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Tokenized equities are increasingly moving onto blockchain networks, promising faster settlement, global access, and programmable ownership. However, new guidance from the US Securities and Exchange Commission (SEC) makes one thing clear: while the technology may be onchain, regulatory control will remain firmly centralized. The SEC is signaling that tokenized stocks and bonds will be governed under existing securities laws rather than treated as a new crypto-native asset class.
SEC Clarifies Custody
The SEC’s Division of Trading and Markets recently outlined how broker-dealers can custody tokenized equities under current customer protection rules. The guidance focuses on crypto asset securities such as tokenized stocks and tokenized bonds, confirming that these instruments fall within traditional securities safeguards.
While the statement does not introduce new regulations, it provides long-awaited clarity. The SEC emphasized that broker-dealers may consider themselves “in possession” of tokenized securities as long as they meet strict operational, security, and governance standards. This applies only to crypto assets that legally qualify as securities, not to all digital tokens.
No New Asset Class
A key takeaway from the guidance is that tokenized equities are not being recognized as a new asset class. Instead, the SEC is placing them squarely within existing broker-dealer frameworks, even when they are issued or settled on blockchain networks.
This approach reinforces the regulator’s long-standing view that financial innovation does not override investor protection rules. Whether a stock is recorded in a traditional database or on a public blockchain, the SEC expects it to function like a security first and a digital asset second.
Rule 15c3-3 Focus
At the heart of the SEC’s position is Rule 15c3-3, also known as the Customer Protection Rule. This regulation requires broker-dealers to maintain physical possession or control of fully paid customer securities.
The SEC stated that blockchain-based tokenized securities may meet the “physical possession” requirement under specific conditions. Crucially, this means broker-dealers must retain exclusive control over the private keys that allow access to and transfer of these assets.
Customers, affiliates, or third parties must not be able to move tokenized equities without explicit authorization from the broker. In effect, self-custody models common in decentralized finance (DeFi) are incompatible with SEC expectations for tokenized securities.
Self-Custody Drawbacks
The guidance draws a clear line between tokenized securities and crypto-native self-custody. While blockchain technology promotes permissionless access and user-controlled wallets, the SEC prioritizes customer protection, asset recovery, and legal enforceability.
Broker-dealers are also expected to prepare for blockchain-specific risks such as 51% attacks, hard forks, airdrops, and network disruptions. They must maintain contingency plans that address seizure, freezing, or transfer restrictions imposed by lawful authorities.
This reinforces the idea that tokenized equities, despite being onchain, remain subject to centralized oversight and traditional compliance obligations.
Trading Structure Questions
On the same day the custody guidance was released, SEC Commissioner Hester Peirce issued a separate statement highlighting unresolved trading issues for crypto asset securities.
Peirce raised questions around how national securities exchanges and alternative trading systems should handle tokenized equities, especially when trading pairs involve one security and one non-security asset. These concerns reflect the difficulty of applying legacy market structure rules to blockchain-based trading environments.
She also questioned whether existing disclosure, reporting, and compliance requirements impose costs that outweigh their benefits when applied to crypto trading platforms. The comments suggest that while custody rules are becoming clearer, trading frameworks for tokenized securities remain a work in progress.
Market Adoption Grows
Despite regulatory uncertainty, adoption of tokenized equities is accelerating across both traditional finance and crypto platforms.
Nasdaq has publicly stated its intention to move quickly into tokenized stock offerings, working closely with the SEC to integrate blockchain-based equities into its trading infrastructure. This signals growing institutional confidence in regulated tokenization models.
Securitize, a firm specializing in tokenized securities, has announced plans to launch compliant onchain trading for tokenized stocks using a DeFi-style interface. The goal is to combine regulatory compliance with user experiences familiar to crypto-native traders.
Meanwhile, Coinbase has expanded into stock trading as part of its strategy to become an “everything exchange,” further blurring the lines between crypto platforms and traditional financial services.
Centralized Reality
The SEC’s guidance confirms that tokenized equities will not escape traditional regulatory control simply by moving onto blockchain networks. Broker-led custody, centralized key management, and compliance with securities laws will define the future of tokenized stocks in the US.
While blockchain technology may improve efficiency and transparency, the regulatory framework ensures that investor protection remains the top priority. For now, tokenized equities represent a fusion of TradFi rules and blockchain rails, rather than a fully decentralized alternative to traditional markets.