Former SEC legal counsel analyzes key elements of RWA compliance

Summary

The SEC's shift in attitude towards cryptocurrencies is boosting the development of RWAs, but jurisdiction and revenue restrictions still constrain compliance models.

Sologenic Chief Legal Officer Ashley Ebersole points out that the main constraint on real-world assets (RWAs) has always been regulatory involvement rather than technology, and this dynamic is changing significantly in the United States.

Ebersole joined the U.S. Securities and Exchange Commission (SEC) in early 2015 and participated in the agency's early internal working groups, responsible for research on cryptocurrencies and the application of securities law to blockchain assets.

Ebersole joined the U.S. Securities and Exchange Commission (SEC) in early 2015 and participated in the agency's early internal working groups, responsible for research on cryptocurrencies and the application of securities law to blockchain assets.

In 2017, the securities regulator released the DAO report, explicitly asserting jurisdiction over tokens that meet the definition of securities. He noted, "The next two years following the DAO report were characterized by an enforcement-oriented response. I had expected a greater shift towards policy during my tenure—but that didn't happen." Ebersole stated that this hardline stance became even more pronounced shortly after his departure from the agency, before Gary Gensler took office in April 2021. After transitioning to private practice, he continued to engage with the SEC until staff were later advised against interacting with cryptocurrency companies. This communication disruption made it difficult for the company to design legal and compliant RWA products and significantly delayed the development of on-chain security models, which are only now gradually being put into production. RWA products representing equity saw explosive growth in the last quarter of 2025. Source: RWA.xyz The market for tokenized physical assets is expanding rapidly. Standard Chartered Bank predicts that by 2028, the value of the non-stablecoin RWA could climb to $2 trillion, primarily driven by the migration of tokenized stocks, funds, and other traditional financial instruments to the blockchain. Listed stocks constitute only a small portion of the overall RWA structure. Source: Standard Chartered Bank. Large financial institutions are actively pursuing this shift. BlackRock is reportedly exploring tokenization technology to modernize its fund infrastructure, while JPMorgan Chase has successfully launched tokenized money market products on Ethereum. "There is indeed a correct way to achieve compliant tokenization and issue tokenized assets. It is absolutely possible," Ebersole emphasized. He highlighted a stock token model similar to a depositary receipt. When a user purchases tokens, a regulated clearing broker acquires and holds the corresponding shares, simultaneously minting a token to represent the contractual rights to those shares. "You own it. It's minted at the time of purchase and references the contractual rights to the shares purchased at the same time," Ebersole explained. "And you get dividends, voting rights, and all the rights that come with being a shareholder, because you are essentially a shareholder." Ebersole points out that this approach is fundamentally different from other tokenized equity products that only provide price exposure but do not grant ownership. In the latter case, the equity token actually functions as a synthetic instrument, merely tracking the stock price without granting shareholder rights or legal claims against the underlying asset. This distinction remains crucial in the present. In late July of this year, Robinhood promoted a tokenized exposure product linked to OpenAI. The privately held company subsequently distanced itself from the product publicly, making it clear that any transfer of its equity would require approval, a process that did not occur. The Limitations of RWA Tokenization Interest in tokenized RWAs is growing rapidly, but Ebersole warns that this does not eliminate the geographical limitations of securities regulation. In practice, many RWA projects encounter legal and jurisdictional limitations. Even though blockchain infrastructure is borderless, securities laws remain nationally governed. A US-compliant RWA structure does not automatically apply to the EU or Asian markets, as these regions have their own licensing, disclosure, and distribution rules. Ebersole points out: "The most difficult issue we hear about tokenized RWA projects is that if you want to operate fully legally and compliantly, you need to deal with a complex set of legal requirements. This is true in the US, and it's even more complex globally." This decentralization has prompted many platforms to shift towards regionally specific products. Robinhood's tokenized offerings are limited to EU users. It allows trading in tokenized US stocks and exchange-traded products, but does not grant direct ownership of the underlying shares. Instead, these tokens reflect the price of publicly traded securities and are regulated as blockchain-based derivatives under the EU Markets in Financial Instruments Directive II (MiFID II). Robinhood has tokenized 1,493 assets, including stocks and exchange-traded products. Source: Entropy Advisors/Dune Analytics. Yields are another area where RWA tokenization frequently encounters regulatory friction. Ebersole points out that regulators have made a clear distinction between yields generated by holders' own actions (such as participating in transaction verification) and yields passively generated simply by holding tokens. "If you buy an asset and simply holding it generates an inherent return, regulators will still consider it a security," he said. This distinction has influenced enforcement decisions and continues to affect the structural design of tokenized products. While regulators' views on staking and other forms of returns have evolved under the current SEC administration, Ebersole points out that, under current law, inherent returns remain a sensitive trigger. The regulatory shift behind RWA's momentum stems from a change in the SEC's attitude towards the industry. During the SEC's stringent enforcement period led by Gensler, staff were discouraged from engaging with crypto companies, and even potential issuers trying to operate within the existing securities laws were unable to find a viable path to building compliant on-chain products. This attitude has begun to soften as the agency has indicated a more open approach to participation. Ebersole stated that the SEC's recent leadership changes, including the addition of Paul Atkins, have helped to foster an attitude that views blockchain technology as infrastructure with potential applications to the securities markets, rather than as an inherent regulatory risk. "Now the SEC is engaging heavily with the industry and saying, 'Come tell us, if you're trying to do what we want to do, how would you do it?'" Ebersole explained. In this environment, compliant models such as tokenized stocks built through regulated intermediaries and custody arrangements can be transformed from concepts into actual products, although legal frictions remain regarding cross-border distribution and revenue-generating designs that may trigger additional securities obligations. Existing securities laws continue to govern RWAs, but according to Ebersole, this shift from a purely enforcement-oriented approach does not preclude the possibility of more targeted rules being developed over time if regulators and markets continue to address remaining gaps.