SEC to tighten regulations on tokenisation, ICOs

The Securities and Exchange Commission (SEC) is preparing to strengthen regulations pertaining to tokenisation and real estate-backed and asset-backed initial coin offerings (ICOs) to protect investors.

Individuals and corporations are increasingly interested in tokenising real estate such as office buildings and condominiums, and other assets such as pictures, jewellery and accounts receivable, offering them to the public for sale through asset-backed ICOs.

Asset-backed ICOs are supervised under the Emergency Decree on Digital Asset Businesses of 2018, and in substance similar to securities such as real estate investment trusts (REITs), securitisation and depository receipts (DR).

However, under the Securities and Exchange Act of 2008, if the digital tokens offered for sale have the same characteristics as securities, they will technically be considered as…