SEC Releases Statement on Tokenized Securities

The SEC’s Division of Corporation Finance, Division of Investment Management, and Division of Trading and Markets have jointly released a statement as part of their ongoing efforts to clarify “the application of the federal securities laws to crypto assets.” The statement defines a tokenized security as “a financial instrument enumerated in the definition of ‘security’ (footnote omitted) under the federal securities laws that is formatted as or represented by a crypto asset, where the record of ownership is maintained in whole or in part on or through one or more crypto networks.” Specific topics addressed in the statement include issuer-sponsored tokenized securities, tokenized securities sponsored by third parties, and two models by which third parties tokenize securities — namely, custodial tokenized securities and synthetic tokenized securities.