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SEC Sets Clear Rules for Tokenized Securities, Splitting Them Into Two Key Categories

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SEC Sets Clear Rules for Tokenized Securities, Splitting Them Into Two Key Categories


The SEC categorizes tokenized securities into issuer-sponsored and third-party models. It explained legal compliance requirements under federal securities laws.

The US Securities and Exchange Commission (SEC) has released new guidance to clarify how federal securities laws apply to tokenized securities.

Issued jointly by the Division of Corporation Finance, the Division of Investment Management, and the Division of Trading and Markets on January 28th, the statement categorizes tokenized securities into two main types: issuer-sponsored and third-party-sponsored.

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Issuer-Sponsored Tokenized Securities

According to the SEC, a tokenized security is a financial instrument that meets the legal definition of a “security.” It is represented or formatted as a crypto asset, while ownership records are maintained on one or more crypto networks.

In the issuer-sponsored model, the issuer or its agent integrates distributed ledger technology (DLT) into its systems, so that transfers of the crypto asset on the network correspond to transfers on the official master securityholder file.

Issuers may offer securities in multiple formats, and a tokenized security may be considered of the same class as its traditional counterpart if the rights and privileges are “substantially” similar. In some cases, issuers may issue a crypto asset that does not directly integrate with the master securityholder file but can be used to effect transfers of ownership recorded off-chain, as explained by the securities agency.

Third-Party Issuance: Custodial Or Synthetic

The second category involves third-party-sponsored tokenized securities, where entities unaffiliated with the issuer tokenize another party’s securities. These can take the form of custodial tokenized securities or synthetic tokenized securities. Custodial tokenized securities occur when a third party issues a crypto asset representing an ownership interest in another company’s security. The ownership records for these crypto assets can be maintained on-chain or off-chain by a third party.

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On the other hand, synthetic tokenized securities include linked securities and security-based swaps, which provide exposure to the underlying security but do not confer rights from the original issuer. Security-based swaps issued as crypto assets may only be offered to eligible contract participants unless registered with the SEC and traded on a national securities exchange.

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The guidance also states that the classification and format of tokenized securities do not alter their treatment under federal securities laws, and the SEC remains available to engage with market participants seeking clarity or preparing filings. This statement aims to help companies and investors navigate the legal landscape for tokenized securities while complying with existing registration and disclosure requirements.

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Crypto World

Why Cardano Investors Are Moving Assets to Self-Custody Now

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ADA Price


“Currently, a 10 billion market cap, this thing is not even worth $1 billion,” one X user argued.

The latest cryptocurrency market crash was brutal, sending Cardano’s ADA to multi-month lows.

Some analysts believe the storm may not be over, warning the price could nosedive by as much as 75% in the short term.

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The Bad Days for the Bulls Aren’t Over?

Several hours ago, ADA plunged to 0.27, the lowest level since August 2024. Currently, it trades at around $0.29 (per CoinGecko’s data), representing a 15% decline on a weekly scale.

ADA Price
ADA Price, Source: CoinGecko

The well-known analyst DrBullZeus claimed that the asset is now nearing “a must hold support zone” at the range of $0.24-$0.28. He thinks that breaking below that level could result in a price crash to $0.125 and even $0.075.

The popular trader Matthew Dixon also chipped in. He suggested that “technically speaking,” ADA has retraced in three waves since the local top seen towards the end of 2024. He outlined $0.24 as a “very important long-term support,” predicting that as long as it holds, the price could rebound.

“A break of support would be a serious concern,” he alerted.

Prior to that, Harmonic Trader predicted that in six months, ADA might trade under $0.10. “Currently, a 10 billion market cap, this thing is not even worth $1 billion,” they argued.

Time to Rally?

Despite ADA’s recent price decline, some other analysts remain optimistic that a resurgence could be on the way. One of them, using the X nickname “Lucky,” asked their almost two million followers whether they plan to increase their exposure to the token at current rates. The analyst also envisioned a potential pump to nearly $1 in the near future.

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LaPetite is also bullish. Several days ago, he forecasted that ADA is about to go “parabolic,” claiming that “huge announcements” concerning Cardano are coming soon.

The recent exchange netflows signal that a rebound could indeed be on the horizon. Data provided by CoinGlass shows that over the past days and weeks, outflows have significantly outpaced inflows. This means investors have been shifting from centralized platforms to self-custody, which in turn reduces immediate selling pressure.

ADA Exchange Netflow
ADA Exchange Netflow, Source: CoinGlass
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Aave Shutters Avara Brand and Family Crypto Wallet

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Aave Shutters Avara Brand and Family Crypto Wallet

Aave Labs says it is sunsetting its “umbrella brand” Avara in the company’s latest move to refocus on decentralized finance and simplify its branding.

Aave founder and CEO Stani Kulechov posted to X on Tuesday that Avara, a company encompassing projects including the Family crypto wallet and previously the social media platform Lens, “is no longer required as we go all in on bringing Aave to the masses.”

Kulechov said the Apple iOS-based Family crypto wallet was also being wound down as the team has “learned that onboarding millions of users requires purpose-built experiences, such as savings, rather than generic, open-ended wallet experiences.”

The move marks Aave’s latest effort to refocus on products such as its flagship lending protocol as the project handed stewardship of Lens to the Mask Network last month, with Kulechov saying Aave’s role in the protocol would be reduced to an advisory role so it can focus on DeFi.

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Source: Stani Kulechov

Kulechov said in his latest post that Aave was “now united as one team of world-class designers, engineers, and smart contract experts, aligned around a single mission: bringing DeFi to everyone.”

All future projects under Aave Labs

Avara said in a blog post that “all current and future products, including the Aave App, Aave Pro, and Aave Kit, will operate under Aave Labs” to simplify the brand.

It added that accounts linked to the Family wallets “will continue as core infrastructure within Aave Labs products,” but the iOS app would be wound down over the next year.

No new users will be onboarded to the app from April 1, and existing users can continue using the app until April 1, 2027, and will continue to have full access to their funds on Aave’s website.

Related: There is no trust in DeFi without proper risk management

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Aave is the biggest DeFi protocol with $30 billion in total value locked, nearly $9 billion more than the next largest project, the staking protocol Lido, which has $21.7 billion in value locked, according to DefiLlama.