US Securities and Exchange Commission (SEC) member Hester Peirce issued a blanket warning for companies considering distributing and trading tokenized securities.
In a Wednesday statement, Peirce called on companies to discuss their potential tokenized offerings with SEC officials amid “new entrants and many traditional firms […] embracing onchain products.”
Though the SEC commissioner, who also heads the agency’s crypto task force, did not explicitly mention trading platform Robinhood, her notice came roughly two weeks after the company launched a tokenization-focused layer-2 blockchain.
“As powerful as blockchain technology is, it does not have magical abilities to transform the nature of the underlying asset,” said Peirce. “Tokenized securities are still securities. Accordingly, market participants must consider—and adhere to—the federal securities laws when transacting in these instruments.”
Peirce’s remarks echoed those of former SEC Chair Gary Gensler, who frequently called on companies considering offering crypto-related products that could be regarded as securities to “come in and talk” to officials. However, the US financial regulator has suggested that it was moving in a new direction for the crypto industry since the inauguration of US President Donald Trump and the confirmation of SEC Chair Paul Atkins.
Related: Robinhood stock nears record high as tokenization strategy gains traction
Robinhood’s strategy would allow the platform to offer tokenized US stocks and exchange-traded products to investors in Europe. The company also seemed to be aware of the potential impact on US securities laws, reportedly submitting a proposal to the SEC for a framework to regulate tokenized real-world assets in May.
“When unique aspects of a technology warrant changes to existing rules or where regulatory requirements are outdated or unnecessary, we stand ready to work with market participants to craft appropriate exemptions and modernize rules,” said Peirce.
SEC awaiting crypto market structure legislation from Congress
Republican lawmakers in the US House of Representatives announced that they planned to move forward with consideration of a bill to establish clear regulatory rules of the road for digital assets.
The crypto market structure framework under the proposed Digital Asset Market Clarity Act could clarify the roles the SEC and the Commodity Futures Trading Commission (CFTC) would have in regulating crypto in the US.
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