The US regulator, the Securities and Exchange Commission (SEC), has reiterated that tokenized securities remain securities and fall under federal securities law.
In a recent statement, the regulator clarified that whether a stock is issued off-chain or on-chain, it must still comply with applicable laws.
“Regardless of its format, the Securities Act requires that each offer and sale of a security be registered with the Commission, unless an exemption from registration is available.”
Advice further reiterated,
“Similarly, shares are ‘equity securities’ under the Securities Act and the Exchange Act, regardless of their format.”
According to the watchdog, tokenized stocks fall into two categories. The former is sponsored by the issuer, which transfers rights and protections to the holder, while the latter consists of on-chain actions sponsored by third parties that provide varying ownership rights and protections.
Securitize, one of the issuers of tokenized securities, welcomed this decision, declaring that it is crucial to “evolve” the sector.
“Clear frameworks like this are essential to scaling tokenization responsibly.”

Source:
Wall Street opposes DeFi exemptions
The statement follows the recent meeting between the regulator and Wall Street firms on how to treat tokenized securities under the current legal regime.
According to an SEC memo, representatives from Citadel, JPMorgan Chase & Co., Cahill Gordon & Reindel, Securities Industry and Financial Markets Association (SIFMA), opposed broad exemptions for blockchain stocks.
Referring to the October flash crash and the collapse of Stream Finance, the TradFi Group warned,
“Broad exemptions for tokenized trading activities could undermine investor protections and lead to market disruption.”

Source: SEC/SIFMA
In fact, in a December letter, Citadel Securities called for similar regulation of DeFi platforms managing tokenized securities like their traditional counterparts.
The DeFi complex has lobbied for legal exemptions, claiming its platforms are deintermediated to justify legal liability.
At a recent meeting, SIFMA and its TradFi members pushed for a new classification of tokenized securities to enable more effective regulation.
The SEC’s latest statement reflects some of the concerns it has raised. However, it does not cover broader DeFi operations. This omission may be because issues related to tokenized securities are still under discussion within the CLARITY Act.
Tokenized stocks aim for $1 billion
Despite this, the collective actors of DeFi called Citadel Securities’ arguments and arguments are “baseless” and “flawed.”
The industry could likely argue for some sort of DeFi exemption in the bill. It remains to be seen whether the final framework for tokenized securities will be a compromise between these two camps.

Source: RWA
The sector has gained popularity, with tokenized securities holders nearly 300,000 users, which represents 100% growth in January alone. Additionally, the total value of stocks traded on-chain is approaching the $1 billion mark.
Final Thoughts
- The US SEC has clarified that tokenized securities still fall under current federal securities law.
- Wall Street has opposed a broad DeFi exemption in trading tokenized securities.


