The U.S. Federal Reserve said banks should treat tokenized securities the same as traditional securities for capital purposes, emphasizing that existing rules are "technology neutral."
In a frequently asked questions document published Thursday, the Federal Reserve Board said the technology used to issue or transfer a security, including blockchain technology, does not affect its regulatory capital treatment.
"An eligible tokenized security should be treated in the same manner as the non-tokenized form of the security would be treated under the capital rule," the Fed wrote.
The Fed also said tokenized securities may qualify as financial collateral under existing rules if banks meet the same legal and risk-management requirements applied to traditional securities.
"The capital rule does not provide a different treatment based on the use of permissioned or permissionless blockchains," the Fed added.
The guidance comes as regulators increasingly address how existing financial laws apply to blockchain-based versions of traditional assets.
In January, the Securities and Exchange Commission said tokenized securities fall under federal securities laws and must comply with the same registration, disclosure, and investor-protection requirements as conventional securities.
The clarification comes as financial firms increasingly experiment with bringing traditional assets onto blockchain networks. Data from RWA.xyz estimates that tokenized public equities have reached about $1.1 billion in market value, within a broader $26 billion tokenized real-world asset market led by tokenized U.S. Treasury products.
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