Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Peirce: You Can Tokenize Securities but Not Skip the Rules
Tokenization | July 10, 2025
Image: Freepik
SEC’s Hester Peirce Confirms Tokenized Securities Are a Go but Must Still Comply With Rules
On July 9, 2025, U.S. Securities and Exchange Commissioner Hester Peirce (aka Crypto Mom) issued a clear statement about tokenized securities: "Tokenization may facilitate capital formation and enhance investors’ ability to use their assets as collateral" but they are still subject to existing securities laws.
See: SEC Issues Covered Stablecoin Statement, Risks Remain
Her comments are directed at companies using blockchain technology to issue or trade digital versions of financial instruments like stocks or bonds. Major U.S. firms such as Franklin Templeton, BlackRock, and Robinhood are already exploring tokenized fund structures and products.
Hester Perice, SEC Commissioner:
“Calling a token representing a security by a different name or moving it to a blockchain does not change its fundamental nature,"
“Tokenizing securities does not render them unrecognizable to our existing rule set. If you issue or trade a tokenized version of a stock or bond, you still must comply with the relevant rules.”
Her statement confirms that registration, disclosure, custody, and investor protection rules apply whether a security is paper-based or tokenized. As more and more firms turn to blockchain to modernize capital markets, the SEC is reminding them that the legal definitions of securities have not changed.
See: OSFI Drafting New Framework to Regulate Stablecoin Issuers
She highlights two categories of tokenized securities and in both cases full compliance is required: (1) those issued directly by a company and (2) those created by a third party based on an existing security.
She also cautioned that third-party tokenization can raise new risks, especially if the offering is misleading or undermines investor protections.
“A third party seeking to tokenize someone else’s security must ensure that such efforts are not misleading, do not violate the securities laws, and do not compromise investor protections.”
Why Tokenization Matters
Blockchain infrastructure can improve how markets operate. Tokenization allows for faster settlement, greater transparency, and lower administrative costs. It also enables fractional ownership, which can make investing more accessible. Restrictions can be built in and help enforce compliance automatically, some platforms may also offer 24/7 continuous trading access.
See: Coinbase Pushes for Tokenized Equities Approval
In Peirce’s view, innovation and regulation don't have to be in conflict:
“We should consider exemptions, no-action relief, or other tailored regulatory accommodations where the benefits of blockchain technology can be realized without undermining investor protections.”
Implications for Canadian Fintechs
The SEC’s position does not change Canadian law, but it provides useful direction for NCFA members and fintechs active in U.S. markets. In Canada, tokenized offerings must comply with securities rules. If a financial product is a security under Canadian law then it's subject to regulation.
Canadian fintechs exploring tokenization should expect scrutiny on custody, disclosures, and investor onboarding. Issuers must also ensure that the technology used does not obscure risk or circumvent investor rights. Regulatory engagement is key.
See: Coingecko 2024 Report: Investing in Tokenized RWAs
Peirce's statement shows that regulators are open to innovation but only if it maintains transparency and investor safeguards.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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