On January 28, 2026, the U.S. Securities and Exchange Commission (SEC) staff released a significant statement aimed at clarifying the application of federal securities laws to a growing category of crypto assets known as tokenized securities. This guidance is intended to assist market participants in understanding compliance requirements when preparing registration statements, proposals, or requests for the SEC’s consideration.
The staff’s statement categorizes tokenized securities into two main groups: issuer-sponsored tokenized securities and third-party sponsored tokenized securities. Issuer-sponsored tokenized securities are those that are created by or on behalf of the securities’ issuers, while third-party sponsored tokenized securities are produced by unaffiliated third parties.
Understanding Tokenized Securities’ Formats
The SEC emphasizes that tokenized securities can take various forms. An issuer-sponsored tokenized security could either match an existing class of security issued off-chain or represent a completely separate class. For instance, a security might be issued by the issuer or a transfer agent as a crypto asset, which is electronically represented through distributed ledger technology.
In this scenario, issuers maintain their master securityholder files on one or more crypto networks, supplementing or replacing traditional off-chain database records. Alternatively, an issuer might issue a security off-chain, using a conventional master securityholder file, while simultaneously providing a crypto asset to the security holder. The transfer of this crypto asset serves as a notification for the issuer or transfer agent to update ownership records.
Despite the different formats, the SEC maintains that the fundamental requirements of federal securities laws apply to tokenized securities. This means that either registration of the token security or an exemption from registration is necessary.
Exploring Third-Party Sponsored Tokenized Securities
Third-party sponsored tokenized securities can be divided into two models: custodial and synthetic. In the custodial model, a third party generates a crypto asset that represents the underlying security, such as a tokenized security entitlement. Financial market participants may choose to have their entitlements recorded using distributed ledger technology instead of relying solely on off-chain centralized ledgers.
The synthetic model is more complex. Here, a tokenized security might act as a crypto asset that offers synthetic exposure to an underlying security, referred to as a linked security. This linked security may be a debt instrument, such as a structured note, or an equity instrument, such as exchangeable stock. Under certain conditions, a linked security can be classified as a “security-based swap.”
In this context, the SEC noted that third-party-created security-based swaps provide synthetic exposure to either a referenced security or events related to the issuer of that security. Notably, these crypto assets representing security-based swaps cannot be sold to individuals who do not qualify as eligible contract participants unless a registration statement under the Securities Act is active for the crypto asset and transactions occur on a national securities exchange.
The SEC staff underscored that the economic realities of these synthetic tokenized security products are critical in determining how they are regulated, rather than the nomenclature assigned to them.
The joint statement was issued by the SEC’s Divisions of Corporation Finance, Investment Management, and Trading and Markets. This new framework for tokenized securities represents the first step in what SEC Chairman Paul Atkins has indicated will be a series of guidelines and proposed rulemaking aimed at clarifying the regulation of crypto assets.
This initiative reflects a commitment to address the evolving landscape of digital finance and ensure that market participants understand their legal obligations. The complexity of tokenized securities requires a robust regulatory framework to safeguard investor interests and maintain market integrity.
