SEC’s Hester Peirce stated that tokenizing assets does not change their legal classification as securities.
Wrapped securities introduce counterparty risks and may fall under strict rules, including bans on retail swaps.
Tokenized equity activity is rising, with platforms like Solana, BNB Chain, and Bitget integrating stock tokens.
The U.S. Securities and Exchange Commission (SEC) has reaffirmed that tokenized financial instruments remain subject to securities laws, regardless of their on-chain format. Hester Peirce, who leads the agency’s Crypto Task Force, said on July 9 that placing assets like stocks or notes on a blockchain does not change their legal classification. She clarified that these assets still fall under federal securities regulations and must comply with existing rules.
On-Chain Format Doesn’t Alter Legal Status
In her statement, Peirce explained that tokenization typically follows two approaches. One involves issuers creating blockchain-based versions of their own shares. The second involves custodians wrapping third-party securities and issuing tokenized versions as receipts. She said both formats remain within the legal definition of a security.
She warned that the wrapped model introduces counterparty risk. In such cases, the token holder relies on the custodian’s control and solvency over the original asset. Peirce advised token distributors to review the SEC’s corporate finance staff bulletin and consult with agency staff early when seeking regulatory exemptions.
According to Peirce, some token types may be classified as “receipts for a security.” Others that do not convey beneficial ownership could be treated as “security-based swaps.” These swaps are not permitted for off-exchange trading among retail investors. She emphasized that all token formats must comply with disclosure, registration, and trading requirements, regardless of their blockchain-based design.
Tokenized Stock Activity Expands Across Chains
Peirce’s statement followed a rise in tokenized equity activity on public blockchains. Solana-based equity tokens issued under the xStocks framework by Backed Finance reached a total value of $48.53 million by July 4. That figure rose above $50 million by July 6, according to data from RWA.xyz. BNB Chain has since adopted the xStocks format. The chain will host tokenized shares of Apple and Tesla as BEP-20 assets.
This rollout includes collaborations with Kraken and Backed, aiming to provide round-the-clock access through DeFi systems. Kraken stated that BNB Chain’s integrations will allow users to post tokenized stocks as collateral. It also confirmed these tokens remain securities, regardless of usage in DeFi environments.
Bitget added xStocks to its platform on July 9, enabling trades through standard spot accounts without requiring new wallets. Peirce concluded by noting that the SEC remains willing to modernize securities regulations. She said the agency is ready to work with firms seeking tailored exemptions where current rules may not fit new technology.
