US Lawmakers Move to Regulate Tokenized Securities Markets

• Lawmakers push tokenized securities rules while preserving investor protections.
• SEC allows tokenization but confirms assets remain under securities laws.
• Industry highlights faster settlement and rising global tokenization competition.

US lawmakers are moving to define rules for tokenized securities as blockchain-based assets gain traction across capital markets. The SEC is advancing a framework while institutions test tokenized shares, settlement systems, and onchain trading infrastructure, signaling a shift toward regulated blockchain-based financial markets.

US Lawmakers Push Tokenized Securities Regulation

During the hearing titled “Tokenization and the Future of Securities: Modernizing Our Capital Markets,” members of Congress acknowledged that tokenization is already being adopted across financial systems. 

Representative Andy Barr stated that the transition is underway and stated that regulatory modernization must preserve investor protection while allowing the United States to remain competitive.

At the same time, regulators have taken steps to integrate tokenized assets into existing frameworks. 

SEC Signals Framework for Tokenized Assets

The U.S. Securities and Exchange Commission has permitted select entities to proceed with tokenized securities initiatives while maintaining that such instruments remain subject to securities laws.

In December, the agency authorized the Depository Trust & Clearing Corporation to tokenize certain highly liquid assets on approved blockchains under a three-year program. Separately, Nasdaq received approval for a rule change enabling the trading of tokenized shares, while the New York Stock Exchange has been developing infrastructure for on-chain settlement and continuous trading.

SEC Chair Paul Atkins indicated that the agency is preparing to seek public input on possible rulemaking, including an innovation exemption that could function as a regulatory sandbox for blockchain-based assets.

SEC Signals Framework for Tokenized Assets

Some lawmakers raised concerns that exemptions could create uneven rules. Representative Brad Sherman warned that different standards for tokenized securities may weaken investor protections.

Committee Chair French Hill described tokenization as a structural shift in how securities are issued, traded, and recorded. He noted that while distributed ledger technology could improve efficiency and transparency, it also introduces legal and regulatory challenges that require careful evaluation.

Blockchain Association CEO Summer Mersinger highlighted the possible for continuous trading and improved transparency, while Plume Network’s Salman Banaei noted that huge tokenization activity is already occurring in jurisdictions such as Singapore and Hong Kong.

Related: Australia Pushes Tokenization, Signaling $17B Market Opportunity