The U.S. Securities and Exchange Commission (SEC) issued a ruling clarifying that assets transferred to a blockchain remain securities when they meet the legal standard. SEC staff made it clear that registration, disclosure, and anti-fraud obligations continue to apply regardless of the technology.
The SEC drew a clear line that shook the crypto world, dispelling doubts that the technology doesn’t change the economic substance of a right against an issuer. The agency said that issuer-sponsored tokens that are integrated with the official shareholder registry can qualify as true on-chain securities.
Meanwhile, third-party tokens that offer only synthetic exposure will face more rigorous scrutiny and may not confer direct ownership rights. This approach preserves investor protections under federal securities laws while treating the on-chain mechanics as an operational layer subject to existing regulations.
This sets the standard for issuer-sponsored tokenized securities, as they are issued tokens that are updated and can represent direct ownership and shareholder rights. On the other hand, third-party tokenized securities that offer synthetic economic exposure rather than direct ownership are subject to different scrutiny.
The regulatory context set by the SEC
The staff guidance echoes the SEC’s broader work under Project Crypto, articulated by Chairman Paul Atkins in November 2025, which seeks a coherent framework for the issuance, custody, and trading of crypto assets. The statement aims to align tokenization with economic realities and coordinate policy between the administration and Congress.
For product teams, custodians, and exchanges, the ruling raises immediate operational questions, including which paths to take and which direction to take when making important decisions. The statement notes that smart contracts and other automations must be designed to meet securities law requirements, not replace them.
Investors, compliance teams, and technology providers must now prioritize integrating legal controls into token designs and back-end processes. Project Crypto and related policy work will determine whether tokenization reduces friction or remains merely a decorative legal layer.
