Noticed an interesting clarification from the SEC regarding tokenized assets. It turns out they have differentiated their classification approach depending on who is behind the issuance.

If the issuer itself issues the token — it will be considered a regular security, with all the associated requirements. Logical, because essentially it’s just a digital form of a traditional asset.

But with third parties, it gets more complicated. When someone sponsors a tokenized security from an external party, the classification can be entirely different. Such instruments may not grant holders direct rights to the underlying asset and could ultimately be classified as a security-based swap. Structure and function play a key role in determining the status here.

Overall, the regulator is trying to understand how exactly to classify all these new formats to prevent loopholes. For the market, this means transparency and clear rules are gradually coming into place. Those monitoring regulatory developments — keep this in mind.