Banking organizations must ensure that a tokenized security confers identical legal rights as its non-tokenized counterpart to qualify for the same capital treatment as the non-tokenized form of the security, according to new guidance from the federal banking…
Davis Polk Discusses Federal Banking Agency Guidance on Capital Treatment of Tokenized Securities
Federal banking agencies issued new guidance requiring tokenized securities to confer identical legal rights as their non-tokenized counterparts to maintain the same capital treatment. This affects banking organizations holding tokenized assets, which must now ensure compliance to avoid regulatory penalties or capital misallocation. The guidance introduces additional compliance burdens and potential operational risks.