SEC Maintains Strict Stance, Tokenized Securities Remain Subject to Securities Laws

The Chairman of the U.S. Securities and Exchange Commission (SEC), Paul Atkins, discussed the potential of distributed ledger technology (DLT) and regulatory principles in the digital asset era during an appearance on the All-In Podcast. His remarks revealed that while the SEC is open to new technologies, it maintains a strict regulatory stance.

Potential Benefits of DLT and the Settlement Revolution

Chairman Atkins pointed out that distributed ledger technology could offer many potential benefits to the financial services industry. Notably, it could enable T+0 settlement, meaning nearly instant transfer and payment. Digital assets on the blockchain could facilitate innovative solutions that were difficult to achieve with traditional settlement systems, highlighting blockchain’s potential to transform core financial infrastructure.

Tokenized Assets Still Within Securities Law Framework

At the same time, SEC regulatory principles are clear. As long as an asset is inherently a security, tokenization does not change its classification; it remains a security subject to federal securities laws. In other words, regardless of how innovative the technological form may be, if its substantive nature remains unchanged, it will still fall under regulatory oversight. Chairman Atkins emphasized the importance of ensuring that these principles genuinely accommodate new practical applications.

Regulatory Adjustments for Emerging Technologies

However, regulators have a responsibility not only to apply existing rules but also to adapt them to new technological environments. The SEC is currently reviewing and adjusting its regulatory frameworks to keep pace with technological advancements. As trading methods and payment mechanisms evolve, it is necessary to address questions such as what the concept of “best bid and offer” means in these new systems. This process is crucial for truly aligning regulations with emerging technology landscapes.

Oversight Responsibilities Between SEC and CFTC

An important point is that the SEC coordinates regulation with the CFTC. The regulatory framework differs depending on the nature of the digital asset. If an asset is a tokenized security, it falls under the SEC’s jurisdiction. Conversely, digital currencies, digital tokens, digital tools, or digital collectibles are within the CFTC’s scope. This clear division of roles ensures appropriate oversight in emerging technology markets.

The SEC’s approach reflects a balance between fostering innovation and maintaining regulation, responding to market expectations. While upholding securities law principles, it also demonstrates flexibility in adapting to technological progress.