The Tokenization of Securities: Key SEC Statements and Takeaways for Tech Founders

On July 9, 2025, SEC Commissioner Hester M. Peirce issued a statement titled “Enchanting, but Not Magical: A Statement on the Tokenization of Securities,” offering critical insights into how U.S. securities laws apply to blockchain-based tokenization. Just two months prior, SEC Chairman Paul S. Atkins delivered the keynote at the Crypto Task Force Roundtable, outlining a vision for a more rational and innovation-friendly regulatory framework for crypto assets. Together, these statements represent the most substantive regulatory commentary on tokenization and blockchain to date and carry profound implications for technology founders, digital asset innovators, and venture-backed companies entering the crypto markets.

This article provides a scholarly analysis of the SEC’s evolving stance on tokenization, identifies the legal and operational challenges it raises, and offers key takeaways for technology entrepreneurs navigating this shifting regulatory terrain.

Tokenization’s Promises and Legal Realities

Commissioner Peirce’s statement centers on an essential message: while blockchain technology can transform how securities are distributed, traded, and used, it cannot transform the legal nature of the underlying asset. A tokenized security remains, in the eyes of U.S. law, a security and is thus subject to the full weight of federal securities regulations. Peirce emphasizes that issuers and distributors must assess disclosure obligations, counterparty risks, and the possibility that token structures may generate new forms of securities, such as “receipts for securities” or “security-based swaps.”

Of particular concern are third-party tokenized products. When a custodian or other unaffiliated entity issues tokens tied to securities it holds, purchasers may face novel risks, especially around custody, redemption, and legal rights. Peirce advises market participants to proactively engage with the SEC to discuss innovative models, signaling that the Commission is open to dialogue, but only within the boundaries of securities law.

A Vision for Regulatory Modernization

Chairman Atkins’ keynote advances a broader and in some respects, bolder agenda. He draws a vivid analogy between the shift to on-chain securities and the digital revolution in the music industry, where technological advances unlocked entirely new business models, products, and consumer experiences. Atkins argues that blockchain tokenization holds similar transformative potential, particularly through smart contracts, automated dividend distributions, and enhanced liquidity for traditionally illiquid assets.

However, Atkins is sharply critical of the SEC’s historic approach to crypto markets, describing prior efforts as a denial of the issue followed by aggressive enforcement actions. He commits to ending regulation by enforcement and pivoting toward formal rulemaking, interpretive guidance, and exemptions that align legacy regulations with the realities of crypto innovation.

Atkins outlines three focal points: modernizing registration and disclosure frameworks for crypto issuances, expanding optionality and clarity around crypto custody, including reevaluating the special purpose broker-dealer regime, and enabling more diverse crypto trading products, including integrated securities and non-securities platforms. His underlying premise is that U.S. competitiveness, and the aspiration to make the United States the global leader in crypto innovation, requires a more adaptive regulatory architecture.

Key Takeaways for Tech Founders

For founders and executives at technology startups, particularly those developing blockchain, fintech, and tokenization platforms, several key lessons emerge from these regulatory pronouncements.

First, tokenization does not eliminate regulatory risk. Founders must resist the temptation to treat tokenization as a workaround for securities regulation. Whether a security is on-chain or off-chain, the same legal standards apply. This means robust compliance programs, securities law expertise, and formal legal opinions are indispensable, even at early stages.

Second, it is essential to understand product classification risks. Token structures can create complex legal instruments, including derivative-like exposures or novel entitlements. Founders should work closely with securities counsel to map token features against federal definitions, and ensure product design aligns with regulatory constraints.

Third, proactive engagement with regulators is critical. Both Peirce and Atkins encourage market participants to meet with the SEC. Founders should view regulatory engagement not as a defensive act but as part of the go-to-market strategy. Formal meetings with the Division of Corporation Finance, the Division of Trading and Markets, or the Crypto Task Force can help identify pathways to compliance and, in some cases, explore bespoke exemptions or no-action relief.

Fourth, founders should prepare for a changing regulatory landscape. While Atkins’ agenda promises a more innovation-friendly environment, it also introduces regulatory uncertainty. Founders should monitor forthcoming rulemakings, guidance, and staff statements, recognizing that the compliance strategies of today may not be adequate for tomorrow.

Fifth, positioning compliance as a competitive advantage will be essential. Firms that integrate compliance into their technology stack, particularly around issuance, custody, and trading functions, are likely to gain market share as regulatory clarity improves. Founders should invest in compliance engineering, whether through internal hires or partnerships with regulated financial institutions.

Conclusion: A Historic Moment for Digital Asset Innovation

The July 2025 statements by Commissioner Peirce and Chairman Atkins signal that U.S. digital asset regulation is at an inflection point. While the SEC reaffirms that blockchain does not change the fundamental nature of securities, it also acknowledges the need for regulatory frameworks that accommodate the unique attributes of tokenized assets. For technology founders, this moment presents both a profound opportunity and a profound responsibility: to harness the innovative potential of blockchain while upholding the principles of investor protection, market integrity, and legal compliance.

Startups and scale-ups navigating this terrain would do well to develop sophisticated regulatory strategies, engage actively with policymakers, and recognize that in the tokenization era, compliance is not a barrier to innovation but rather the foundation for it.

To explore how your company can align with emerging SEC guidelines and position itself for success in the evolving digital asset landscape, contact our firm at 786.461.1617 for a consultation. Our team stands ready to help you structure offerings, assess risks, and develop the regulatory engagement strategies critical to building the next generation of compliant blockchain businesses.