SEC Crypto Mom Clarifies Tokenized Securities Must Comply With Federal Laws

US Securities and Exchange Commission (SEC) member Hester Peirce, widely known as the "Crypto Mom" for her pro-crypto stance, issued a statement clarifying that tokenized securities remain subject to federal securities laws. This statement comes as the crypto industry continues to explore the potential of tokenized assets, with both traditional firms and new entrants embracing onchain products.

Peirce called on companies to engage with SEC officials regarding their potential tokenized offerings, emphasizing that blockchain technology does not alter the nature of the underlying asset. "Tokenized securities are still securities," she stated, urging market participants to adhere to federal securities laws when transacting in these instruments. This warning follows the launch of a tokenization-focused layer-2 blockchain by a trading platform, which has plans to offer tokenized US stocks and exchange-traded products to investors.

Peirce's statement echoes the sentiments of former SEC Chair, who frequently encouraged companies to engage with regulators when considering crypto-related products that could be classified as securities. The SEC has indicated a shift in its approach to the crypto industry since the inauguration of US President and the confirmation of SEC Chair. The regulator has shown a willingness to work with market participants to modernize rules and craft appropriate exemptions where necessary.

The SEC's stance on tokenized securities comes as lawmakers in the US House of Representatives plan to move forward with legislation to establish clear regulatory rules for digital assets. The proposed Digital Asset Market Clarity Act aims to clarify the roles of the SEC and the Commodity Futures Trading Commission in regulating the crypto market. This legislative effort underscores the growing need for regulatory clarity in the rapidly evolving digital asset landscape.

Peirce's call for engagement with the SEC reflects the regulator's commitment to ensuring that market participants comply with existing securities laws while also recognizing the potential for technological innovation. As the crypto industry continues to explore the possibilities of tokenized assets, the SEC's guidance serves as a reminder that regulatory compliance remains a critical consideration for companies operating in this space.