SEC Doubles Down: Tokenized Stocks Remain Securities—No Crypto Loopholes in 2025

Regulators just slammed the door on decentralized wishful thinking. Again.

The SEC's latest warning shot leaves zero ambiguity—your blockchain-wrapped Tesla shares? Still securities. Your synthetic Apple stock on Ethereum? Still regulated. The 'innovation' playbook gets thinner by the ruling.

Wall Street's paper-pushers must be laughing into their martinis. Crypto builders spent years and millions trying to reinvent the stock market, only for Gary Gensler to remind them that financial regulations don't care about your tech stack.

One cynical take? This was never about democratizing finance—just creating a new asset class to pump. The real disruption was supposed to be cheaper, faster markets. Instead, we got regulatory déjà vu and another excuse for Bitcoin maximalists to say 'I told you so.'

TLDR

• Tokenized stocks still securities, says SEC amid crypto innovation boom.
• SEC: Digital stocks must obey same rules despite blockchain format.
• SEC warns firms: Tokenized shares not a loophole from regulations.
• Crypto stocks face SEC scrutiny, must comply with securities law.
• SEC to firms: Tech can’t bypass rules—tokenized equities still regulated.

The U.S. Securities and Exchange Commission (SEC) clarified that tokenized stocks are still securities and must follow federal securities laws. As blockchain adoption grows, the SEC reminded firms that digital format does not change the asset’s legal nature. This comes as more financial and crypto platforms explore tokenization as a potential trading model.

SEC’s Peirce: Tokenized securities still subject to federal laws@SECGov (SEC) Commissioner @HesterPeirce emphasized in a piece that tokenized securities remain securities under U.S. law. While blockchain enables new distribution models, legal obligations—like disclosures and…

— CoinNess Global (@CoinnessGL) July 9, 2025

Tokenized stocks refer to digital representations of traditional equities issued and traded on blockchain systems. Despite their innovative form, the SEC emphasized that these assets remain subject to existing regulations. The agency aims to ensure that evolving technology does not undermine financial stability or market transparency.

The clarification followed concerns raised by lawmakers over loopholes in proposed legislation such as the Clarity Act. Some provisions may allow companies to tokenize stocks to bypass existing SEC oversight. This has drawn criticism from Senate leaders who view tokenization as a potential regulatory escape route.

SEC Underscores Legal Compliance for Tokenized Securities

The SEC stressed that any entity issuing tokenized stocks must adhere to disclosure requirements under current securities laws. This applies equally to both new blockchain-native companies and established firms seeking to tokenize traditional equity offerings. Compliance remains mandatory regardless of technological FORM or platform used.

The agency warned that some tokenized securities may involve counterparty risks, particularly when issued by third parties holding underlying assets. Entities must consider the legal consequences of creating and selling these digital instruments. These tokens may also be treated as “receipts for a security” or even as “security-based swaps” under certain circumstances.

The SEC urged market participants to engage with the Commission before launching tokenized stock products. This engagement helps firms understand their legal obligations and avoid enforcement actions. It also signals the SEC’s willingness to modernize outdated regulations where necessary.

Crypto Exchanges Push Forward With Tokenization Plans

Leading digital asset firms like Coinbase and Kraken have expressed interest in launching tokenized stocks on blockchain platforms. If approved, these initiatives could challenge traditional brokerages by offering real-time settlement and increased accessibility. However, legal hurdles remain significant for any such expansion.

Tokenization has the potential to streamline trading, reduce operational costs, and expand access to equities globally. Still, without regulatory compliance, these benefits cannot legally materialize. The SEC continues to maintain that a security’s Core characteristics do not change with technology.

Market participants looking to tokenize assets must ensure complete alignment with federal laws, including registration and disclosure rules. While innovation is welcome, it cannot come at the cost of regulatory integrity. The SEC made it clear that tokenized stocks are still securities, regardless of the method used to distribute them.