Tokenized Securities and Regulatory Implications: SEC Chair Discusses DLT's Future and Challenges

The Chairman of the U.S. Securities and Exchange Commission (SEC), Paul Atkins, recently appeared on the All-In Podcast to share important insights on the relationship between distributed ledger technology (DLT) and securities regulation. His remarks reveal how U.S. financial regulators are approaching new technologies.

Transforming Market Environment with DLT Technology

Chairman Atkins pointed out that DLT could bring many benefits to the financial services industry. Notably, the realization of T+0 settlement (near-instant delivery and payment) could significantly change existing market practices. Additionally, payments using digital assets on blockchain are also nearing implementation.

While these technological advances are undoubtedly innovative, challenges remain. There is a need for certain restrictions, such as preventing fraud, and regulators must carefully consider what concepts like best bid and best ask mean in this new system, especially regarding liquidity and traditional market functions.

The Legal Status of Tokenized Assets Remains Unchanged

A key principle emphasized by the SEC Chairman is that as long as an asset is inherently a security, it remains a security—even if tokenized—and is subject to federal securities laws. This principle clarifies that new technologies do not fundamentally alter the existing regulatory framework.

At the same time, he stated that regulators have a responsibility to ensure that new rules genuinely fit practical new uses. As trading methods and payment systems evolve, regulators must adapt the regulatory system to the new technological environment.

Regulatory Adaptation: New Frameworks from SEC and CFTC

Currently, the SEC is working closely with the CFTC to review and adjust regulations to accommodate emerging technologies. The guiding principle is based on the nature of the asset.

If an asset is a tokenized security, it falls under the SEC’s regulatory scope. Conversely, digital currencies, digital tokens, digital tools, or digital collectibles fall under the jurisdiction of the CFTC. By restructuring regulatory responsibilities in response to technological progress, the U.S. financial regulatory system is moving toward a new era.

Chairman Paul Atkins’s statements reflect a balanced approach: the principles of regulation remain unchanged, but operational flexibility is necessary to adapt to technological innovation.