Policy
Tokenized Stocks and Treasuries Are Defined Out of the SEC's October 20 Crypto Rule
The tokenization industry has circled one date: the close of comments on Regulation Crypto Assets. Read the 146-page proposal and its definitions exclude, in so many words, any token that is itself a security. The question of what else can trade on-chain is being asked in a different docket, with no deadline printed on it.
Twenty-two days from now, on October 20, the comment period closes on Regulation Crypto Assets, the Securities and Exchange Commission's first standalone offering framework for tokens. The proposal was announced on August 18, published in the Federal Register on August 21 under File No. S7-2026-27, and runs to 146 printed pages. After the CLARITY Act's cloture vote failed, it became the most substantial piece of crypto rulemaking on the federal calendar, and it is being discussed in tokenization circles as the moment the rules for real-world assets get written.
RWAToday, which put the deadline in front of tokenization readers today, discusses the rule in terms of tokenized Treasury bills and tokenized equity. The release's own text does not support that reading. This desk read its definitions, and the scope is narrower than the conversation around it suggests.
Three conditions, and the second one does the work
Everything in Regulation Crypto Assets — both exemptions, the safe harbor and the state preemption — hangs on one defined term, the "covered investment contract." Proposed Rule 100 defines it as an investment contract involving a crypto asset, provided three things are true: a crypto asset is subject to the contract; "such crypto asset is not a security"; and no asset other than that crypto asset, "including any security or non-security asset," is subject to the contract.
A tokenized Treasury bill fails the second condition, because the token is the Treasury — a security in a different format. A tokenized share fails for the same reason. A tokenized fund, a tokenized note or a token representing a slice of a bond portfolio fails the second condition, the third, or both. The release says so directly: the definition is meant to exclude "investment contracts that involve crypto assets that are themselves securities (e.g., digital securities)," and to exclude contracts that involve any asset other than a non-security crypto asset.
It also tells those issuers where to go instead. Footnote 116 says an issuer offering other types of securities should use "another offering framework, such as a registered offering or an exempt offering under Regulation A or Regulation D." Footnote 19 is more pointed: digital securities "may be more suitable for registration," and the Commission is "not, at this time, proposing" changes to the registered-offering rules to accommodate them.
That is consistent with the staff's January 28 Statement on Tokenized Securities, which took the position that the format in which a security is issued does not change how the securities laws apply, and with the March interpretive release that sorted crypto assets into five buckets — digital commodities, collectibles, tools, stablecoins and digital securities — and put the last of those squarely inside the definition of a security.
What the rule actually does
For the tokens it does cover, the proposal is substantial. According to the SEC's fact sheet, a one-time startup exemption would allow up to $5 million to be raised over as long as four years. A fundraising exemption, modeled on Regulation A, would allow up to $20 million a year in Tier 1 and $75 million a year in Tier 2, with audited financial statements required at Tier 2 and ongoing reporting afterward. A safe harbor would let an issuer certify, with a public filing and a supporting analysis, that it has finished the "essential managerial efforts" it promised, at which point the investment contract is deemed to have ended and the token is no longer treated as subject to it. A new "qualified purchaser" definition would preempt state registration for these offerings and for certain resales.
The release's economic analysis also points out that securities sold under the new exemptions could go to an unlimited number of non-accredited investors and would not be restricted securities. That is the part a retail-access argument for tokenized assets would want. It applies to network tokens sold under an investment contract, not to a tokenized money market fund.
Which SEC docket covers which token
| Regulation Crypto Assets (S7-2026-27) | Innovation Exemption (4-927) | |
|---|---|---|
| Instrument | Proposed rule | Exemptive order, already issued |
| Covers | Offerings of investment contracts tied to a non-security crypto asset | Permissioned on-chain trading of tokenized NMS stock |
| Tokenized Treasuries, funds, bonds | Excluded by definition | Not tradable as the base asset; question 4 asks whether they should be |
| Key limits | $5M over four years; $20M / $75M a year | 75 symbols and 0.25% of volume (Tier 1); 250 symbols and 2.5% (Tier 2) |
| Comments due | October 20, 2026 | No closing date stated in the order |
The docket where the tokenized-asset question is open
On September 17, a month after Regulation Crypto Assets, the Commission issued something that does deal with tokenized securities: an "Innovation Exemption" order, published in the Federal Register on September 22 as Release No. 34-106402, File No. 4-927. It is an order, not a proposal. It exempts "Tokenized Securities Venues" from the definition of an exchange, and certain liquidity providers in automated-market-maker pools from the definition of a dealer, so that permissioned participants can trade tokenized versions of listed US stocks on-chain.
The relief is tight. It expires five years after publication. A venue has to post a public notice at least 30 calendar days before it starts operating. Tier 1 stocks are capped at 75 symbols and 0.25 percent of the underlying stock's prior-month average daily volume; Tier 2 at 250 symbols and 2.5 percent. And the base asset has to be NMS stock. Tokenized money market funds appear only as something that can sit on the other side of a trading pair.
The order ends with ten numbered requests for comment. The fourth asks whether a venue should be allowed "to trade securities other than Tokenized NMS Stock," and which types. That is the live federal question for tokenized Treasuries, funds and credit. The comment instructions in the Federal Register text name File No. 4-927 and give an internet form and an email route. The desk found no closing date in the order.
Why the distinction matters before October 20
A comment letter is only as useful as the docket it lands in. A tokenized-Treasury issuer arguing for retail access in S7-2026-27 would be asking the Commission to widen a definition the release says was drawn narrow on purpose. That is a legitimate thing to argue, and the release invites comment on every defined term in Rule 100, but it is an argument for changing the rule's scope, not for shaping how the rule applies. The questions the Commission has actually put to the market about tokenized securities trading are in 4-927.
The release's own economic analysis shows how small the existing crypto-related exempt market is. From June 2015 through 2024, the SEC identified 14 issuers that conducted qualified crypto-related Regulation A offerings, seeking a total of $546 million. Nine of them reported actually raising money: $119 million across ten offerings. From 2009 through 2024, 581 issuers filed 682 crypto-related Regulation D offerings, peaking at 282 in 2018 and running at 75 in 2024. The agency cautions that those keyword-based counts include companies that merely referenced blockchain in their filings.
The Take
Nothing here is hidden. The exclusion is in the definition, in two footnotes, and in the Commission's own summary of the rule's purpose. But tokenization coverage has spent a year treating every SEC action as an RWA action, and deadlines tend to get repeated rather than read. Regulation Crypto Assets is a rule for network tokens and the contracts sold alongside them, and on those terms it is the most serious attempt yet to give token issuers a lawful route. It is not a charter for tokenized Treasuries, and it says so. The tokenized-securities conversation now has an order in force, a five-year clock and ten open questions under a different file number. Anyone who wants on-chain Treasuries in retail hands should be writing to 4-927. The October 20 docket is for somebody else's argument.