Integrating Digital Equities: The SEC’s Stance on On-Chain Custody
The emergence of tokenized securities represents a significant evolution in financial markets, promising enhanced efficiency, liquidity, and accessibility for traditional assets. As these innovative digital instruments gain traction, regulatory bodies worldwide are actively working to define their place within existing legal frameworks.
In the United States, the Securities and Exchange Commission (SEC) has begun to articulate its expectations for how tokenized equities can coexist with the nation’s robust financial market safeguards, particularly concerning their custody.
Regulatory Framework for Tokenized Equities
The U.S. Securities and Exchange Commission has outlined a clear pathway for the integration of tokenized equities into the regulated financial ecosystem. This guidance aims to ensure that the technological advancements offered by blockchain do not compromise the fundamental principles of investor protection and market integrity.
The Commission’s pronouncements underscore a strategic effort to extend its jurisdictional oversight to on-chain assets that represent traditional securities, thereby maintaining a consistent regulatory approach regardless of the underlying technology.
Custody Solutions: A Clear Preference for Broker-Led Models
A central pillar of the SEC’s guidance revolves around the custody of these digital assets. The regulator has expressed a distinct preference for established, broker-led custody models over crypto-native self-custody solutions for tokenized equities.
Under this favored framework, regulated broker-
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