The federal bank regulatory agencies today jointly issued answers to frequently asked questions to clarify the capital treatment of tokenized securities.
A security is often referred to as “tokenized” when ownership rights in the security are represented using distributed ledger technology. The answers to the frequently asked questions clarify that an eligible tokenized security should generally receive the same capital treatment as the non-tokenized form of the security under the capital rule. The agencies also clarified that the capital rule is technology neutral, and the technologies used to issue and transact in a security do not generally impact its capital treatment.
As with any exposure, banks holding tokenized securities must apply sound risk management practices and comply with applicable laws and regulations.
