UPDATE 1-US regulators say banks won't face extra capital charges on tokenized securities

U.S. banking regulators clarified ‌on ​Thursday that banks should not have to hold additional capital against losses when dealing with blockchain-based securities, saying ‌their rules are "technology neutral." The Federal Reserve, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency issued new guidance clarifying that they will not distinguish ‌between tokenized securities and traditional securities when it comes to bank capital.

The agencies ‌said they were issuing the document due to increasing interest from banks in representing ownership rights in tokenized securities. "The technologies used to issue and transact in a security do not generally ⁠impact ​its capital treatment," ⁠the agencies said in a statement. Buoyed by President Donald Trump's pro-crypto stance and his administration's push ⁠for friendly regulations, the crypto industry last year rushed to capitalize on a global ​surge in enthusiasm for the sector, with companies like Robinhood, Kraken and Gemini ⁠launching tokenized stocks in Europe. The industry says tokenized shares - blockchain-based instruments that track traditional equities - ⁠could revolutionize ​stock markets by allowing shares to be traded 24/7 and settled instantly, boosting liquidity and reducing transaction costs.

A few companies have issued their ⁠own experimental stock tokens on the blockchain - software that acts as a shared digital ledger - ⁠but most ⁠tokenized shares are pegged to public companies and issued by third parties. Other companies, including BlackRock and Franklin Templeton, offer ‌tokenized treasury products.