According to SEC Commissioner Hester Peirce, the process of asset tokenization - one of the most anticipated applications of blockchain technology - will struggle to achieve true scale and efficiency without clarity from the federal legal framework. Currently, issuing organizations and transfer agents still face many challenges in determining whether distributed ledger technology (DLT) such as blockchain is recognized by law as an 'official record of securities ownership' under the Securities Exchange Act and related regulations.
Although some states in the U.S. have taken the lead with specific regulations on the use of blockchain for managing ownership rights of securities, the inconsistency between federal and state laws has created significant legal gaps. This makes it difficult for participants in the digital finance sector, especially startups in the asset tokenization space, to safely deploy products or scale.
Additionally, according to the guidance on Special Purpose Broker-Dealers that the SEC has published, the agency still maintains the view that digital assets can be classified as 'securities' if they fall under the broad definition of this term. As a result, many companies operating in trading, custody, or token issuance may face the risk of violating the law if they do not fully meet the stringent oversight requirements for traditional securities.
Summary: Although tokenization technology opens up tremendous potential for digitizing traditional assets, the current legal environment in the U.S. remains the main barrier to the development of this field. Without timely adjustments and consistency in the legal framework, American businesses may be left behind in the global race for digital finance.
