SEC Commissioner Warns Tokenized Securities Must Comply With Federal Laws

SEC Commissioner Hester Peirce, known for her cautious yet supportive stance on cryptocurrencies, has recently issued a warning regarding the tokenization of securities. Peirce emphasized that despite the innovative use of blockchain technology, tokenized securities remain subject to traditional securities laws and regulations. This clarification comes amidst growing concerns that tokenization could be used as a means to evade regulatory oversight, potentially exposing retail investors to new risks.

Peirce's remarks underscore the SEC's commitment to ensuring that all securities, regardless of their form, comply with federal securities laws. She noted that the nature of the asset does not change simply because it is tokenized on a blockchain. This means that companies offering tokenized securities must still adhere to the same regulatory standards as those offering traditional securities. Peirce urged companies to consult with regulators before proceeding with tokenized securities offerings, highlighting the importance of compliance and transparency in the rapidly evolving digital asset landscape.

The SEC's stance on tokenized securities is part of a broader effort to balance innovation with investor protection. While blockchain technology offers numerous benefits, including increased efficiency and transparency, it also presents unique challenges and risks. Peirce's warning serves as a reminder that regulatory compliance is essential for maintaining the integrity of the financial markets and protecting investors from potential harm.

The SEC's position on tokenized securities is particularly relevant in the context of recent developments in the digital asset space. As more companies explore the use of blockchain technology for securities offerings, it is crucial for regulators to provide clear guidance on the legal and regulatory framework governing these activities. Peirce's comments are a step in this direction, offering clarity on the SEC's expectations for tokenized securities and the importance of compliance with existing securities laws.

Despite the transformative potential of blockchain technology, Peirce reminded that tokenization does not magically change the nature of an asset. She underscored the risks involved in proceeding without consulting the SEC, as tokenized securities are still considered securities. She warned of severe penalties for violating federal rules and noted that investors could face counterparty risks, particularly with tokenized products created by third parties.

Additionally, Peirce highlighted that certain types of tokenized securities might be inaccessible to individual investors. She insisted on clarifying issues such as who issues the product, which asset it represents, and what rights investors possess. Market participants, she stated, must recall the definition of an investment contract and not overlook securities law.

Peirce’s statement comes on the heels of a recent report indicating that as of June 2025, the value of tokenized assets reached $24 billion. The report suggests that the sector has expanded by 380% over the past three years and could attain a market value of $30 trillion by 2034. This growth has heightened the global financial community’s interest in blockchain-based instruments, thereby intensifying the responsibilities of regulators.

The latest SEC warnings underline the persistent regulatory gaps despite the increasing volume. Experts advocate for issuers to support the process with transparent reports while urging investors to question where their assets are held and how their rights are protected. Delay in compliance may result in a slowdown in the sector’s ability to attract new capital and could potentially decelerate the momentum of tokenization.

In summary, SEC Commissioner Hester Peirce has cautioned that tokenized securities remain subject to federal securities laws, despite the use of blockchain technology. Her remarks underscore the need for regulatory compliance and transparency in the digital asset space, as well as the importance of protecting investors from potential risks. As the use of blockchain technology continues to evolve, it is essential for companies and regulators to work together to ensure that innovation is balanced with investor protection.