Tokenized securities are still securities. In 2026 the SEC issued a token taxonomy (March 17), proposed Regulation Crypto Assets with $5 million and $75 million exemptions for non-security crypto assets sold under investment contracts (August 18), and granted a temporary, capped Innovation Exemption for onchain trading of tokenized NMS stocks (September 17). Issuers tokenizing equity or fund interests still need a securities-law path for the offering itself.
Key takeaways
- "Tokenized securities are still securities" — the SEC's consistent position.
- March 2026: SEC interpretation (joined by the CFTC) sets out five token categories, including digital securities.
- August 2026: proposed Regulation Crypto Assets — a $5M one-time exemption and a $75M-per-year exemption for covered investment contracts, which exclude tokenized securities. Proposal only; comments closed October 20, 2026.
- September 2026: a temporary, conditional Innovation Exemption lets certain onchain venues trade a capped set of tokenized NMS stocks.
The starting point
Putting a security on a blockchain does not change what it is. As SEC Commissioner Hester Peirce put it in July 2025: "Tokenized securities are still securities" [1]. An offering of tokenized equity, debt, or fund interests therefore needs registration or an exemption — Regulation D, Regulation A, or Regulation S — just like its traditional equivalent.
March 2026: a token taxonomy
On March 17, 2026, the SEC issued an interpretation of how federal securities laws apply to crypto assets, which the CFTC joined [2]. It sets out five categories — digital commodities, digital collectibles, digital tools, stablecoins, and digital securities — and addresses when a non-security crypto asset becomes, and stops being, subject to an investment contract, along with airdrops, protocol mining and staking, and wrapping [2]. SEC Chairman Paul Atkins said that "most crypto assets are not themselves securities" [2] — but tokenized securities sit squarely in the digital-securities category.
August 2026: proposed Regulation Crypto Assets
On August 18, 2026, the SEC proposed Regulation Crypto Assets [3]. It would create a one-time exemption for offerings of up to $5 million over four years with principles-based narrative disclosure, and a second exemption for up to $75 million in each 12-month period that adds financial statements and ongoing reporting [3]. It also proposes a conditional safe harbor under which a crypto asset would not be treated as subject to an investment contract, and preemption of state registration for these offerings [3]. It was published in the Federal Register on August 21, 2026, and its comment period closed on October 20, 2026; it has not been adopted [5]. Importantly for tokenization, the proposed exemptions apply to "covered investment contracts" — investment contracts in which the crypto asset subject to the contract is not itself a security [5] — so tokenized securities would still need registration or an existing exemption.
September 2026: the Innovation Exemption
On September 17, 2026, the Commission approved a temporary, conditional exemption allowing limited trading of tokenized NMS stocks on certain onchain venues, including permissioned trading through automated market makers and liquidity pools [4]. Venues must give public notice, make transactions transparent, coordinate trading halts, keep records, and maintain technology safeguards, and the number of symbols and trading volume are capped [4].
What it means for private issuers
The Innovation Exemption concerns listed (NMS) stocks, not private placements. For a private company or fund considering tokenization, the practical questions remain the offering exemption, transfer restrictions on restricted securities, investor verification, and who is acting as the regulated intermediary. Tokenization can improve record-keeping and, eventually, secondary liquidity — but it does not remove the securities-law work.
Frequently asked questions
- Are tokenized securities regulated as securities?
- Yes. The SEC's position is that tokenization does not change the legal nature of the instrument, and its March 2026 interpretation lists digital securities as a distinct category.
- Is Regulation Crypto Assets in effect?
- No. It was proposed on August 18, 2026; the comment period closed October 20, 2026, and it has not been adopted. Its exemptions would not cover tokenized securities in any case.
- Can private company tokens trade under the Innovation Exemption?
- No. The September 2026 Innovation Exemption covers tokenized NMS stocks — securities listed on national exchanges — on qualifying venues, subject to caps.
Sources
- [1]Commissioner Hester M. Peirce, U.S. Securities and Exchange Commission, “Enchanting, but Not Magical: A Statement on the Tokenization of Securities,” July 9, 2025.
- [2]U.S. Securities and Exchange Commission, “SEC Clarifies the Application of Federal Securities Laws to Crypto Assets (Press Release 2026-30),” March 17, 2026.
- [3]U.S. Securities and Exchange Commission, “SEC Proposes New Regulation Crypto Assets (Press Release 2026-76),” August 18, 2026.
- [4]Commissioner Mark T. Uyeda, U.S. Securities and Exchange Commission, “Statement on the Innovation Exemption,” September 17, 2026.
- [5]Federal Register, “Regulation Crypto Assets (proposed rule),” August 21, 2026.
How Baird Augustine helps
This article is for informational purposes only and is not legal, tax, or investment advice, or an offer to sell or a solicitation of an offer to buy any security. Regulatory proposals described here may change before adoption. Securities offered through Umergence LLC, Member FINRA/SIPC.
