Blockchain Does Not Bypass Securities Law, Warns SEC
In a strong reminder to the crypto industry, U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce—widely known as “Crypto Mom”—issued a statement reinforcing the regulatory stance that tokenized securities remain subject to federal securities laws.
The clarification arrives as more traditional financial institutions and new blockchain-based firms experiment with tokenized assets, particularly in the wake of high-profile developments such as Robinhood’s launch of a tokenization-focused Layer-2 blockchain for European markets.
Peirce emphasized that blockchain technology does not alter the legal character of the assets it represents. “Tokenized securities are still securities,” she said. “Market participants must consider and comply with existing federal laws when issuing or trading such products.”
https://cointelegraph.com/news/hester-peirce-tokenized-securities
SEC Urges Firms to Engage in Dialogue Before Launching
Peirce echoed the long-standing SEC recommendation that firms planning to distribute tokenized products should engage with the Commission ahead of public launches. While she did not name Robinhood directly, her comments follow the company’s reported proposal to the SEC for a regulatory framework governing tokenized real-world assets submitted earlier this year.
“As powerful as blockchain technology is, it does not have magical abilities to transform the nature of the underlying asset.”
Peirce also signaled that the SEC is open to dialogue and reform, stating the agency is willing to work with companies when unique technological characteristics demand regulatory updates. This could include modernizing outdated rules or granting exemptions under specific conditions.
Legislative Movement: Digital Asset Market Clarity Act in Focus
Peirce’s comments come as Congress advances new legislation aimed at providing regulatory clarity for the crypto industry. The Digital Asset Market Clarity Act, introduced by House Republicans, seeks to clearly define the roles of the SEC and the Commodity Futures Trading Commission (CFTC) in overseeing the digital asset market.
If passed, this bill would offer long-sought guidance to firms navigating the intersection of securities law and digital innovation in the United States.
Final Take
While tokenization offers efficiency and innovation, compliance remains essential. The SEC’s latest message is clear: no matter the form—tokens or traditional stocks—regulated securities must adhere to federal law. Market participants are urged to proceed responsibly and collaboratively as the legal framework continues to evolve.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.