The U.S. Securities and Exchange Commission (SEC) appears to be moving toward applying exemptions under securities laws to initiatives involving “tokenization” (the process of digitizing real-world assets or rights, such as real estate and stocks, and issuing them as “tokens” that can be traded on a blockchain). However, challenges with this approach have been pointed out.Former SEC attorneys have expressed the view that these exemptions are inferior in terms of stability and sustainability compared to broader, more robust “comprehensive rules.” This observation raises important questions about the appropriate regulatory framework from the perspectives of the healthy development of the tokenization market and investor protection.According to a report dated June 12, 2026, the SEC’s move suggests that more fundamental regulatory frameworks are needed to ensure long-term market reliability while promoting innovation. This article examines the background of this issue and its implications for the future of the tokenization market.
The SEC’s Tokenization Initiatives and Their Background
The U.S. Securities and Exchange Commission (SEC) places a high priority on innovation in financial markets. In particular, “tokenization” (the process of digitizing real-world assets or rights, such as real estate or stocks, using blockchain technology and issuing them as “tokens” that can be traded on the blockchain) is attracting attention as a new means of fundraising and asset securitization.
The SEC is considering granting “exemptions” (exclusion from the application of specific laws or regulations) under securities laws for certain tokenization projects. This is believed to be an effort to ensure that existing strict securities regulations do not hinder the development of new technologies.
These exemptions temporarily or selectively ease regulatory requirements for projects that meet specific conditions. This could enable companies to accelerate their experimentation and deployment of tokenization.
However, experts continue to debate whether this approach is sufficient to ensure long-term market stability and investor protection.
Limitations and Challenges of Exemptions
According to former SEC attorneys, exemptions are not as robust as “full-fledged rules” (those formally enacted as laws or regulations with broad applicability). They point out that exemptions are often limited to specific situations or time periods, and thus have limited legal stability.
Exemptions carry the risk of being modified or revoked in the future. This means tokenization projects may face unexpected regulatory changes, increasing uncertainty in their business plans.
Furthermore, exemptions do not provide a consistent regulatory framework across the entire market. The fact that different approaches are taken for each individual project raises concerns that market transparency and fairness may be compromised.
From the perspective of investor protection, there are concerns that exemptions alone are insufficient. It has also been pointed out that in the absence of comprehensive regulations, it may become difficult to take legal action against fraud and misconduct.
The Importance of "Full Regulation"
Clear and comprehensive “complete regulations” are essential for the sustainable growth of the tokenization market. Complete regulations provide a level playing field for all market participants and enhance predictability.
Comprehensive regulations are also crucial for strengthening investor protection. By establishing clear rules—such as disclosure requirements and penalties for misconduct—investors can participate in the market with greater confidence.
Furthermore, complete rules play a vital role in promoting international regulatory harmonization. When countries adopt similar regulations, cross-border token trading becomes smoother.
Former SEC attorneys emphasize that while exemptions may spur short-term innovation, comprehensive regulations are necessary to ensure the market’s long-term “resilience” (recovery capacity and durability). Source
Expert Opinions and Future Outlook
Financial regulation experts point out the difficulty the SEC faces in balancing innovation and regulation. While exemptions may be effective as a temporary solution, they do not provide a fundamental solution.
Tokenization is a technology with the potential to shape the future of finance. However, a robust and reliable legal framework is essential to fully realize its potential.
Going forward, the SEC may begin moving toward the development of more comprehensive tokenization regulations while evaluating the application of exemptions. Market participants need to closely monitor these developments.
Cooperation between regulators and the industry to build a sound market environment is essential for the widespread adoption and development of tokenization.
Implications for the Japanese Market
Japan’s Financial Services Agency (FSA) also maintains a cautious stance regarding the regulation of crypto assets and blockchain technology. The SEC’s recent actions offer insights for the Japanese market as well.
In Japan as well, the potential benefits of tokenization are recognized. However, many challenges remain, such as investor protection and anti-money laundering (AML) measures.
It is necessary to build an appropriate regulatory framework tailored to Japan’s unique market environment, while taking into account regulatory trends overseas. Striking a balance between flexible measures, such as exemptions, and the establishment of comprehensive rules from a long-term perspective is crucial.
When Japanese financial institutions and companies engage in tokenization, they must deeply understand domestic and international regulatory trends and formulate prudent business strategies.
[Source: Original Article]
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