Peirce: ‘Tokenized Securities are Still Securities’

Blockchain technology has introduced innovative methods for distributing and trading securities in tokenized form. While tokenization promises to streamline capital formation and enhance asset liquidity, SEC Commissioner Hester Peirce emphasizes that these digital instruments remain subject to federal securities laws. "The technology doesn’t magically alter the underlying asset’s nature," she stated, underscoring the need for compliance.

Issuers can tokenize their own securities—such as corporate shares or fund interests—or third parties may create tokenized derivatives tied to custody-held assets. The latter introduces unique counterparty risks for investors. Market participants must navigate disclosure requirements, with the SEC’s Division of Corporation Finance recently issuing guidance on these obligations.