SEC Advisory Committee Backs Tokenized Securities, Proposes Regulatory Safeguards

Tokenized deposits represent customers’ claims on bank deposits as blockchain-based tokens. They remain issued by regulated financial institutions, distinguishing them from privately issued stablecoins. If approved for launch, they could shorten cross-border payment and asset-settlement times and would signal that the U.S. Securities and Exchange Commission’s crypto innovation policy is beginning to extend into traditional banking.

SEC Chair Paul Atkins recently said tokenized deposits offered by traditional financial institutions could receive regulatory approval as early as 2027. Reports cautioned that approval is not assured, however, as questions remain over banking supervisory authority, deposit protection and rules for inter-institutional settlement. No initial participating banks, issuance amounts or firm launch dates have been announced.

Tokenized securities use blockchain-based tokens to represent traditional assets such as stocks. The technology could enable round-the-clock trading and more efficient settlement, but holders’ access to dividends, voting rights and asset protections still depends on the legal framework and market infrastructure. The US Securities and Exchange Commission’s current framework dates to the 1930s, making permanent rules from Congress crucial to industry investment and investor protection.

A June 15, 2026, report said SEC Chair Paul Atkins was using the agency’s existing exemptive authority to develop a temporary framework allowing companies to trade tokenized stocks. The proposal has yet to disclose the amounts involved or a formal effective date. SEC Commissioner Hester Peirce confirmed that the agency has broad exemptive authority, but legal experts cautioned that comprehensive legislation typically takes 12–18 months. Questions surrounding third-party issuance, buyer identification, dividends and voting rights remain unresolved.

Tokenized securities put interests in real-world assets such as stocks, bonds, REITs and private credit onchain. However, holders’ rights vary across issuance structures, and the instruments may constitute securities or security-based swaps. Fidelity Investments said traditional finance will continue to face legal gaps when connecting with onchain markets unless the U.S. Securities and Exchange Commission standardizes trading, custody and capital rules.

On March 20, 2026, Fidelity Investments responded to a request for input issued earlier in the month by the SEC’s Crypto Task Force. It called for broker-dealers to be explicitly permitted to offer, custody and trade crypto assets through alternative trading systems, including tokenized securities issued by third parties. Fidelity also advocated updating DeFi reporting rules to bridge centralized and decentralized venues. The submission was a regulatory proposal and involved no transaction amount.

Securities tokenization uses blockchain to record ownership interests in stocks or ETFs and has previously developed mainly on crypto platforms or in over-the-counter markets. Nasdaq is now integrating the technology into an SEC-regulated national securities exchange and the DTC clearing system. Crucially, onchain shares will retain the same legal, economic and governance rights as traditional shares.

The SEC approved Nasdaq’s rule change on March 18, 2026. DTC’s three-year pilot covers Russell 1000 constituents and ETFs tracking major indexes including the S&P 500 and Nasdaq-100. Eligible participants may opt for tokenized settlement, while the two forms of shares will use the same ticker, CUSIP and order book. The existing T+1 settlement cycle and trading hours will remain unchanged, and no approved monetary amount was set for the program.