Given the recent introduction of various policies by the U.S. government regarding virtual currencies, stablecoins, and related areas, this article aims to analyze the legal framework governing tokenized assets in the United States and explore the legal uncertainties surrounding the classification of tokenized assets, with the goal of providing general guidance for entrepreneurs and developers in the tokenized asset sector.

**Introduction**

Tokenization refers to the process of representing tangible physical assets through digital tokens on a blockchain (a decentralized digital ledger that stores transaction records across network computers). In the development of tokenization businesses, online trading platforms have enhanced global accessibility and reduced dependence on intermediaries. Tokens enable fractional ownership of high-value assets, lowering barriers to entry for small investors, while blockchain technology ensures transaction security and reduces fraud risk.

Considering these and other advantageous factors, the tokenization market has expanded rapidly (reaching $24 billion by 2025),[1] with countless types of real-world assets being tokenized and traded, including fiat currencies, commodities, real estate, private equity, government bonds, stocks, and more.

However, due to the novelty of tokenized assets, their emergence presents certain incompatibilities with legal frameworks tailored for traditional financial markets, creating challenges for regulatory authorities across different jurisdictions. While some jurisdictions have enacted legislation specifically for tokenized assets, others struggle to incorporate such assets within existing frameworks.

Given recent U.S. government policies regarding virtual currencies, stablecoins, and related areas, this article aims to analyze the legal framework governing tokenized assets in the United States and explore legal uncertainties in tokenized asset classification, providing general guidance for entrepreneurs and developers in the tokenized asset field.

**1. Regulation and Tokenization Classification**

Under U.S. regulatory policy, tokenized assets are broadly categorized into three types: securities, commodities, and stablecoins. If a tokenized asset is classified as a security, it falls under Securities and Exchange Commission (SEC) regulation according to securities laws. Commodities are regulated under the Commodity Exchange Act (CEA) and the Commodity Futures Trading Commission (CFTC). Finally, stablecoins are covered by the GENIUS Act.

Although proper classification of tokenized assets forms the foundation of this structure, U.S. legislation lacks clear rules for tokenized asset classification, increasing legal uncertainty and regulatory concerns faced by entrepreneurs and developers. Additionally, some tokenized assets (such as algorithmic stablecoins) do not belong to any of the above categories, essentially remaining in an unregulated state.

**2. Securities Regulatory Framework**

**2.1 Definition of "Securities"**

Section 2(a)(1) of the Securities Act contains an extensive list of financial instruments qualifying as securities, such as "any note, stock, treasury stock, security future, security-based swap [...]".[2] Among the listed instruments, "investment contract" is particularly important for tokenized asset classification, as the distinction between them is often a source of controversy and has led to numerous lawsuits between the SEC and crypto companies.

The landmark case defining investment contracts legally is SEC v. Howey,[3] where the Supreme Court defined an investment contract as "an investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others".[4] This definition, known as the "Howey Test," protects investors who lack control or expertise and depend on others.

The application of the Howey Test to certain tokenized assets is straightforward. For example, the SEC has determined that tokenized assets financed and distributed through Initial Coin Offerings (ICOs) typically constitute investment contracts. This is because money is invested to fund a project (common enterprise), and investors can reasonably expect that project success will increase token value and generate profits.

Similarly, tokens representing underlying financial securities (such as stocks and bonds) likely qualify as securities or security-based swaps, as their economic value derives entirely from the management efforts of the issuing entity responsible for maintaining the peg to underlying assets, leading investors to expect profits from these efforts.

Conversely, tokens like Bitcoin, whose value does not depend on underlying company performance, are likely not securities. Utility tokens used for paying gas fees and validating transactions, such as Ether, would also not be considered securities as they do not serve investment purposes.

However, applying the Howey Test to tokenized assets traded on automated secondary platforms (such as Coinbase's exchange) is more difficult. Courts have made conflicting rulings on applying the "expectation [...] of profits from the efforts of others" element.

On one hand, Judge Torres in SEC v. Ripple[5] ruled that digital tokens sold to public buyers on automated platforms do not meet this Howey Test requirement. The judge reasoned that unlike primary market buyers who rely on token issuers' management efforts, secondary market buyers' profit expectations stem from market trends affecting token prices.

On the other hand, Judge Katherine Polk Failla in SEC v. Coinbase argued that distinguishing between primary and secondary markets is unnecessary, as in both markets, "purchasers have reasonable expectations of profiting from others' efforts to maintain crypto asset ecosystems".[6] This conflict between legal concepts has not been resolved by higher courts.

Therefore, it remains unclear whether tokenized assets traded on exchanges constitute securities under the Securities Act. In summary, whether tokenized assets are classified as securities primarily depends on the Howey Test. While some tokenized assets clearly fall within or outside the Securities Act's scope, this cannot be applied most broadly.

**2.2 Securities Trading Regulations**

According to SEC regulations, there are four pathways for issuing securities, with the first three being exemptions from general registration requirements. First, issuers can rely on Rule 506 under Regulation D, which involves lower costs and shorter application procedures but allows sales only to "accredited investors".[7] Second, issuers can choose the crowdfunding process under Regulation CF, which sets a $5 million offering cap within 12 months and imposes ongoing filing obligations with the SEC.[8] Third, issuers can utilize the two-tier procedure under Regulation A, which exempts smaller offerings from registration requirements.[9] Under this regulation, issuers can raise up to $20 million for Tier 1 offerings within 12 months. For Tier 2, issuers can raise up to $75 million within 12 months. Tier 2 imposes stricter ongoing reporting requirements but exempts compliance with blue sky laws/state securities laws, simplifying nationwide offering processes.

While these pathways exempt from lengthy and costly registration processes with the SEC, issuers face limitations in total fundraising amounts and public accessibility. The final pathway is ordinary registration through Form S-1, requiring companies to submit information such as "description of property and business; description of securities to be offered; company management information; and financial statements certified by independent accountants".[10] The entire application process from preparing audited statements to SEC review takes 8-18 months and costs $500,000 to $2 million, depending on company size and other factors. Despite high barriers to entry, the benefit is that once registered, issuers can freely issue securities to the public within registered total limits.

**3. Commodities Regulatory Framework**

**3.1 Definition of "Commodities" and the Commodity Exchange Act (CEA)**

Tokenized assets not covered by the Securities Act may fall under the CEA, which regulates commodity trading in derivatives markets. Section 1a(9) of the CEA lists various items constituting commodities and extends CFTC jurisdiction over futures contracts for such commodities.[11] Congress intentionally used broad language when drafting this provision to regulate new commodities emerging with market development.

Consistent with this legislative intent, the CFTC declared in CFTC v. Coinflip that Bitcoin or any other "virtual currency" qualifies as a "commodity" under the statutory definition.[12] Subsequent cases, including CFTC v. McDonnell[13] and In re BFXNA Inc.,[14] confirmed that virtual currencies are commodities under the CEA.

The consequence is that futures contracts based on virtual currencies cannot be traded unless executed on federally regulated exchanges (such as the Chicago Mercantile Exchange).[15] For options and swaps trading, the CEA also requires traders to register with the CFTC. For example, crypto company Kraken was fined $1.25 million for failing to register as a futures commission merchant.

However, it should be noted that while virtual currencies are considered commodities, the CFTC has not yet declared jurisdiction over other types of tokenized assets. Furthermore, CFTC's regulatory authority is limited to regulating fraud and manipulation in spot markets and derivatives market regulation, leaving a regulatory gap for transactions other than derivatives trading.

**4. SEC and CFTC Jurisdictional Overlap**

As discussed above, classification rules for tokenized assets are not entirely clear. The SEC's regulatory scope is unclear and may overlap with CFTC's limited jurisdiction over virtual currencies. For example, former SEC Chairman Gary Gensler commented that "crypto products are subject to securities laws and must operate within our securities system framework".[16] Conversely, former CFTC Commissioner Quintenz stated that "the SEC has no jurisdiction over... crypto assets".[17] Therefore, actions that cannot fall within a specific regulatory framework are likely to face dual jurisdictional constraints.

**4.1 The CLARITY Act Solution**

Given these regulatory issues, the Digital Asset Market Structure and Investor Protection Act (CLARITY Act) was submitted to Congress on May 29, 2025. The bill proposes creating a new class of digital assets called "digital commodities," defined as "digital assets that are intrinsically associated with blockchain systems and whose value derives from or is reasonably expected to derive from the use of blockchain systems".[18] Additionally, the CFTC would gain nearly exclusive jurisdiction over such assets.[19] This would significantly narrow the range of tokenized assets constituting securities and limit SEC jurisdiction. This should partially delineate SEC and CFTC responsibilities regarding cryptocurrencies.

However, a key weakness of the CLARITY Act is excluding tokenized real-world assets (RWA) from the digital commodity scope. Specifically, the bill stipulates that a token that would otherwise be a digital commodity is not considered such if it "references, represents an interest in, or is functionally equivalent to" a "commodity".[20] This means tokenized gold, oil, or other real-world assets would not be considered digital commodities under the bill, effectively recreating the same classification confusion and SEC-CFTC jurisdictional ambiguity the bill attempts to resolve.

Another key adjustment proposed by the bill is creating a new asset class called "investment contract assets," which are digital commodities recorded on blockchains, capable of being owned and transferred without relying on intermediaries, and sold or transferred through investment contracts.[21] Importantly, "investment contract assets" are not investment contracts and therefore not securities; this is expected to limit SEC jurisdiction over investment contracts.[22]

In summary, the CLARITY Act plans to create two new asset classes ("digital commodities" and "investment contract assets"), aiming to resolve jurisdictional conflicts between the SEC and CFTC by delineating their regulatory boundaries, but this is likely not the final solution.

**5. Stablecoin Regulatory Framework**

**5.1 Definition of Stablecoins**

The newly created third category of tokenized assets is "payment stablecoins." The GENIUS Act, enacted on July 18, 2025, but not yet effective, defines payment stablecoins as "digital assets" used as payment or settlement means and redeemable for fixed monetary values.[23] For example, Tether's USDT and Circle's USDC, both pegged to the U.S. dollar, would qualify as stablecoins under this act.

However, the GENIUS Act explicitly excludes algorithmic stablecoins from its scope.[24] Unlike payment stablecoins redeemable at fixed monetary values, algorithmic stablecoins rely on algorithms to reduce price volatility and are primarily used to exchange for other crypto tokens. For example, a popular U.S. algorithmic stablecoin, TerraUSD, had its price algorithmically pegged to its sister token LUNA. TerraUSD holders would exchange tokens for LUNA rather than monetary value.

**5.2 Related Regulations**

Issuing stablecoins in the United States involves roughly four steps. First, companies must register with the Office of the Comptroller of the Currency (OCC) (for federal qualification) or state-level authorities (for state-level qualification) as licensed payment stablecoin issuers.[25] Second, issuers should maintain adequate reserves (in U.S. dollars, Treasury securities, and other approved assets) to support stablecoins at a 1:1 ratio.[26] Third, issuers should publish timely redemption policies and procedures.[27] Finally, issuers must register with the Treasury Secretary as money transmitters and obtain state-level money transmission licenses.[28]

**6. Other Assets**

As previously discussed, tokenized assets that cannot be clearly categorized into existing categories (securities, commodities, stablecoins) still exist. Algorithmic stablecoins, real-world asset tokens excluded by the CLARITY Act, gaming tokens, and many other digital assets fall into this regulatory gray area. This remains a significant issue requiring substantial effort for entrepreneurs and developers to clarify.

**7. Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) Laws**

Regardless of how tokenized assets are classified, issuers and service providers of such assets must comply with federal anti-money laundering/counter-terrorism financing laws (collectively known as the Bank Secrecy Act) if deemed financial institutions. According to the Financial Crimes Enforcement Network (FinCEN), financial institutions include any legal entities conducting business in specific capacities, including banks, securities brokers or dealers, money services businesses, etc.[29]

Financial institutions must comply with AML/CTF rules regarding record keeping, transaction freezing or blocking capabilities, suspicious transaction reporting, customer identification, and economic sanctions. Beyond these general requirements, Money Services Businesses (MSBs), which provide money transmission, check cashing, currency exchange, and other money-related services, must register with FinCEN and implement AML programs tailored to their risk levels.[30] MSBs transmitting "money, funds, or other value substitutes [...]" also need to obtain money transmission licenses.[31]

**Conclusion**

The current U.S. system for regulating tokenized assets is relatively complex, though this situation is similar across all global jurisdictions. SEC Chairman Paul S. Atkins stated in a recent speech that "clearly defined rules" are needed to clarify existing law applications and provide clear guidance for market participants.[32] Objectively speaking, implementing such regulatory guidance is not easy. Therefore, navigating under partially clear yet sometimes ambiguous policy regulations remains the current state of the web3 industry. However, profitable business models for many ventures have gradually emerged, and progressing through negotiation and balance is something most people are willing to embrace.

[1] Real-World Asset Tokenization Market Has Grown Almost Fivefold in 3 Years, https://www.coindesk.com/business/2025/06/26/real-world-asset-tokenization-market-has-grown-almost-fivefold-in-3-years. [2] 15 U.S.C. § 77b(a)(1). [3] SEC v. W.J. Howey Co., 328 U.S. 293 (1946). [4] Framework for "Investment Contract" Analysis of Digital Assets, https://www.sec.gov/about/divisions-offices/division-corporation-finance/framework-investment-contract-analysis-digital-assets. [5] SEC v. Ripple Labs Inc., 2023 U.S. Dist. [6] SEC v. Coinbase, Inc., 25-145, (2d Cir.). [7] 17 C.F.R. § 230.506. [8] 17 C.F.R. § 227.100. [9] 17 C.F.R. § 230.251. [10] Statutes and Regulations, https://www.sec.gov/rules-regulations/statutes-regulations#secact1933. [11] 7 U.S. Code § 1a(9). [12] CFTC v. Coinflip, Inc., CFTC Docket 15-29. [13] CFTC v. McDonnell, 287 F. Supp. 3d 8 213. [14] In re BFXNA Inc., CFTC Docket 16-19. [15] 7 U.S. Code § 4. [16] Remarks Before the Aspen Security Forum, https://www.sec.gov/newsroom/speeches-statements/gensler-aspen-security-forum-2021-08-03. [17] Brian Quintenz on X, https://x.com/cftcquintenz/status/1422912721637580803?lang=en. [18] H.R. 3633, 119th Cong. § 301(a)(4) (2025-2026). [19] H.R. 3633, 119th Cong. § 401 (2025-2026). [20] H.R. 3633, 119th Cong. § 301(a)(4) (2025-2026). [21] H.R. 3633, 119th Cong. § 201 (2025-2026). [22] H.R. 3633, 119th Cong. §§ 201, 203 (2025-2026). [23] S. 394, 119th Cong. § 2(22) (2025-2026). [24] Ibid. [25] S. 394, 119th Cong. § 3(a) (2025-2026). [26] S. 394, 119th Cong. § 4(a)(1)(A) (2025-2026). [27] S. 394, 119th Cong. § 4(a)(1)(B) (2025-2026). [28] 31 U.S.C. § 5330. [29] 31 C.F.R. § 1010.100(t). [30] 31 C.F.R. § 1022.380, 31 CFR § 1022.210. [31] 31 C.F.R. § 1010.100(ff)(5). [32] American Leadership in the Digital Finance Revolution, https://www.sec.gov/newsroom/speeches-statements/atkins-digital-finance-revolution-073125.