According to ChainCatcher, the US SEC released a statement about securities tokenization, indicating that blockchain technology has opened up a new mode for issuing and trading securities in a "tokenized" form. Tokenization could potentially promote capital formation and enhance investors' ability to use their assets as collateral. Attracted by these possibilities, an increasing number of emerging participants and traditional institutions are actively embracing on-chain products. However, despite blockchain technology's potential, it does not possess "magic" to change the fundamental nature of underlying assets. Tokenized securities remain securities. Therefore, market participants must carefully consider and comply with relevant federal securities laws when trading such instruments.
Sometimes, issuers may tokenize their own securities. Investors purchasing such third-party tokens may face specific risks, such as counterparty risk. Issuers of tokenized securities must also consider their disclosure obligations under federal securities laws and can refer to recent staff statements from the SEC's Division of Corporation Finance.
Meanwhile, market participants who issue, purchase, and trade tokenized securities should consider the attributes of these securities and the resulting securities law compliance issues. Although blockchain-based tokenization is an emerging technology, the act of "issuing financial instruments representing securities rights" itself is not novel. Whether issued on-chain or off-chain, the applicable legal requirements remain the same. Therefore, market participants should consider communicating with the SEC and its staff when designing their tokenization product proposals, as we are willing to collaborate with market participants to establish reasonable exemption mechanisms and promote rule modernization.
