Peirce’s bulletin notes that tokenization can occur in two ways: an issuer can mint blockchain versions of its own shares, or a custodian can wrap third-party securities and issue receipts.
She warned that the second model introduces counterparty risk because the token holder depends on the custodian’s solvency and control of the underlying shares.
Peirce urged distributors to consult the SEC’s Division of Corporation Finance’s “staff statement” on disclosure duties and to meet with agency staff early if they seek bespoke exemptions.
She also flagged that the rules might classify specific token formats as “receipts for a security” or, if they lack beneficial ownership rights, as “security-based swaps” barred from off-exchange retail trading.
Peirce wrote:
“The same legal requirements apply to on- and off-chain versions of these instruments.”
Dashboard snapshots from data provider RWA.xyz show that the total surpassed the $50 million mark on July 6.
Market participants largely welcomed the clarity. Backed Finance co-founder Adam Levi said in a statement that the company “designed xStocks to mirror traditional equity custody so regulatory treatment remains straightforward.”
Peirce closed by signaling openness to modernization, saying the Commission “stands ready to work with market participants to craft appropriate exemptions and modernize rules” where technology exposes gaps.
