Louis Froelich on what the SEC agenda means for tokenisation
SEC Chair Paul Atkins's statement on the Commission's 2026 Regulatory Agenda drew headlines about making the United States the crypto capital of the world. Its substance is a set of rulemakings on custody, capital raising with crypto assets, transfer agent modernisation, broker-dealer financial responsibility and recordkeeping, and exchange trading rules.
Louis Froelich is a partner at Womble Bond Dickinson, advising hedge and venture fund managers and fintech companies on regulatory and commercial matters, after eight years at one of the world's largest quantitative hedge funds. In written answers to Disrupts, he set out what the agenda signals for asset tokenisation, what a workable framework has to settle first, how enforcement looks while the rules are written, and where activity will concentrate.
The statement, Froelich said, "reinforces what the SEC staff has been signalling for over a year, which is that they expect tokenised securities and other tokenised assets to live inside the US national market systems, not in parallel". Past the headlines, the agenda "heavily focuses on substantive digital asset regulation", a set of cross-functional updates across the US securities laws. "It signals to the market a continued de-risking of institutional engagement with crypto assets."
Custody is solvable; privacy is not yet
Asked whether a workable framework must settle custody, disclosure or market structure first, Froelich chose none of them. Custody is "a significant regulatory and technical problem to solve. But it is solvable." It is already on the agenda, and the industry's ability to custody and safeguard crypto assets has grown substantially in the past few years.
"The bigger question mark to me is privacy and identity." The public, pseudonymous nature of a blockchain ledger poses two related but opposed problems. "Legally, the pseudonymous nature of blockchains say too little: the chain can tell you precisely where an asset sits but not who holds the crypto asset. To the market, they say too much: no asset manager is going to use a system where their transactions are visible, in real time, to competitors, counterparties, governments, and anyone else with access to a 'block explorer'."
A framework will need to give market participants the confidentiality they have today. "That is a business problem more than a legal one, and rulemaking does not necessarily fix it." Private or permissioned blockchains are one route, "though that can surrender the promise of increased liquidity and composability that drove interest in tokenisation in the first place".
Two kinds of token
How capital raising with crypto assets is treated depends, he said, on what the asset is. Where it is or represents a security or another traditional regulated instrument, "I would expect capital raising rules to remain like they are now. A security should still be treated like a security." Issuers should be prepared to comply with the offering architecture they already know: registration or an exemption, disclosure, and liability for what is disclosed.
A genuine network or utility token is a different analysis. "There is no 'issuer' of a mature, decentralised crypto network token. The entire disclosure-and-registration machinery presumes one, someone who has the information, sells the instrument, and answers for what was said, and once a network is genuinely decentralised, these traditional legal and regulatory tools become outdated. This is a key area for developers to watch."
Quiet on theory, loud on fraud
The enforcement outlook while the rules are still being written is, in Froelich's phrase, "quieter on theory, but loud on fraud". The SEC has said plainly that regulation by enforcement is over and has acted accordingly, dropping the registration-theory cases against the major platforms and installing enforcement leadership with an explicit mandate built around fraud and misconduct. "I would expect fraud, misappropriation, and manipulation actions to continue without any pause for the rulebook, because those cases never depended on the unsettled questions. Lying to investors has been actionable under every classification anyone has proposed."
He also expects enforcement around tokenised securities and other tokenised assets, because tokenisation can become complex and change the nature of the product offered. The signal to the market, he said, is "that traditional assets should be regulated traditionally, and tokenisation is not an escape from that".
Where activity concentrates
All three of the US, the UK and the EU are, in general, treating tokenised securities as subject to existing securities law. The EU legislated for cryptoassets first and most comprehensively through MiCA, though tokenised securities themselves largely sit outside MiCA under traditional EU securities law. The US "started last and is addressing tokenisation across its entire market structure at once", through federal legislation beginning with the GENIUS Act and followed by intense SEC and CFTC rulemaking. The UK is bringing cryptoassets into its existing framework, but its distinctive move on tokenisation is experimentation: "it is testing tokenised securities live through its Digital Securities Sandbox, including a planned digital gilt issuance".
Activity so far has concentrated in the US, largely in tokenised Treasuries and money market funds, and Froelich expects that to continue. "Tokenisation follows the underlying assets, and the deepest, most liquid capital markets globally remain US dollar denominated."
His advice to institutions for the next twelve months is practical. "I would encourage institutions to complete a transaction using blockchain." Most traditional institutions still face operational gaps: custody arrangements that can actually hold the asset, books and records that can capture it, and a control environment for assets that could trade around the clock. Whether an institution wants to bring a tokenised product to market or trade as a participant, he said, "transacting through real blockchain pipes teaches more than anything you can read online".
The UK's Digital Securities Sandbox, run by the Bank of England and the Financial Conduct Authority, is the live testing ground Froelich points to, with a digital gilt issuance planned within it.