On Wednesday, staff from the Divisions of Corporation Finance, Trading and Markets, and Investment Management at SEC said tokenized stocks and bonds remain subject to federal securities laws whether ownership records sit on-chain or off-chain, and issuers must meet existing registration requirements. The staff said the rule applies to transfers recorded on distributed ledgers and to conventional database systems.
The statement added that the issuance format does not change legal status. “The format in which a security is issued or the methods by which holders are recorded (e.g., on-chain vs. off-chain) does not affect application of the federal securities laws.”
Issuers may offer tokenized securities alongside traditional shares. If tokens are substantially similar and give comparable rights, they may be treated as the same class under federal law.
The guidance does not decide whether crypto-native tokens or staking programs qualify as securities, leaving that key issue open (Ed. note: the agency did not resolve the classification question here).
In 2024, Consensys disclosed in an unredacted lawsuit that the SEC had authorized an internal probe into “Ethereum 2.0” and issued a formal order treating Ethereum as a security in March 2023, then later closed the inquiry without enforcement action. Industry lawyers cautioned that while legal classifications stayed the same, operational practices and market infrastructure face unresolved issues.
