SEC’s Peirce States Tokenized Securities Must Obey Federal Laws Despite Blockchain Format

Highlights:

• Hester Peirce warns firms that blockchain does not change the legal status of tokenized financial assets.
• Robinhood expands in Europe with tokenized stocks while the SEC urges caution on investor risks and legal duties.
• The SEC remains open to rule updates for blockchain products, but firms must still follow current securities laws.

Hester Peirce, a member of the US Securities and Exchange Commission, has issued a strong message to companies exploring blockchain in securities. She urged firms to speak directly with SEC officials before offering blockchain-based financial products. Peirce explained that several firms are showing increased interest in on-chain offerings. However, she stressed that blockchain does not change the legal status of the underlying asset. According to her, companies must still follow federal laws when dealing with these instruments.

Some thoughts on tokenization of securities: https://t.co/7rbqbQ4TfV

— Hester Peirce (@HesterPeirce) July 9, 2025

Peirce, who leads the agency’s crypto task force, emphasized that tokenizing an asset does not make it something new. The same laws govern securities even when companies facilitate them on a digital platform. She mentioned that using blockchain can enhance the processes, though it does not eliminate the legal obligations. Consequently, businesses should be knowledgeable of the regulations governing their remaining applicable blockchain-based products. She warned that using new technology does not remove the need for proper compliance.

According to Peirce, the design of a tokenized product can determine how the law applies to it. For example, she said a token might be treated as a receipt for a security or a type of security-based swap. Such classifications are associated with a set of guidelines, such as restrictions on trading by retailers. Peirce requested that businesses look closely at their products and evaluate the applicability of securities laws to them.

Robinhood’s Tokenized Securities Strategy Raises Concerns

Robinhood has launched a blockchain roadmap that allows investors in Europe to access tokenized stocks and exchange-traded products. The offerings enable users to get exposure to non-publicly traded companies such as OpenAI and SpaceX.

The step opens the entry of general investors to privately held companies that are otherwise enjoyed by high-net-worth end investors. In May, Robinhood proposed a plan to the SEC to assist in developing a framework to manage tokenized real-world assets.

Peirce did not name Robinhood in her statement, though the timing suggested the SEC has noticed the platform’s developments. She explained that tokenized securities must follow disclosure rules and legal obligations. According to her, risks increase when a third party manages the actual securities behind the tokens. In such cases, investors may face uncertainty about how assets are held and protected.

She warned that some tokens may confuse investors when another firm holds the underlying asset. In this setup, the token itself becomes a new security, which may differ from the original asset. Peirce highlighted that these structures can expose buyers to extra risks, including counterparty issues. She reminded companies that they must follow all legal duties when creating or distributing such tokens.

SEC Shows Willingness to Update Rules for Blockchain Assets

Peirce mentioned that the SEC is not dismissing the possibility of collaborating with companies that apply blockchain in innovative applications. She added that current rules may not suit blockchain products, and the agency plans to review and update outdated ones. However, she clarified that companies still have to fulfill their legal obligations until reforms are instituted. She encouraged the businesses to meet with SEC staff and discuss the structure of their products and their potential obstacles.

At the same time, lawmakers in the House of Representatives are pushing forward a bill to clarify how digital assets are handled in the US. The proposed law aims to define the roles of key agencies and provide a structure for the growing industry.