The SEC has moved to rein in the fast-growing market for “tokenized stocks,” issuing fresh guidance that treats many third-party tokenized equity products as traditional securities or derivatives rather than true shares. In a joint statement, the agency’s Divisions of Corporation Finance, Investment Management, and Trading and Markets drew a bright line between two types of tokenized securities: those issued or authorized by the underlying company, and those created by outside intermediaries without issuer involvement. The agency stressed that simply putting a security on a blockchain does not change how U.S. securities laws apply. Whether ownership is recorded on a distributed ledger or in a conventional database, the issuer still controls official shareholder records, transfer approvals, and shareholder rights. Only tokenized instruments that are explicitly integrated into a company’s official shareholder register—i.e., issuer-sponsored tokenizations—can represent genuine equity ownership, the SEC said. Third-party tokenized “stocks,” the SEC warned, typically fall into one of two categories. Some are custodial arrangements: tokens that represent an entitlement backed by shares held by an intermediary, which expose holders to counterparty and bankruptcy risk. Others are synthetic products—linked securities or security-based swaps—that merely track a stock’s price but do not convey voting rights, information rights, or any claim on the issuer itself. The distinction became especially prominent after OpenAI publicly disavowed tokenized “equity” tied to its shares that had been offered through Robinhood in Europe. By formalizing how tokenized stocks should be classified, regulators are signaling an intent to limit the spread of synthetic equity products—particularly to retail investors—and to steer tokenization toward issuer-approved, fully regulated structures. For crypto platforms and issuers looking to tokenize shares, the guidance clarifies that compliance will likely require issuer sponsorship and integration with traditional corporate recordkeeping if the goal is to create legally enforceable equity. Read more AI-generated news on: undefined/news

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