SEC’s Crypto Task Force Commits to Improving Tokenized Securities Regulations

The SEC's Crypto Task Force recognizes previous regulations were detrimental to innovation in the crypto space. It aims to collaborate with industry participants to develop sensible regulations while acknowledging that U.S. securities laws, established by Congress, pose significant challenges for tokenized securities projects.

Key Regulatory Considerations

  • Tokenized securities are on-chain tokens representing shares of equity or other cashflow rights.
  • Developers need to navigate existing statutes, as the SEC cannot change them.
  • Investment Company Act may classify pooled asset tokens as investment companies, imposing strict requirements.
  • Broker-dealer definitions lack clarity; trading digital assets remains complex under current rules.
  • Exchanges facilitating tokenized securities could fall under the Securities Exchange Act depending on structure.
  • Tokens linked to economic performance of securities may qualify as security-based swaps, regulated jointly by the SEC and CFTC.
  • Anti-money laundering (AML) and know-your-customer (KYC) laws apply to trading and transferring tokenized securities, necessitating customer verification.

Developers must integrate regulatory considerations early in project design to avoid jeopardizing economic and technological benefits. Addressing these challenges is essential for leveraging blockchain technology effectively.