This article was compiled and organized by BlockWeeks
SEC Releases Tokenized Securities Classification Framework
U.S. Securities and Exchange Commission (SEC) staff released guidance on tokenized securities on Wednesday, jointly issued by the Division of Corporation Finance, the Division of Trading and Markets, and the Division of Investment Management. The document is primarily definitional, providing classifications for different types of tokenized securities and explaining their designs.
The SEC divides tokenized securities into two major categories:
First, issuer-led tokenized securities, where a company offers its securities through the blockchain, either allowing traditional securities to be converted into tokenized form or issuing securities directly on-chain.
Second, third-party-led tokenized securities, where a third party (a tokenization company, crypto exchange, or asset management institution) provides exposure to securities through some intermediary method. The market has experimented with two forms:
Custodial tokenized securities: A company unrelated to the issuer creates securities interests, which may or may not grant holders economic exposure, governance rights, or legal rights to the underlying securities. Market participants typically place securities shares into a fund structure (such as a special purpose vehicle, SPV), and then tokenize the fund shares.
Synthetic tokenized securities: Economic exposure to securities can be provided through "linked securities," where a third party issues its own securities and designs them so that their returns are linked to the underlying asset; or "security-based swaps" (SBS) issued in tokenized form, which is another way to provide synthetic exposure but with different regulatory obligations.
The statement does not offer qualitative views on different models, but rather establishes a framework to help investors understand the differences between types of instruments and to guide discussions between market participants and the SEC. The relevant divisions stated: "We stand ready to communicate on any questions."
Clarifying classifications is crucial to ensuring constructive participation by diverse stakeholders, especially on complex technical issues such as the securities lifecycle, format, trading, and settlement. Such definitional progress is also a key part of market structure and stablecoin legislation, as well as nearly all comprehensive legal and regulatory frameworks. If parties cannot agree on language, they cannot advance the design of new systems.
The Battle Between Issuer-Led and Third-Party Wrapping
Galaxy has publicly advanced the tokenization of GLXY Class A common stock, which is an issuer-led tokenized security. In July, Galaxy criticized the third-party-led model (also known as "wrapping"), and a week later SEC Commissioner Hester Peirce wrote that such structures could be security-based swaps. This document is consistent with Peirce's views on SBS, while also appropriately describing the differences between the two high-level designs. Holding tokenized GLXY is equivalent to holding the traditional issued version, with all related legal, economic, and governance rights. Holding tokenized securities issued by a third-party wrapper, however, enters into a relationship with the third party, which may or may not grant various rights to the underlying securities. As Galaxy wrote on July 11, "The wrapping structure eliminates the relationship between the issuer and the shareholder, which is bad for both parties."
But the wrapping model also has benefits, especially when the third-party initiator does not restrict transfers to allowlisted addresses, as is the case with xStocks. Without such an allowlist, holders can easily deploy tokens into DeFi applications today. This is also a more scalable way to bring a large number of stocks onto the blockchain, because the model does not require the issuer's consent (or even its knowledge). In essence, each xStock is like a tokenized fund, or even like a modern stablecoin: of course, the collateral is a single underlying asset.
ERC-8004 and x402: The On-Chain Identity and Payment Layer for AI Agents
Another focus this week is the new Ethereum standard ERC-8004, which provides persistent identity for AI agents. As autonomous systems account for a growing share of online activity, demand will increase for programmable layers that support identity, permissions, and payments for interactions with real economic value.
ERC-8004 and Coinbase's x402 represent early building blocks of this emerging technology stack. ERC-8004 provides persistent identity for agents, while x402 enables native, programmable payments for tools, data, and services. Together, they suggest that crypto's role as a financial settlement layer may evolve into a broader coordination layer for AI—not only for transferring value, but also for enabling autonomous systems to interoperate at scale.
Pendle Bids Farewell to vePENDLE: sPENDLE and AIM Launch
This week, Pendle made drastic changes to its tokenomics, replacing its entire governance incentive structure with a liquid staking version of its token. The vePENDLE era has officially ended. In its place is sPENDLE, a liquid staking token with a 14-day withdrawal window (or instant exit for a 5% fee), and AIM, a fully algorithmic incentive system.
Pendle is simplifying governance, cutting emissions by about 30%, and acknowledging a fact many DeFi protocols are unwilling to face: the system is not working as intended, incentives are misaligned, and third parties have stepped in to fill customer demand that Pendle did not provide—a transferable, yield-bearing token with governance rights.
Under vePENDLE (the prefix meaning "vote-escrowed"), emissions were manually directed, often flowing to marginal or even completely unprofitable pools, and supported by third parties and launch incentives. Pendle's own data shows that more than 60% of pools are unprofitable (more than $1 in incentives for every $1 of protocol revenue), with overall fee performance driven by a small number of pools.
AIM launched on Thursday, replacing the manual, vote-based emission mechanism with algorithmic distribution of PENDLE.
