US financial regulators have clarified how banks should treat tokenized securities, confirming that these digital versions of traditional assets will follow the same capital requirements as their non-tokenized counterparts.
The guidance was issued by the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency. According to the agencies, the rules governing bank capital are “technology neutral,” meaning the underlying technology used to issue or trade a security does not change how it is regulated.
This clarification provides greater certainty for banks and financial institutions exploring blockchain-based financial products.
Tokenized Securities Receive the Same Capital Treatment
The regulators stated that tokenized securities — which are traditional financial assets issued or represented on a blockchain — should be treated exactly like their conventional versions under bank capital rules.
In simple terms, if a traditional security qualifies for a certain capital treatment, its tokenized version will receive the same treatment as long as it meets the eligibility requirements.
Regulators emphasized that the technology used to issue or trade the security does not affect how banks calculate capital requirements. This means financial institutions will not face additional capital burdens simply because the asset is tokenized.
Another important clarification is that banks will not need to over-collateralize tokenized securities on their balance sheets. Over-collateralization is typically required for highly volatile or unproven assets, but eligible tokenized securities will not fall into that category if they represent established financial instruments.
The agencies also explained that derivatives linked to tokenized securities will be treated the same as derivatives tied to the traditional version of those securities.
Growing Institutional Interest in Asset Tokenization
The guidance comes as interest in asset tokenization continues to grow across traditional finance. Major financial institutions such as JPMorgan Chase, BlackRock, and Franklin Templeton have already started exploring blockchain infrastructure, investments, and tokenized financial products.
Tokenization involves converting real-world financial assets such as stocks, bonds, or funds into digital tokens on a blockchain network. These tokens represent ownership of the underlying asset and can potentially be traded more efficiently.
One of the biggest advantages of tokenized securities is the possibility of 24/7 trading. Unlike traditional financial markets that operate during fixed trading hours, blockchain-based assets can be transferred and settled at any time.
Regulators also clarified that tokenized securities can still qualify as financial collateral, provided they meet standard requirements. These include being liquid, legally owned or controlled by the institution, and able to be sold if a borrower defaults under a collateral agreement.
