Tokenized Securities Get Same Capital Treatment as Traditional Ones

Banks and regulators have announced that digital versions of securities, known as tokenized securities, will be treated exactly like their conventional counterparts when it comes to capital requirements. The Federal Reserve, the FDIC, and the Office of the Comptroller of the Currency explained that technology does not change how a security is valued for regulatory purposes. Under this new guidance, financial institutions will no longer need to over‑collateralize tokenized assets that are proven and liquid. This relief is similar to the treatment of traditional securities, which do not require extra collateral. The agencies also clarified that derivatives based on tokenized securities are to be considered equivalent to derivatives tied to the non‑tokenized version. This means banks can assess risk and capital needs in the same way for both types of instruments.

Tokenization has attracted interest from major players such as JPMorgan, BlackRock, and Franklin Templeton. These firms see benefits in 24/7 trading enabled by blockchain technology, which contrasts with the fixed hours of traditional markets. The regulators emphasized that tokenized securities can still serve as legal financial collateral, provided they are liquid and owned or controlled by an institution that could sell them if a borrower defaults. When all conditions are met, these tokens can help reduce credit risk for banks. Overall, the guidance signals a move toward technology neutrality in banking regulation, encouraging broader adoption of digital asset solutions while maintaining existing risk frameworks.

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