Original Source: Cryptoslate
Compiled by: Blockchain Knight
Hester Peirce, head of the SEC's cryptocurrency working group, stated that placing securities on the blockchain 'does not possess the magical ability to alter the nature of the underlying assets.'
In a statement released on July 9, Peirce emphasized that tokenized stocks, notes, or rights 'are still securities,' and that issuers, intermediaries, and traders must comply with current federal laws when creating, selling, or transferring these securities.
Peirce's announcement noted that tokenization can be achieved in two ways: one is for the issuer to mint a blockchain version of its own stocks; the other is for the custodian to package third-party securities and issue receipts.
She warned that the second model introduces counterparty risk, as token holders rely on the solvency of the custodian and control over the underlying stock.
Peirce urged distributors to consult the SEC Division of Corporation Finance's 'staff statements' to understand disclosure obligations and to meet with SEC staff early if seeking tailored exemptions.
She also pointed out that relevant rules may classify specific token forms as 'security receipts,' and if there is a lack of beneficial ownership, they may be classified as 'security-based swaps' that prohibit off-exchange retail trading.
Peirce wrote: 'The on-chain and off-chain versions of these instruments are subject to the same legal requirements.'
As Peirce made these comments, trading volumes of tokenized stocks were continuously climbing. As of July 4, the total market value of stock tokens issued under the xStocks framework on Backed Finance based on Solana reached $48.53 million.
A dashboard snapshot from data provider RWA.xyz shows that on July 6, this total had surpassed $50 million.
In addition, xStocks is expanding to other platforms. BNB Chain has announced a partnership with Kraken and Backed to list stock tokens for companies like Apple and Tesla as BEP-20 assets, providing users with a 24-hour trading channel and DeFi composability.
Market participants largely welcomed regulatory clarity. Adam Levi, co-founder of Backed Finance, stated in a release that the company 'designed xStocks to mirror traditional stock custodial methods to maintain regulatory clarity.'
Kraken added that the DeFi integration on BNB Chain will allow users to use tokenized stocks as collateral without changing their security attributes.
Additionally, Bitget integrated xStocks into its on-chain platform on July 9, allowing users to trade these tokens directly from their spot accounts without needing a separate wallet.
Peirce finally stated that the SEC is open to modernization, saying that the commission 'is always ready to work with market participants to formulate appropriate exemptions and update rules when technology exposes gaps in the rules.'
