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The US Securities and Exchange Commission has clarified how tokenised securities are regulated, drawing a sharp distinction between compliant, regulated products such as Robinhood’s stock tokens and fraudulent schemes like Terra’s Mirror Protocol.
In a joint statement issued on Jan. 28, the Securities and Exchange Commission classified tokenised securities into issuer-sponsored models and third-party models, including custodial and synthetic structures, all of which remain subject to federal securities laws.
The framework comes as Mirror Protocol, launched by Do Kwon, collapsed with more than $40 billion in investor losses, with US prosecutors later saying the platform was secretly controlled and manipulated by its creators.
The SEC said issuer-sponsored tokenisation integrates blockchain records directly into official ownership systems, while third-party synthetic models provide only price exposure without conferring equity or voting rights.
Mirror Protocol was cited as an early example of synthetic tokenised securities, but unlike regulated platforms it falsely claimed decentralisation to evade oversight while relying on the failed UST stablecoin for collateral.