The US Securities and Exchange Commission is making its position clear on tokenized equities. Blockchain rails may change how assets settle, but they do not change who holds the keys.
In new guidance from its Trading and Markets Division, the SEC outlined how broker-dealers can custody tokenized stocks and bonds under existing US customer protection rules. The message is direct. Tokenized securities are not a new asset class. They are securities first, regardless of whether they live on a blockchain.
Rather than carving out a bespoke regulatory framework, the SEC is folding tokenized equities into the same safeguards that govern traditional stocks and bonds. Broker-dealers may treat crypto asset securities as being in their “possession or control” under Rule 15c3-3, the cornerstone of US customer protection, provided strict operational, security, and governance standards are met.
At the center of this approach is custody. Even if a security is issued or settled onchain, the broker must retain exclusive control over the private keys that move the asset. Customers, affiliates, and third parties cannot have unilateral access. The blockchain may record ownership, but authority remains firmly with the broker.
This guidance draws a sharp line between tokenized securities and crypto-native self-custody models. The SEC is prioritizing investor protection and market integrity over the permissionless ideals that define much of crypto infrastructure. Onchain settlement is acceptable. Onchain autonomy is not.
The regulator is also pushing brokers to think beyond normal market operations. Firms are expected to prepare for blockchain-specific risks such as hard forks, airdrops, consensus attacks, and network disruptions. They must also maintain the ability to freeze, seize, or transfer assets in response to lawful orders, just as they would with traditional securities.
The broader implication is structural. Tokenized stocks may move faster and settle more efficiently, but they are expected to behave exactly like legacy securities inside regulated market rails. The technology can evolve. The compliance obligations do not.
On the trading side, unresolved questions remain. In a separate statement, SEC Commissioner Hester Peirce highlighted the challenges facing exchanges and alternative trading systems that facilitate trading in crypto asset securities, especially when trading pairs mix securities with non-securities.
Her comments reflect a growing tension in market structure. Rules designed for centralized equity markets are being stretched to accommodate blockchain-based instruments. Peirce openly questioned whether the costs of applying existing disclosure, reporting, and compliance frameworks to crypto trading platforms outweigh their benefits.
Taken together, the statements reveal the SEC’s current philosophy. Tokenization is not being blocked, but it is being tightly contained. Innovation is welcome, so long as it conforms to traditional custody, control, and investor protection models.
For the market, this signals a clear direction. The future of tokenized stocks in the US will look less like DeFi and more like TradFi running on new rails. The chain may be public, but the keys, for now, stay with the broker.