staff statement on the custody of crypto asset securities by broker-dealers. https://t.co/5u3mrAGmmu
— U.S. Securities and Exchange Commission (@SECGov) December 17, 2025
Technology-neutral rules for tokenized equities
The SEC’s position rests on a technology-neutral principle: the nature of an asset, not the ledger that records it, determines whether it falls under securities law. Agency officials apply established standards — notably the Howey Test, which determines whether an asset is an investment contract and thus a security — to tokenized offerings, meaning existing disclosure duties, market rules and investor safeguards are intended to apply to tokenized equivalents. Commissioner Hester Peirce has articulated the rule plainly: “tokenized securities are still securities,” a line regulators use to justify extending existing regimes into on-chain markets. The rationale the agency cites centers on investor protection, market integrity and systemic stability rather than opposing the underlying technology.
To operationalize this stance, the SEC is using enforcement actions and structural requirements to shape how tokenized stocks are issued and traded. In 2024 the agency brought 33 enforcement actions related to cryptocurrency and digital assets, signaling active supervision and a deterrence posture toward unregistered offerings and fraud. The SEC has insisted that trading platforms and intermediaries register as broker-dealers or exchanges when they handle tokenized securities, and no-action relief or pilot tokenization programs with central securities depositories have come with explicit conditions. Those conditions include demanding custody standards for private keys and protocols for addressing blockchain malfunctions, effectively ensuring regulated firms retain control mechanisms for on-chain assets.
Regulatory attention also extends to anti-money-laundering and counter-terrorist-financing compliance for entities involved in tokenized markets, turning blockchain transparency into a compliance tool rather than a loophole. The agency is engaged with legislative efforts that aim to clarify jurisdiction between securities and derivatives regulators, while pressing to retain oversight where assets meet the securities definition. This stance constrains market participants who had hoped tokenization might sidestep existing registration or custody regimes and underscores that on-chain instruments must still satisfy established investor-protection norms.
For market infrastructure, the practical result is a hybrid model in which blockchain records can be used for settlement and transfer, but regulated intermediaries are still expected to implement traditional controls. That structure narrows the space for purely decentralized trading of tokenized stocks and channels much activity through entities subject to securities laws. The SEC’s insistence on custody, registration and enforcement makes clear that tokenization changes recordkeeping and settlement rather than the underlying legal status of securities. Markets and policymakers will monitor pilot programs and pending legislative fixes to determine whether a durable operational model can reconcile on-chain mechanics with existing investor protections.