SEC’s “Crypto Mom” Warns Tokenized Securities Must Follow Existing Rules

A senior U.S. securities regulator known for her crypto-friendly approach emphasized on Wednesday that new trading models involving “tokenization” must still comply with existing securities laws.

Hester Peirce, a Republican commissioner at the Securities and Exchange Commission (SEC) who is often called “crypto mom,” said in a statement: “As powerful as blockchain technology is, it does not have magical abilities to transform the nature of the underlying asset. Tokenized securities are still securities.”

Tokenization involves converting traditional company shares into digital tokens, making them tradable much like cryptocurrencies. Instead of directly holding the shares, investors hold tokens that represent ownership. Peirce noted that these tokens could be issued either by the security’s original issuer or by unrelated third parties. She warned that “anyone who buys a third-party token could face unique risks.”