The US Securities and Exchange Commission’s Division of Trading and Markets on Wednesday outlined how broker-dealers can custody tokenized stocks and bonds under existing customer protection rules, signaling that blockchain-based securities will be governed by traditional regulatory safeguards rather than a new framework.
The division said it would not object to broker-dealers considering themselves in possession or control of crypto asset securities—such as tokenized stocks or bonds—provided they meet specific operational, security, and governance requirements. The guidance applies only to securities issued in tokenized form.
While not a formal rule, the statement offers clarity on how regulators expect tokenized securities to be integrated into established market protections. It indicates that tokenized securities are not being recognized as a separate asset class, but instead folded into existing broker-dealer regimes, even when settlement occurs on blockchain networks.
TradFi on the blockchain: Custody rules for tokenized securities
At the center of the SEC’s statement is Rule 15c3-3, the customer protection rule that requires broker-dealers to maintain control or physical possession of fully paid customer securities.
The division said that crypto asset securities recorded on blockchains can meet the rule’s “physical possession” requirement in certain cases. To do so, broker-dealers must retain exclusive control over the private keys used to access and transfer the assets.
Even if the securities exist on a blockchain, customers and third parties—including affiliates—must not be able to move them without the broker-dealer’s authorization.
The guidance draws a clear line between tokenized securities and crypto-native self-custody models, prioritizing investor protection over crypto’s permissionless design.
Broker-dealers are also expected to plan for risks such as 51% attacks, hard forks, airdrops, and other network disruptions, and to maintain procedures for seizure, freezing, or transfer restrictions under lawful orders.
Overall, the statement reinforces that tokenized stocks and bonds are securities first, regardless of the technology used to issue or settle them.
Trading tokenized securities within regulated market rails
In a separate statement released the same day, SEC Commissioner Hester Peirce highlighted unresolved challenges on the trading side of crypto asset securities.
Peirce posed questions about how national securities exchanges and alternative trading systems should handle crypto asset securities, including trading pairs where one asset is a security and the other is not.
Her comments reflect increasing pressure to apply market-structure rules designed for traditional equities to blockchain-based assets.
Peirce also questioned whether existing regulatory frameworks—along with their disclosure and reporting requirements—may impose costs that outweigh their benefits when extended to crypto trading platforms.
Platforms moving into tokenized equities
The statements arrive as crypto platforms and financial institutions accelerate efforts to tokenize securities.
On Nov. 30, Nasdaq’s head of digital assets strategy, Matt Savarese, said the exchange plans to move quickly on tokenized stocks and work closely with the SEC to bring them to its trading platform.
Earlier this week, Securitize announced plans to launch compliant, onchain trading for tokenized stocks through a swap-style interface familiar to decentralized finance (DeFi) users.
On Thursday, Coinbase also rolled out a stock trading feature as part of its broader push to become an “everything exchange.”
