TLDR
- SEC Commissioner Mark Uyeda emphasized that tokenized securities must comply with existing securities regulations.
- Uyeda stated that the SEC’s role is to adapt current laws for blockchain technology rather than create new rules for crypto-native assets.
- The Commissioner highlighted that market demand and investor confidence should drive the adoption of tokenization.
- Uyeda noted that the SEC has already shown openness to innovation by approving an exemptive application from WisdomTree Digital Trust.
- The SEC is committed to technology-neutral rulemaking that focuses on outcomes rather than specific processes or methods.
U.S. Securities and Exchange Commission (SEC) Commissioner Mark T. Uyeda shared his views on tokenization, emphasizing the SEC’s role in modernizing securities laws without creating barriers. In his speech at the Asset Management Derivatives Forum, Uyeda framed blockchain-based securities as part of a natural evolution, not a regulatory disruption. He highlighted that tokenized securities must comply with current regulations, but the SEC should ensure its rules do not hinder market progress.
SEC’s Approach to Tokenization and Blockchain-Based Securities
Commissioner Uyeda addressed the growing reality of tokenization, explaining that blockchain technology is no longer just a theoretical concept. Market participants are now testing how traditional securities can be issued, held, and transferred on the blockchain. According to Uyeda, the SEC’s role is not to create new rules for crypto-native assets but to adapt existing regulations for the onchain environment.
Uyeda emphasized that tokenized securities must adhere to the same regulations as traditional securities. “Technological advancements do not alter core legal obligations around disclosure, custody, and investor protection,” he said. He stressed that it is essential to ensure these legal obligations remain intact while accommodating blockchain’s potential to streamline operations.
SEC’s Rulemaking Should Avoid Unnecessary Roadblocks
The Commissioner also underscored that market demand and investor confidence should determine the pace of tokenization adoption. He argued that the SEC’s role is to avoid adding unnecessary roadblocks to the development of tokenized securities. “The SEC’s rulebook should not impose unnecessary roadblocks,” Uyeda stated, reinforcing the importance of aligning the agency’s actions with market progress.
Uyeda pointed out that the SEC has already shown openness to innovation through recent regulatory steps. The SEC’s approval of an exemptive application from WisdomTree Digital Trust exemplifies this approach. The application seeks relief under the Investment Company Act to allow affiliated dealers to trade shares of a money market fund with tokenized assets.
Moving Toward a Technology-Neutral Regulatory Environment
The SEC Commissioner stressed the agency’s commitment to technology-neutral rulemaking, focusing on outcomes rather than specific methods. Uyeda acknowledged that traditional SEC rules assume complex intermediation structures, which tokenization could bypass. He explained that tokenization could enable more direct interactions between issuers and investors on blockchain platforms.
Uyeda concluded that the SEC will continue to modernize its approach while ensuring it upholds the foundational principles of investor protection. He noted that by working within the framework of existing laws, tokenization can grow without undermining the established regulations governing the securities markets.
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