The CEO of Securitize proposed that native tokenization can implement securities on the blockchain. Can it withstand regulatory scrutiny?

According to Securitize CEO Carlos Domingo, the true way to represent securities on-chain is through "native" tokenization. In an interview with Decrypt on Thursday, he stated that this concept may become increasingly important, especially as more companies attempt to create tokenized products based on securities, which may leave investors confused. The U.S. Securities and Exchange Commission (SEC) also raised similar concerns this week.

What is native tokenization?

Domingo explained that if a stock is natively tokenized on Ethereum, it will inherit all the rights that investors receive in traditional stock trading, such as voting rights or dividend rights. Furthermore, natively tokenized assets have no counterparty risk and avoid fragmentation issues.

For example, BlackRock's $2.8 billion institutional digital liquidity fund (BUIDL), launched with the help of Securitize, is a native tokenization product. Securitize acts as the transfer agent for the fund, managing and recording the fund's shares directly on the blockchain. Traditional transfer agents typically use proprietary databases instead of blockchain.

Case of Native Tokenization: Exodus's Stocks

Domingo also mentioned that Exodus's stock is another example, as these stocks have been traded in tokenized form on the Securitize platform since 2022. "Each token represents a share of stock," he said.

In 2025, interest in tokenized stocks has rebounded, with Robinhood announcing last month the launch of tokenized stock trading on the Ethereum Layer-2 scaling network Arbitrum. Additionally, Swiss financial instrument issuer Backed has also launched a tokenized stock product called xStocks. By tokenizing traditional stocks, it allows investors to access assets from traditional financial markets through blockchain technology. These tokenized stocks are issued on the Solana chain and traded on centralized exchanges as well as decentralized exchanges like Jupiter. 

SEC's warning: tokenization of securities is still regulated

Although tokenization is considered one of the potentials of blockchain technology, SEC Commissioner Hester Peirce emphasized in a statement on Tuesday that tokenization does not mean existing securities regulations can be circumvented. She stated that tokenized securities still fall under the category of securities, and "blockchain technology does not possess the magic to change the nature of the underlying assets."

Peirce also reminded that if a company is building tokenization products, they must ensure compliance with federal securities laws and consider communicating with regulators.

Robinhood's tokenized stocks

The tokenized stocks launched by Robinhood have implemented control measures in certain aspects. For example, U.S. customers cannot purchase stock tokens, these tokens cannot be transferred to other wallets or platforms, and users must undergo KYC verification. In contrast, while xStocks also does not allow U.S. customers to purchase, these tokens are permissioned, meaning they can be freely traded on decentralized exchanges or independently adopted by any platform.

SEC's advice to market participants

The SEC is currently trying to promote regulation of the crypto market through cooperation with market participants. SEC Commissioner Mark Uyeda stated: "Investors and issuers have valuable observations and experiences that should be respected."

attempts by other market participants

Major CEXs have attempted tokenization of stock trading, but these products were ultimately shelved. The crypto lending platform Abra also offered tokenized contracts to its customers in 2019, allowing them to gain exposure to the price fluctuations of certain U.S. stocks and ETFs. However, after cooperating with the SEC in an investigation, Abra decided to voluntarily cease offering these tokens and paid a fine.

This article is translated from Decrypt, with data sourced from the SEC official statement, CoinGlass, and Securitize disclosure documents.