Wow! SEC: Cryptocurrency Tokenization is “Mesmerizing” But Not Free from Regulation!

Jakarta, Pintu News – Tokenization-the conversion of traditional assets into blockchain-based tokens-is seen as a breakthrough in the world of crypto and digital finance. However, the SEC through its commissioners emphasized that while blockchain technology is highly advanced, it does not remove the status of securities. This means that tokens such as stocks, bonds, or traditional assets are still subject to federal rules despite being on-chain.

What is Tokenization and Why is it So Hot?

Tokenization is the process of digitizing ownership of assets-stocks, bonds, or property-into digital units or tokens that can be traded via the blockchain. It promises faster settlement, data transparency, and asset fractionalization so that retail investors can buy a portion of a large asset. The technology paves the way for institutions like BlackRock, JPMorgan, Coinbase, and Robinhood to try crypto-financial innovations.

However, the SEC warns that the aesthetic value of blockchain technology does not make it sushi-free from legal liability.

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SEC (Crypto Mom) Speaks Firmly: Tokenized Securities Remain Securities

On July 9, 2025, SEC Commissioner Hester Peirce-dubbed “Crypto Mom”-stated unequivocally:

“As powerful as blockchain technology is, it does not have magical abilities to transform the nature of the underlying asset. Tokenized securities are still securities.”

Meaning:

• Tokenization does not change the legal rights or legal obligations of the asset.
• Anyone creating or distributing securities tokens must still follow the registration, disclosure, and compliance rules of securities laws in the US.
• The structure can be a token for real shares (“receipt for a security”) or a security-based swap which is mostly restricted to retail investors.

Risk and Compliance: When Magic Meets Law

Tokens issued by third parties, for example, can pose a major risk:

• Counterparty risk.
• It is unclear who the legal owner of the asset is.
• If it is considered a security-based swap, it could be prohibited from being traded off-exchange by retail investors.

Peirce also urged market participants to consult early with the SEC, and the SEC is even ready to consider exemptions or modernization of rules if tokenization brings unique unregulated matters.

Why Is This Important for the Crypto and Digital Finance Industry?

Tokenization could transform the global financial system:

• Provides 24/7 investment access options.
• Allows fractionalization of property ownership or startup shares.
• Offering unprecedented liquidity and settlement speed.

But the SEC’s statement is a clear signal that technological advancement does not mean freedom from regulation. Market participants in the crypto world must remain compliant with US securities laws. Otherwise, they open the door to sanctions, class actions, or stricter enforcement.

Conclusion: Innovation is OK, but rules must be followed

Tokenization does offer great potential for the cryptocurrency ecosystem and capital markets. But the SEC reiterated that all tokenized products remain within the framework of securities laws. Experts like Peirce suggest that blockchain projects consult early with regulators and remain willing to adapt if there are opportunities to update regulations.

The main message is: don’t expect blockchain to be a regulatory free-for-all. Innovation must go hand in hand with transparency, accountability, and legal compliance.

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*Disclaimer

This content aims to enrich readers’ information. Pintu collects this information from various relevant sources and is not influenced by outside parties. Note that an asset’s past performance does not determine its projected future performance. Crypto trading activities are subject to high risk and volatility, always do your own research and use cold hard cash before investing. All activities of buying andselling Bitcoin and other crypto asset investments are the responsibility of the reader.

Reference:

• Reuters. SEC’s ‘crypto mom’ says tokenized securities are still securities. Accessed July 11, 2025.